Dairy in Uruguay

Prospects

Retail volume sales of cheese continue to decline due to the weak economy

Retail volume sales of cheese continued to decline in 2019, at steeper levels than those witnessed the previous year due to the weak economic context since the second half of 2018. Spreadable processed cheese recorded the lowest decline due to its more affordable prices than unpackaged hard cheese, which, although remaining the most popular type of cheese, registered the steepest decline due to its higher prices.

Spreadable processed cheese is regarded as a healthy option, but still loses sales

Spreadable processed cheese is regarded as a healthy product, and is often used as a substitute for butter and margarine, being spread on bread for either breakfast or a light snack in the evening. However, it was also affected by the slow economic growth in the country and recorded a retail volume decline in 2019.

Cheese appeal firmly established in Uruguay, offering prospects for forecast period growth

Cheese is well established in Uruguay. Although trends are changing in other categories, where consumers are seeking healthier choices, cheese does not seem to be affected by this trend.

Competitive Landscape

Cooperativa Nacional de Productores de Leche maintains lead thanks to quality image

Cooperativa Nacional de Productores de Leche, a domestic player, continued to lead cheese in 2019 with a stable retail value share. Although in the dairy categories Cooperativa Nacional de Productores de Leche is the undisputed leader, cheese is much more competitive, with the leading companies holding similar shares.

Domestic player Pili in financial difficulties

Domestic cheese producers have a long history of exporting to Venezuela. The ongoing and serious financial issues in that country have left many of these producers exposed to a number of problems.

Strong presence of artisanal cheese

There is a strong presence of artisanal cheese producers, with an estimated 800 such companies in Uruguay, mainly concentrated in the Colonia and San José areas. The Ministry of Livestock, Agriculture and Fisheries, the National Milk Institute (Inale), the Artisan Cheese Association and the municipalities of Colonia, San José, Soriano, Flores, Florida and Cannelloni have collaborated for a number of years in helping artisanal producers to improve their working practices and the quality of their cheese.

Prospects

Milk alternatives attracts new launches following the health trend

Milk alternatives registered the strongest retail value and volume growth in 2019, boosted by new companies and brands. The Ades brand was relaunched by The Coca-Cola Company in South America featuring a new visual identity and the introduction of seeds in its ingredients and in the form of almond milk.

Fat-free and semi skimmed shelf stable milk to continue to outperform full fat

Fat-free and semi skimmed shelf stable milk both outperformed the full fat format in terms of retail volume growth in 2019 and are expected to continue to do so over the forecast period. The health and wellness trend is expected to boost demand for these formats.

Shelf stable milk substituted for fresh milk as price gap drops

Although fresh milk was by far the most popular format in 2019 and is expected to remain so over the forecast period, shelf stable milk is achieving stronger retail volume growth. Shelf stable formats have the obvious advantage of not requiring refrigeration in retail outlets and at home, but have traditionally been set at higher prices than fresh milk.

Competitive Landscape

Cooperativa Nacional de Productores de Leche has near monopoly, thanks to limited competition and long tradition

Cooperativa Nacional de Productores de Leche almost monopolises sales of drinking milk products in Uruguay. Although the company focuses on cow’s milk, it also has a strong presence in other categories such as flavoured milk drinks.

Parmalat Uruguay successful with Brazilian imports in HDPE bottles

Parmalat Uruguay began to import shelf stable milk from Brazil in 2018 in HDPE bottles. There are tax advantages to HPPE packaging over liquid carton and flexible plastic packaging in Uruguay.

Small companies appear in milk alternatives

Given the dominant position of Cooperativa Nacional de Productores de Leche in cow’s milk, it is difficult for small companies to compete there. However sales of milk alternatives are growing and this represents a new niche for companies, especially as the leading company has no presence in these products.

Prospects

Plain yoghurt performs well, driven by new launches and the health trend

Plain yoghurt was the only category in yoghurt and sour milk products to record retail volume growth in 2019, driven by new product launches and the health and wellness trend. Cooperativa Nacional de Productores de Leche launched a new version of plain yoghurt under its Yogur Descremado Natural brand which is fat and cholesterol free, and with no sugar or gluten.

Planned health warning labels likely to include yoghurt

A new health warning labelling system has been under discussion in Uruguay since the end of 2016. The warning labels will take the form of black octagons warning of excessive fat, saturated fat, salt and sugar levels, which must be displayed on the front of packaging when certain defined levels are exceeded.

Sour milk products not popular in Uruguay and un likely to make an impact

Sour milk products have no tradition in Uruguay and are not at all popular. There are no brands available with any significant share as consumption is not an extended habit in the country.

Competitive Landscape

Cooperativa Nacional de Productores de Leche benefits from advertising and innovation

Domestic companies, led by Cooperativa Nacional de Productores de Leche, characterised yoghurt in 2019. The leading company remained the undisputed leader, and continued to grow its retail value share over the year.

Claldy refreshes its packaging and launches new flavours

Claldy, one of the leading companies in yoghurt, refreshed the packaging of its yoghurt lines over the review period to provide a more modern look. In 2018, the company changed the formulas of some of its brands, including Bio Yogur, adding more fruit, whilst also launching a natural flavour.

Groupe Danone expands its domestic production plant in order to export and meet international standards

Groupe Danone invested in expanding the production capacity of its factory located in Farolur in order to improve its capacity for domestic sales and begin exports to neighbouring countries, including Argentina, after the election of a more business-friendly government in that country. The investment is also designed to ensure the domestic production plant meets the rigorous international standards set by Groupe Danone, which it previously had been unable to entirely achieve.

Prospects

Flavoured condensed milk remains the most popular other dessert due to dulce de leche

Dulce de leche is a traditional flavoured condensed milk in the country, which is similar to caramel in other countries. The product remains one of the preferred options among consumers in many formats, including in a variety of cooking preparations, such as for cake and alfajores, while some consumers choose to eat it on its own with a spoon.

Chilled dairy desserts highly popular, appealing to adults and children alike

Chilled dairy desserts is the preferred format of dairy dessert in Uruguay. A wide range of chilled dairy desserts is available in the country, including flanes, a caramel flavoured dessert such as Danette by Fort-Masis, to pudding, a dessert made from condensed milk.

Coffee whiteners on a downward trend due to lack of consumer trust

Coffee whiteners registered a steep retail volume decline in 2018, and, albeit to a much lower degree, sales again fell in 2019. Coffee whiteners are generally imported and suffered from the devaluation of the local currency in 2018, making them more expensive.

Competitive Landscape

Cooperativa Nacional de Productores de Leche leads through innovation

Cooperativa Nacional de Productores de Leche continued to lead other dairy in 2019. The company led condensed milk and cream and ranked second in chilled and shelf stable desserts.

Fort-Masis continues to increase share thanks to new launch and price promotions

Fort-Masis extended its share in other dairy to strengthen its second place in 2019. The company offers a wide variety of chilled dessert products, including lower sugar varieties for adults under its Ser brand, and versions including confectionery and which are packaged to attract children, such as Serenito.

Large number of brands present but smaller players struggle to match leaders’ distribution reach

There are a wide variety of brands present in other dairy in Uruguay, although the vast majority hold relatively insignificant retail value shares in comparison to the leading Conaprole brand. Smaller players find it difficult to compete with the logistics capabilities and wide distribution networks of the leaders.

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