Cheese experienced growth in both retail current value and volume terms in 2018, driven by economic recovery and increasing consumer confidence. There is a clear but gradual trend towards premium references within the category, which is reflected in increasing sales of specialities and imported cheese; products with higher added-value, sales of which were negatively affected during the economic crisis.
The high volatility of the price of raw materials, as a consequence of the end of dairy quotas in Europe, is one of the main factors affecting cheese in Spain. The industry argues that this volatility has made it difficult to set stable prices and affected operations in the medium and long term, hindering distribution as well as export activity.
Growing awareness of lactose intolerance amongst Spanish consumers contributed to the development of lactose-free cheese in the last couple of years. The interest of large manufacturers in this segment, including Grupo Lactalis Iberia, Mercadona, Lácteas García-Baquero and Mantequerías Arias, which have introduced new lactose-free products, has been key to the success of this segment.
Grupo Lactalis Iberia maintained its lead in cheese in Spain in value terms in 2018. Its wide product portfolio, broad distribution scope and the popularity of its brands in Spain, which include El Ventero, Gran Capitán, Société and Président, explain the leading position of the company within cheese.
Private label continued to lose share within cheese in 2018, which can be explained by the growing sophistication of consumer demand and the rising preference for products with higher added-value, most of which come from branded players. Despite losing share, private label still accounted for a significant share of total sales within cheese in 2018, due to the strong position of the retail channel, in which private label is present.
The recovery of consumer confidence led to the re-emergence of trends that were largely abandoned during the hardest years of the economic crisis. These included the development of snacking formats, with new releases such as the renewed Navidul spreadable cheese format or the new Arla snacking format in hard cheese.
Growing scepticism about the health effects of dairy products in the eyes of the public was the main factor explaining the declining consumption of drinking milk products in Spain in 2018. This negative opinion of dairy products was the result of stories published online and in the media that claim that older consumers do not need to consume milk, and that most consumers have some degree of lactose intolerance, which had a damaging effect on milk consumption.
Other milk alternatives continued its boom in Spain in 2018, favoured by rising health-consciousness amongst consumers and growing concern regarding lactose intolerance, which resulted in a shift from cow’s milk towards other milk alternatives. The growing demand for plant-based products suitable for vegans was also key in the performance of the category.
Fresh milk managed to emerge from its negative trend from 2017, recording a positive performance in 2018. The growing demand for more natural products was key to the success of the category.
Leading Spanish retailer Mercadona led drinking milk products in Spain in value terms in 2018. Its lead can mainly be explained by its strength within shelf stable milk.
In early 2018, Corporación Alimentaria Peñasanta (CAPSA) launched Asana, a new brand of organic dairy products produced with organic milk from cows that graze freely in the Austrian Alps. Within drinking milk products, the new releases included references of full fat, semi-skimmed and skimmed milk, as well as lactose-free semi-skimmed milk.
The efforts of branded manufacturers in new product development favoured the development of flavoured milk drinks. Key innovations within this category during 2017-2018 included the lactose-free version of Cola Cao Shake, which comes in a 200ml plastic cup, and Cacaolat veggie, a non-dairy chocolate-based flavoured milk reference produced using oat milk, available in 1-litre PET bottles.
Sales of yoghurt and sour milk products continued to decline in 2018, following a similar path to the review period. The negative perception of dairy products, which can be explained by the growing scepticism regarding the health benefits of these references and rising awareness of lactose intolerance, was behind the decline of the category.
Sour milk products recorded the highest growth in yoghurt and sour milk products in retail current value terms in 2018. Albeit coming from a low base, the category benefited from the good performance of kefir (fermented milk), which contributes to regenerating the intestinal flora, facilitates digestion and helps to solve constipation.
In the last couple of years, manufacturers threw themselves into attracting new consumers via indulgence and pleasure, positioning their products as a healthier alternative to dairy desserts. Leading manufacturer Danone led the way a few years ago with its release of Oikos, and the incorporation of new flavours, including fruit fondues – fruit fondue with orange, fruit fondue with cherry and fruit fondue with red berries.
Danone led yoghurt and sour milk products in Spain in value terms for another consecutive year in 2018. The dominance of the company can be explained by the popularity of its brands amongst Spanish consumers; these include Actimel, Activia, Danacol, Danet, Danissimo, Dan’up, Danonino, Griego and Savia.
El Pastoret de la Segarra, a regional manufacturer from Catalonia, saw very healthy growth in Spain in the last couple of years, benefiting from its strategy of added-value and differentiation, and its commitment to natural products. El Pastoret de la Segarra offers ranges of both standard and organic yoghurt, and kefir in two formats: 125g and 500g, with the latter format contributing to identifying it on the shelves of retailers.
In early 2018, Danone, the leader in yoghurt and sour milk products in Spain, launched its new non-dairy spoonable yoghurt line under the brand Alpro. The French multinational launched a 500g format designed to be consumed for breakfast, combined with fruit, seeds and cereals, in three varieties: natural, with oat, or with coconut.
Similar to what is happening in other dairy categories, rising concern about lactose intolerance and the overall negative public opinion affecting dairy products were the main factors leading to the decline of other dairy in 2018. These trends affected all major categories within other dairy, including chilled dairy desserts, condensed milk and cream.
In 2018, the foodservice channel continued to recover, favoured by the return of Spaniards to bars and restaurants in a context of economic growth and rising disposable incomes. The performance of the channel also benefited from the rise in the number of foreign tourists visiting Spain in 2018.
The growing premiumisation in other dairy, favoured by the increasing demand for higher added-value references in a context of rising disposable incomes, resulted in a rise in the average unit price of other dairy products. This was especially evident in categories such as chilled dairy desserts and cream, in which brands focused on product differentiation and added-value when it came to new developments.
Danone led other dairy in Spain in value terms in 2018. The leading position of the French multinational can be attributed to its hegemony within chilled dairy desserts and fromage frais and quark, with well-known brands such as Danone para postres, Danet, Mousse and Vitalinea, which are deeply rooted amongst Spanish consumers.
Despite the rising demand for higher added-value references in the current scenario of economic growth, which favoured the performance of brand manufacturers, private label managed to record a steady performance in 2018. The rooted presence of private label in the category can be explained by the strength of retailers such as Mercadona in major categories such as chilled dairy desserts, which benefited from the agreement with intersupplier Romar for the elaboration of its line of chilled dairy desserts; it invested strongly in the development of new products since its entry in Mercadona at the end of 2015.
As part of its commitment to boosting its competitiveness within other dairy, category leader Danone is currently investing EUR10 million in a new production line for its brand of chilled dairy desserts Danet, in a plant located in Tres Cantos, Madrid, which currently has 10 production lines. The new production line, which will be in operation by June 2018, will increase production capacity in the plant by over 14,000 tonnes a year.
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This industry report originates from Passport, our Packaged Food market research database.