Dairy in Ukraine

Prospects

Packaged hard cheese will drive value growth

Packaged hard cheese is sold mostly in modern retailers, but has still managed to gain consumer loyalty. Whether sliced or unsliced, packaged hard cheese is considered a guarantee that that the product does not contain any bacteria.

Soft cheese is set to see volume growth

Soft cheese was historically divided between cheap domestic soft cheese (bryndza, Adygeisky) and premium imported products such as gorgonzola and camembert. However, within the last year the situation changed, as a free trade zone agreement with the EU is in force, as well as domestic manufacturer Milkiland offering premium soft cheese, and private label (Auchan, Fozzy Group) also offering soft cheeses in their portfolios.

Lactose-free cheese will become more popular

Lactose-free cheese is expected to become increasingly popular in Ukraine, due to the growing demand for lactose-free products from international and Ukrainian companies. Despite the high price of this type of cheese, more and more people are purchasing it, both lactose-intolerant and health-oriented consumers.

Competitive Landscape

A strong presence and wide product range are factors for Komo’s success

Kovel-Moloko (Komo brand) is a leading company in cheese, which is present in the majority of categories and constantly launches new flavours. The company offers both cheese and cheese-based products, so its products are available to all consumers.

Health and wellness is Shostka’s strategy for the premiumisation of cheese

Shostkynsky Miskmolkombinat is one of the biggest manufacturers of cheese in Ukraine. The company produces local brands in all cheese categories (Shostka), and as part of Groupe Bel (Bel-Shostka) offers the core brand Vesela Korivka (La Vache Qui Rit) in spreadable processed cheese.

The significant success of the recently launched Ferma brand

Terra Food Group has obtained leading positions in almost all dairy categories. In the review period the company launched one of the best-recognised umbrella brands on the market, Ferma.

Prospects

Goat milk is becoming more popular

Goat milk is expected to become more popular in the forecast period, due to the increasing number of lactose-intolerant people (including children) in Ukraine. In the review period goat milk was imported, and its high unit price prevented many people from buying it.

Milk alternatives is no longer a niche

During the early review period, milk alternatives was represented only by soy drinks, whilst other dairy alternatives were sold only in a few healthfood specialists. With the development of hypermarkets and supermarkets and the stabilisation of the foreign exchange rate in 2017, the situation changed, and rice, almond and other non-dairy alternatives are more widely available and sold in modern retailers.

Shelf stable milk is set to strengthen over the forecast period

Ukrainians, in line with global trends, are reducing the consumption of full fat products, including full fat fresh milk. However, full fat shelf stable milk is expected to grow in both volume terms and value terms at constant 2018 prices in the forecast period, as this milk is normally preferred by owners of coffee machines for making lattes and cappuccinos – manufacturers typically advise that a high-quality foam can be achieved when using full fat milk.

Competitive Landscape

Health and wellness is a priority for Na Zdorovya by Lustdorf

Lustdorf, which produces drinking milk products under the core brands Selyanske, Burenka and Na Zdorovya, stands out as the leading company in drinking milk products and covers all price tiers with its brands. Taking into account signs of economic recovery and overall rising consumer health-consciousness, Lustdorf prioritises wellness products in its new developments; a good example is Lustdorf’s launch of milk enriched with vitamins, and omega-3 milk.

Pack sizes continue to reduce

After cancellation of the state regulation of unit prices for social products (including milk), manufacturers of drinking milk products increased unit prices only moderately, as many consumers could not afford to purchase expensive products. In fact, most producers reduced the size of their packaging from 1-litre to 950ml or 900ml, whilst maintaining the same unit price.

The success of cocoa-flavoured dairy milk

Cocoa (a hot drink based on milk) is a traditional beverage in Ukraine, which is produced mostly at home, or in kindergartens, schools and hospitals. However, in 2016 Molochny Alliance launched Kakao Na Molotsi (cocoa-flavoured dairy milk drink), which saw great success, as it is tasty either cold or hot.

Prospects

Plain yoghurt will drive value sales

Plain classic yoghurt and Greek and Turkish yoghurt are expected to be popular as light and healthy alternatives to mayonnaise, cream and sauces in the forecast period. Their light texture and low calories will attract consumers.

Flavoured yoghurt to diversify further

Flavoured yoghurt is one of the most popular types of yoghurt in Ukraine. Overall sales of yoghurt grew over the review period, in line with the health trend in Ukraine.

Sour milk products will remain the biggest category

The list of traditional sour milk products (kefir, ryazhanka, zakvaska) was recently expanded by airan, tan and others. This helped to maintain value sales in the category, although volume sales continued to decline.

Competitive Landscape

Creative launches and advertising from Terra Food

In 2017, Terra Food Group launched new drinking yoghurt Bila Liniya Bifidus, containing probiotics, prebiotics and vitamin D3. The company claims that the combination of these components means that the product serves both as a snack and as a thirst-quencher.

New lines of sour milk products

To maintain consumers’ interest in sour milk products, domestic producers began to add products from other cultures, such as tan and airan, over the review period. Also, it became more common to offer sour milk products for digestive health – such as biolact, acydofilin and gerolact.

New kefir from Danone

Danone presented another novelty in sour milk products – three flavours of kefir. Following the health trend, Danone added green herbs, cereals and Borodynsky bread flavours.

Prospects

Plain fromage frais and quark will drive sales

Plain fromage frais and quark is expected to see the strongest value growth at constant 2018 prices in the forecast period. As plain fromage frais and quark is thought to be healthier than flavoured products or those with fillings, sales will grow in line with the growing health-consciousness of Ukrainians.

Condensed milk is expected to fail to see growth over the forecast period

Condensed milk is considered an old-fashioned product, which is not in favour amongst people with modern lifestyles. Its unhealthy image (due to the sugar content) is also a factor negatively affecting sales.

Chilled snacks are a healthy snack for children

Chilled snacks (mostly made from fromage frais) are the choice of parents who want to give their children tasty and healthy snacks instead of biscuits or chocolate. The availability of different flavours and fillings positively affects volume sales.

Competitive Landscape

Snacking development in the premium segment

As hectic lifestyles leave limited room for cooking or going out, the snacking culture is widely expanding towards all price platforms, including the premium segment, in which chilled snacks has room for growth. In 2018, Yuriya launched a new product under its brand Voloshkove Pole.

Terra Food Group launches savoury fromage frais and quark

In 2017, Terra Food Group enriched its range with a completely new and unique type of product for Ukraine – savoury fromage frais and quark and sauce in two different compartments. It comes in two flavours – paprika and green herbs.

Danone will strengthen its position with core products

Groupe Danone (GBO) lost share over the review period. The decline in sales began in 2014, when the boycott of Russian goods started (its flavoured fromage frais was mostly made there), and Danone’s plant operations in Galakton in Kyiv were terminated in 2015.

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