Store-based retailing, fueled by the global growth of modern retail, is the key engine driving sales volume in dairy products and alternatives. On the other hand, e-commerce sales are expanding due to younger generations' increased acceptance of the practice and the growth of digitally-driven business models such as subscription services. This study evaluates the performance of different distribution channels in the sale of dairy products and alternatives and focuses on the actions of retailers.
This report comes in PPT.
COVID-19 has reshuffled consumers’ preference to shopping for dairy and alternative products across retail channels, while e-commerce was enjoying healthy momentum prior to the pandemic, with the onset it emerged as a favoured channel as it delivered on consumers’ key concerns. This variation in dynamics has forced changes to trickle through all retail channels.
Grocery retailers are investing heavily in partnerships that enhance in-store footfall, while non-store retailers are exploring business models that sustain continuous purchase such as subscription models. Dairy farms are exploring removing the middlemen across the value chain and accessing consumers directly through their owns apps or partnership with platforms having robust delivery network.
Modern grocery retailers dominate the industry sales for dairy and alternative products, with supermarkets taking the lead in absolute growth over 2016-2021 and posting a CAGR of 3.4%.
Even with consumers regaining free access to brick-and-mortar stores, the convenience provided through e-commerce guaranteed an upward trajectory. E-commerce dominates non-store based dairy and alternative retailing. E-commerce reached a 5% value share of total category distribution in 2021, up from just 2% in 2016.
The value for money attribute has gradually elevated in importance for many consumers as they started to manoeuvre the economic challenges laid upon them by the impact of the pandemic followed by soaring inflation. Modern retailers have capitalised on their knowledge of synergies across the dairy products value chain to launch offerings at a competitive prices.
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