Local dairy products have gained importance in former years not only for companies but also for consumers as they are associated with freshness, health and sustainability. This is a challenge for global players, and they have developed different strategies to leverage and combine the benefits of global and local characteristics in their products. While the EU is discussing it, Chile is implementing a new law that obliges all dairy products to state their origin on the front pack with a flag.
Local claims have gained presence in the packaged food industry and there is an especially high fit with dairy products. This is driven by the interest that consumers have in local products. Euromonitor’s Health & Nutrition Survey reveals that the “country of origin” is even more important for consumers than, for example, protein or lactose free claims.
The good news is that products do not have to be 100% local. The key lies in leveraging the combination of global and local strengths. Using a well-known global brand name while communicating the support for local communities is just one of the examples examined in this report.
As consumers are looking for local and regional products, it is not surprising to see that Danone positioned its French yoghurt with local ingredients above the median unit price of its yoghurt assortment and above the median unit price of the flavoured yoghurt category. This is an example of premiumisation of the portfolio with local ingredients as an added-value proposition for consumers.
Still in a niche is single-origin milk, offered by Dutch brand Elke Melk, where consumers can know not only where their milk was produced but also by which cow. Another strategy is a regionally limited network approach with consumers who can become shareholders. This is offered by Regionalwert AG in Germany. However, the main idea of this initiative prohibits growing out of the region.
While the EU is still in discussion, Chile is implementing a new law that obliges all dairy products to state their origin on the front pack with a flag. Companies are expecting a positive impact for local products so this will be a case study to watch in the future to better evaluate the impact that legal regulations can have.
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