Price distortions caused by regulations on the milk industry continue to encourage sales of pasteurised milk to the informal channel. Given that artisanal cheese production is not regulated, manufacturers are able to pay milk producers prices at levels higher than the ceilings imposed by the government, which in turn are transferred to the final prices paid by consumers.
The price difference between packaged hard cheese and unpackaged hard cheese makes buying the former unattractive for average Venezuelans. Traditionally, the average unit price of packaged cheese was about two and a half times higher than that of unpackaged cheese, but hyperinflation has been closing the gap.
Price segmentation in cheese depends largely on the product category. For instance, in packaged hard cheese, varieties such as Parmesan and pecorino are bought by high- and middle-income consumers, whilst queso de año is consumed by low-income households.
Cheese is led by artisanal varieties of white cheese, which are characterised by relatively lower unit prices, and are ubiquitous in presence. In addition, there is a cultural advantage in that white cheese is the most popular filling for arepas – cornmeal patties – which supports the strong leadership of artisanal white cheese.
Pasteurizadora Táchira CA enjoys a strong position in soft cheese, offering varieties such as white cheese and mozzarella under its brand Paisa. Productos Lacteos Flor de Aragua CA maintains its leadership in hard cheese through the offering of a broad portfolio of products, which includes Manchego, Parmesan and pecorino.
Milk is not subsidised in Venezuela. Fresh milk and powder milk are on the list of price-regulated packaged food products, which implies that manufacturers are not free to set and adjust retail prices without prior government authorisation.
The domestic production of cow’s milk is estimated to be six million litres a day, of which approximately 15% goes to the manufacturing of dairy products other than cheese. Production is inadequate and prices at the farm level are rising fast.
Shortages of drinking milk products are becoming more severe, and product variety has weakened. Also, since the closure of the Tetra Pak manufacturing facility in 2016 – due to overdue payments not being honoured by the Venezuelan government – drinking milk products such as shelf stable milk and flavoured milk drinks have been absent from the category for long periods.
Local manufacturer Convelac ranks first in drinking milk products in 2018, thanks to its leadership in shelf stable milk and third place in powder milk with its brand La Pastoreña. This vertically integrated company processes milk from farms located in western states and has its own packaging facilities.
Industria Láctea Venezolana (Indulac) ranks second in drinking milk products in 2018, advantaged by its government-owned status; it is given high priority in the allocation of powder milk imported by the government for packaging and distribution across the country. Indulac ranks first in fresh milk in 2018 and has an outstanding share in flavoured milk drinks with two strong traditional brands El Chichero (milk and rice) and Riko Malt (milk, malt and cocoa).
Yoghurt has never been under price regulation, so companies have been reallocating scarce inputs such as raw milk to yoghurt production, in a strategic move to improve the profitability eroded by government controls. The low per capita consumption of yoghurt, compared with what is seen in other countries in the region, indicates that the category has room for expansion; nonetheless, shortages of inputs and much weaker household budgets have prevented a stronger performance.
Greek-style yoghurt is underdeveloped in Venezuela. The only available brand of Greek yoghurt, Kyros by Corporación Inlaca CA, entered the category in October 2015 but availability has been erratic as the company faces difficulties in the supply of packaging materials and raw milk.
Yoghurt is consumed as a snack either mid-morning or in the afternoon when purchased in an individual format from 125g to 150g, whilst larger pack sizes such as 900ml and 1.6 litres are most commonly bought for home consumption at breakfast to accompany cereals.
Alimentos Polar (migurt) steadily gained value share over the review period to reach the top position in 2015, where it has stayed. Migurt is the only brand that does not need refrigeration, and this gives Alimentos Polar a competitive advantage.
Conventionally, yoghurt is perceived as a premium product, but Alpina Productos Alimenticios CA – the leader in drinking yoghurt – is offering its Yagú brand as an economy version to encourage Venezuelans to increase their consumption of yoghurt in times of limited purchasing power. Premium options such as pre/probiotic and functional yoghurt brands, eg Alpina Regeneresis (Alpina Productos Alimenticios) and Digess (Alimentos Polar) have had an irregular presence during 2018.
The supply of other dairy products continues to be limited to a few categories. In fact, chilled dairy desserts, plain condensed milk and cream are the only other dairy products sold in the country.
Since none of these products is under price regulation, companies are inclined to transfer scarce inputs such as raw milk to the manufacturing of other dairy. Shortages of packaging materials, eg tin cans for condensed milk, persist and the increased presence observed in 2017 is over in 2018.
In Venezuela, half/single cream is a popular product that can be found in chilled or ambient format and is widely used to prepare cream-based pasta sauces. Chilled sour cream is less popular.
Local company Pasteurizadora Táchira CA leads sales in other dairy thanks to the solid presence of its Paisa brand, which is considered a high-quality product by most Venezuelans and enjoys a strong distribution across the country. Leadership in other dairy is tenuous, however, as chilled cream is a product derived from milk manufacturing and there are countless farmers willing to enter the market.
Industrias Maros CA occupies third place in other dairy in 2018, thanks to Natulac, the leading brand in condensed milk. Overall, the presence of imported brands has diminished dramatically given the obstacles in obtaining import licences and the high price of foreign currency, which causes the category to comprise domestic brands mostly.
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This industry report originates from Passport, our Packaged Food market research database.