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Sector Trend Analysis – Dairy trends in Western Europe

June 2018

Executive summary

  • In 2017, Western Europe was the second-largest market in the world for dairy, worth US$ 113.6 billion. Dairy consumption in Western Europe is mature in comparison to other regions in the world, with high per capita consumption.
  • Amongst the top five markets for dairy in Western Europe, only Germany recorded a positive compound annual growth rate from 2013 to 2017. Italy and the U.K. led the overall decline in dairy in the region.
  • Despite an overall decline in dairy retail sales in Western Europe, a few categories saw strong performance, such as milk alternatives which registered a CAGR of 12% over 2013-2017. This is aligned with the rising trend towards “free from lactose” and “free from dairy” products. Features such as organic, lactose-free or suitability for snacking, are expected to continue outperforming more traditional products.
  • Private label is a central component of the dairy market in Western Europe, with an overall share of 29.5% in 2017, reaching as much as 40% retail sales in certain countries, such as the U.K.

Contents

Introduction

Western Europe is home to 500 million people and it is known for its high standards of living, with noticeably high income levels. It is the wealthiest region on the European continent, with a per capita Gross Domestic Product (GDP) that is more than four times as high as in Eastern Europe. The region's economy is closely linked to the performance of its key national markets – Germany, the United Kingdom (U.K.), France, Italy and Spain.

GDP per capita (US$, 2016)
Eastern Europe Western Europe Germany U.K. France Italy Spain
8,738.90 34,376.20 42,334.30 40,481.00 38,162.20 30,642.00 26,642.00

Western Europe was until recently the biggest consumer region of dairy products, but growth has been stagnant between 2013 and 2017. In 2016, for the first time Asia-Pacific recorded US$11 billion more in dairy retail sales than Western Europe. The Asian-Pacific region is also expected to keep growing faster, at a forecast compound annual growth rate (CAGR) of 8% from 2018 to 2022, while Western Europe may grow more modestly at 2% during that same period. Western Europe’s population is ageing rapidly, which may create challenges for dairy companies in the future.

World’s consumption of dairy products, per region, in 2017 (% breakdown)
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Region %
Asia Pacific 26%
Western Europe 24%
North America 16%
Latin America 13%
Middle East and Africa 10%
Eastern Europe 9%
Australasia 2%

Source: Euromonitor International, 2018

European countries are also amongst the top importers of dairy. In 2016, the European Union (EU) imported US$ 32.1 billion worth of dairy. During that year, a share of US$ 2.8 million was reportedly imported from Canada, down from US$ 11.7 million in 2013, showing a declining trend at a -30% CAGR. Cheese and curd accounted for 98% of the dairy products that the EU imported from Canada, while a share of 96% of the total dairy supplied by Canada to the EU went to the U.K.

Top importers of dairy products (2016) and CAGR* (2013-2016)
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Country US$ CAGR* 2013-2017
Germany 6,143,235,515.00 -4%
Italy 3,507,384,049.00 -9%
China 3,371,462,839.00 -10%
France 3,245,736,087.00 -6%
U.K. 3,166,567,158.00 -6%
Belgium 3,129,621,420.00 -6%
Netherlands 2,888,115,577.00 -4%
U.S.A. 1,966,013,397.00 3%
Russia 1,906,597,076.00 -18%
Hong Kong 1,807,875,236.00 4%
Saudi Arabia 1,742,302,264.00 -1%
Spain 1,622,022,623.00 -9%

Source: Global Trade Tracker, 2018

*CAGR: Compound Annual Growth Rate

HS Codes used: 0401 to 0406

In 2017, retail sales of dairy products were valued at US$ 113.6 billion in Western Europe. This figure represents almost three times the size of the dairy market in Eastern Europe (US$ 40.5 billion).

Thus, this report focuses on Western Europe, and more specifically on the top five markets for dairy products retail sales, namely Germany, France, the U.K., Italy and Spain. These countries also rank amongst the 13 major consumers of dairy in the world. Moreover, retail sales for these five countries together made up 67% of the total dairy products consumed in 2017 in Western Europe.

Top five consumers of dairy products in Western Europe – Retail sales (2017) and CAGR* (2013-2017)
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Country US$ Billions *CAGR 2013-2017
Germany 26.6 1.2%
France 19.9 -0.1%
U.K 14.4 -0.6%
Italy 12.2 -2.7%
Spain 9.0 -0.4%

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

Dairy consumption in Western Europe

Major differences in consumption patterns for dairy products can be noticed in Western Europe. Variations reflect the economic situation, culinary practices, and eating habits of different countries. Overall, the region is characterised by a strong dairy culture and high per capita consumption. Production in Western Europe is strong and benchmarked throughout the world. Cheese from Italy and France, for example, is widely recognised and exported around the world (Euromonitor International, 2017).

