Drinking Milk Products in Eastern Europe

February 2019

Over 2013-2018 drinking milk products in Eastern Europe saw positive value growth, yet development was restrained by the complicated economic and political situation in Russia and Ukraine, as well as imbalance caused by the abolition of milk quotas in the EU. Milk alternatives appear to have great potential in the region, as cows’ milk stagnates. Over the forecast period the category is expected to see moderate value growth, constrained by the maturity of the cows’ milk category.

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Key Findings

Drinking milk products has not yet recovered from the strong decline of 2015

While drinking milk products in Eastern Europe developed with a value CAGR above the global average over 2013-2018, the category has not yet recovered from the sharp decrease seen in 2015. Economic and political instability in Russia and Ukraine, as well as the negative consequences of the abolition of EU milk quotas for Croatia and Czech Republic, disrupted drinking milk products’ development in the region.

Domestic companies successfully compete with multinational giants

Groupe Danone and PepsiCo led sales of drinking milk products in Eastern Europe over the review period. However, seven of the 10 leading manufacturers were primarily targeting their domestic markets, and imposed healthy competition by offering more affordable brands of good quality.

Modern retail dominates sales of drinking milk products

The general development of modern retail in the region led to its dominance in drinking milk distribution. Sales of drinking milk products through modern retail are bolstered by the abundant refrigeration facilities, widespread network and private label offering.

Opportunities lie within the milk alternatives category

While cows’ milk is seeing stagnation and reaching saturation, consumers are finding milk alternatives as an interesting substitute. Positioned as healthy, lactose-free and trendy, milk alternatives are expected to grow out of the current niche perception to become more widespread in Eastern Europe.

Goat milk has high potential in Eastern Europe

While it has not reached the attention level of milk alternatives, goat milk saw sound volume growth in the region in recent years. Similarly, goat milk provides an alternative to the mature cows’ milk category, taps into the health and wellness trend, and is shown to be attractive to local manufacturers.

Introduction

Scope
Key findings

Regional Overview

Drinking milk products see moderate retail value growth over 2013-2018
Hectic development in recent years set to change to restrained growth
Russia generates over half of all sales value in the region
Cows’ milk remains drinking milk products’ main pillar
Milk alternatives and goat milk drive category development
Sales in Ukraine plummet, while Russia sees sound growth
Belarussian import supports domestic production of milk in Russia
Modern retail dominates distribution
Consumers seek affordability and quality

Leading Companies and Brands

Category avoids excessive concentration
The two largest players retain leadership
Danone and PepsiCo rely heavily on sales in Russia
Leading brands remain on top

Forecast Projections

Drinking milk products to see value growth in most countries of the region
Opportunities lie outside cows’ milk
Declining population restrains category’s development
Population decline offset by economic growth and restrained price growth

Country Snapshots

Belarus: market context
Belarus: competitive and retail landscape
Bosnia-Herzegovina: market context
Bosnia-Herzegovina: competitive and retail landscape
Bulgaria: market context
Bulgaria: competitive and retail landscape
Croatia: market context
Croatia: competitive and retail landscape
Czech Republic: market context
Czech Republic: competitive and retail landscape
Estonia: market context
Estonia: competitive and retail landscape
Hungary: market context
Hungary: competitive and retail landscape
Georgia: market context
Georgia: competitive and retail landscape
Latvia: market context
Latvia: competitive and retail landscape
Lithuania: market context
Lithuania: competitive and retail landscape
Macedonia: market context
Macedonia: competitive and retail landscape
Poland: market context
Poland: competitive and retail landscape
Romania: market context
Romania: competitive and retail landscape
Russia: market context
Russia: competitive and retail landscape
Serbia: market context
Serbia: competitive and retail landscape
Slovakia: market context
Slovakia: competitive and retail landscape
Slovenia: market context
Slovenia: competitive and retail landscape
Ukraine: market context
Ukraine: competitive and retail landscape
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