Dairy Products and Alternatives: Half-Year Update H1 2023

March 2023

This half-year review of Euromonitor International’s Dairy Products and Alternatives data provides analysis of the biannual update to Euromonitor’s Forecast Model (FM), alongside the quarterly update to the Macro Model, offering insight into the most important developments since August 2022’s annual update. The strength of the US dollar compared to other denominations and inflationary pressures are the main factors impacting the changing dynamics of the industry.

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This report comes in PPT.

Key Findings

Downgrades seen in USD terms but volumes get upgraded

Dairy products and alternatives’ retail value sales were downgraded in current USD 2022 retail terms mainly due to the strength of the USD against other denominations. The largest downgrades are seen in Japan, the UK and Turkey. Retail volumes were upgraded, however, as drops in retail volume sales were more moderate than the forecasts estimated in the August 2022 baseline data.

US saw largest upgrade as consumer spending proves resilient

The US had the biggest volume upgrade with almost all categories being adjusted, as consumer spending remained resilient despite the skyrocketing prices. Fresh milk in particular was the biggest winner as in-home consumption continued well into 2022. Plant-based dairy volume sales however were downgraded as flexitarian consumers simply moved towards cheaper fresh milk.

Western Europe and China saw volume downgrades as consumers feel the pinch of inflation

Western Europe markets, namely the UK, Italy and Spain, and China led the volume downgrades. Consumer spending for dairy products and alternatives in Western Europe was impacted by a 19% inflationary hike in the EU’s milk prices. On the other hand, the extended lockdown situation in China further aggravated the financial hardships of consumers on the whole, forcing many to reconsider their buying habits.

Company strategies include promotions, and highlighting value through premium and  sustainable positionings

Navigating the inflationary environment includes portfolio rationalisation from companies such as Nestlé as well as investing in strong growing categories such as coffee whiteners. Promotions offer relief for budget-strapped consumers. However, having a premium and sustainable positioning still attracts consumers willing to pay more for products aligned with their values. Clearly communicating the added value will be essential to succeed in these cases.

About this briefing
Key findings
Strength of US dollar causes downgrades of retail value sales in 2022 and forecast
Inflation is the key growth driver of the dairy products and alternatives industry
Inflationary pressures affecting dairy products and alternatives Industry
Industry impact: Rising milk prices in the EU
The many layers of global inflation
US sees highest volume upgrade to narrow down declines in August baseline
Global volume sales are upgraded driven by resilient home consumption in the US
Prolonged COVID-19 lockdowns in 2022 undermine China’s retail volume sales
Western Europe impacted by a 19% inflationary hike in the EU’s milk prices
Consumers substitute butter with margarine amid rising butter cost
Baby food and liquid formulas outperforming powders
Diverse shifts in milk formula in North America and Asia Pacific
Plant-based dairy volume sales see downgrade as consumers opt for cheaper options
Plant-based dairy to benefit from promotions, premium and sustainable positioning
Nestlé and Danone focus on coffee whiteners as a pocket of growth
Key takeaways from half-year update
Global economy edges closer to recession amid sharp slowdown
Global inflation begins gradual downward trend - but remains significantly elevated in 2023
Real GDP annual growth forecasts and revisions from last quarter
About Euromonitor International’s Forecast Model (1)
About Euromonitor International’s Forecast Model (2)
About Euromonitor International’s Macro Model
Data and reporting timeline: Dairy Products and Alternatives


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