The market has been in decline over the past years. However, according to Euromonitor International (2017) there is still room for growth, due to shifts between categories, and following trends such as premiumisation. Dairy products are a natural source of vitamin B and calcium, which could help in positioning products. Well-packaged dairy is also starting to compete with snacking products, responding to the consumers quest for convenience.

Four out of the top five dairy markets in Western Europe saw a slowdown in consumption in 2017. Only Germany registered growth, especially in cheese and other dairy, which can be partly explained by the favourable economic stability. One of the key trends causing the general decline in dairy retail sales is related to changes in consumer perceptions and diets, many of whom are adopting more dairy-free oriented diets, whether for motives related to intolerance or allergy, or to enhance the digestion process. Many consumers in Western Europe are decreasing their dairy consumption overall. Even in Italy, well known for its cheese production, consumer attitudes have changed towards dairy. Another important factor is the rise in milk prices which can impact the retail price of products, pushing local consumers to search for more affordable brands (Euromonitor International, 2017).

Historical naturally healthy category - market retail sales in Japan in US$ millions - fixed 2017 exchange rates
Country 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F 2021F
France 312.6 312.8 314.0 311.7 308.3 306.4 308.8 312.3 317.0 322.5
Germany 236.6 244.8 247.9 246.4 242.0 250.0 257.2 264.5 271.3 277.9
United Kingdom 230.3 230.6 227.6 222.4 218.3 218.4 224.3 228.3 231.7 235.2
Italy 236.9 227.7 217.1 209.8 204.7 200.8 199.6 200.8 202.8 205.6
Spain 198.3 196.4 197.3 198.4 196.1 194.1 196.1 199.6 204.3 210.0
Western Europe 230.4 231.4 231.1 228.9 226.4 227.1 230.4 234.2 238.4 242.9

Source: Euromonitor International, 2018.

F: Forecast.

Cheese retail volume in main European markets (‘000 tonnes)
Country 2012 2013 2014 2015 2016 2017
France 865.0 881.8 885.7 883.7 890.0 894.9
Germany 788.1 793.4 795.1 799.7 806.2 819.2
Italy 619.2 604.1 586.4 573.1 558.2 550.6
United Kingdom 367.3 371.8 366.9 380.5 387.6 392.4
Spain 327.3 327.1 319.6 313.8 319.8 328.0
Western Europe 4,166.6 4,186.4 4,178.8 4,192.5 4,218.2 4,259.4

Source: Euromonitor International, 2018.

Butter and margarine retail volume in main European markets (‘000 tonnes)
Country 2012 2013 2014 2015 2016 2017
Germany 616.2 606.8 614.6 609.8 610.5 599.9
United Kingdom 435.7 425.6 413.0 395.6 379.2 366.7
France 284.9 284.7 283.6 282.0 273.7 264.4
Italy 78.2 78.5 77.8 76.6 75.9 75.3
Spain 43.8 43.6 43.2 45.0 44.9 43.2
Western Europe 2,285.7 2,261.7 2,246.6 2,217.6 2,191.4 2,151.2

Source: Euromonitor International, 2018.

Drinking milk retail volume in main European markets – Ready-to-Drink volume (million litres)
Country 2012 2013 2014 2015 2016 2017
United Kingdom 5,602.8 5,605.9 5,752.2 5,858.3 5,907.4 5,927.3
Germany 5,031.7 5,052.1 5,080.0 5,035.3 4,986.4 4,946.0
Spain 4,559.5 4,546.3 4,417.2 4,357.7 4,225.6 4,105.6
France 3,666.0 3,620.1 3,551.0 3,482.4 3,433.0 3,406.8
Italy 3,436.3 3,352.3 3,242.8 3,093.1 2,977.2 2,880.3
Western Europe 30,443.2 30,211.2 29,999.0 29,667.8 29,289.7 28,988.5

Source: Euromonitor International, 2018.

Sub-sector analysis

In total, 4,807 dairy products were launched in 2017 in the five main markets in Western Europe. Lidl was the leading company for dairy product launches in Germany, Yoplait in France, Asda in the U.K., Lidl in Italy and Danone in Spain. The five dairy sub-sectors under analysis in this section are butter and margarine, cheese, drinking milk, yogurt and sour milk, and other dairy.

Number of dairy products launches in main European markets, 2017
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Market Launches
Germany 1,443
France 1,095
UK 914
Italy 711
Spain 644

Source: Mintel, 2018

Butter and margarine

Butter and margarine is a US$ 40 billion market in the world, worth US$ 11 billion in Western Europe. This category includes butter and other animal-based cooking fats such as lard, margarine and spreads (fatty butter substitutes consisting of a blend of vegetable oils).

Top butter and margarine markets in the world, 2017 Retail sales – Fixed 2017 exchange rates
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Country US$ Billions
USA 5.0
Germany 2.9
India 2.2
Iran 2.1
Brazil 2.0
Russia 1.9
United Kingdom 1.7
France 1.7
Poland 1.3
Canada 1.0

Source: Euromonitor International, 2018

This subsector has been declining from 2013 to 2017 at a negative 1% CAGR. Compared to the other top markets, butter and margarine are significantly less popular in Italy and Spain, which traditionally use olive oil. For instance, many Spaniards preferring to use olive oil on their toast or when cooking instead of butter and margarine. Consumers also tend to be confused with regards to vegetable fat and margarine, with many concerned about the risks associated with margarine containing trans-fats.

Historic retail value sales of butter and margarine in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2013 2014 2015 2016 2017 CAGR* 2013-2017
Germany 2,996.9 2,884.5 2,647.4 2,749.4 2,857.7 -1%
United Kingdom 1,792.7 1,766.9 1,718.7 1,661.1 1,675.5 -2%
France 1,726.4 1,747.0 1,748.7 1,710.2 1,667.3 -1%
Italy 571.1 591.3 576.5 567.2 560.2 0%
Spain 217.1 222.3 222.3 217.4 208.6 -1%
Western Europe 11,263.8 11,206.1 10,882.2 10,904.3 11,017.7 -1%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

Forecast retail value sales of butter and margarine in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2018F 2019F 2020F 2021F 2022F CAGR* 2018-2022F
Germany 2,915.6 2,989.2 3,063.6 3,134.6 3,205.7 2%
United Kingdom 1,721.8 1,759.2 1,793.2 1,826.1 1,854.6 2%
France 1,642.8 1,632.1 1,631.9 1,639.0 1,654.2 0%
Italy 559.6 569.4 580.7 593.5 607.2 2%
Spain 202.6 197.4 193.8 191.0 188.5 -2%
Western Europe 11,166.0 11,356.5 11,571.3 11,799.8 12,041.3 2%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

F: Forecast.

There were 280 butter and margarine products launched in 2017 in the five main European markets from January 2017 to December 2017. In all countries, there is a clear preference for butter, except in the U.K. where margarine and other blends are favourites. Vegetarian claims are also strongly associated to new product launches in this sub-sector in the U.K., which may respond to the taste of British consumers.

Some of the new products launched in 2017 in this sub-sector were for example butter with sea salt crystals, brandy butter, butter with truffles, fine hay milk butter oil, and vegan herb butter.

Number of launches of butter and margarine products in main European markets in 2017
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Country Launches
Germany 90
UK 74
France 72
Italy 23
Spain 21

Source: Mintel, 2018

Butter and margarine product launches in main European markets in 2017, by sub-category (% breakdown)
Sub-category Germany U.K. France Italy Spain
Butter 54.4% 39.1% 75.0% 69.5% 66.6%
Margarine and other blends 41.1% 59.4% 25.0% 30.4% 33.3%
Shortening and lard 4.4% 1.3% 0.0% 0.0% 0.0%

Source: Mintel, 2018.

Top claims associated with butter and margarine product launches in main European markets in 2017, % of total butter and margarine product launches
Claim Germany UK France Italy Spain
Vegetarian 13% 76% 0% 0% 5%
No additives/preservatives 19% 27% 11% 9% 19%
Ethical - environmentally-friendly product 21% 30% 10% 4% 5%
Low/no/reduced allergen 14% 18% 8% 13% 33%
Organic 17% 9% 17% 13% 14%
Ethical - environmentally-friendly package 1% 23% 19% 9% 14%
No animal ingredients 12% 14% 7% 9% 0%
Vegan 12% 14% 7% 9% 0%
Cardiovascular (functional) 1% 14% 11% 4% 24%
Low/no/reduced lactose 11% 7% 8% 9% 5%
Total number of butter and margarine product launches 90 74 72 23 21

Source: Mintel, 2018.

Number of butter and margarine product launches in 2017, by import status*
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Country Not imported Imported
Germany 6 3
UK 34 14
France 27 2
Italy 2 3
Spain 2 3

*Note: Not all launches are assessed on this criteria.

Number of butter and margarine products launched in 2017, by company
Country Top three companies Number of products
Germany Unilever 18
Ornua 7
Arla Foods 5
France Unilever 8
Lactalis Beurres & Crèmes - LB&C 8
Elle & Vire 6
Italy Vallè 3
Eurospin 3
U.K. Unilever 14
Arla Foods 11
Asda 10
Spain Unilever 3
Rodrigonsa 3
Lactalis Beurres & Crèmes - LB&C | Corporación Alimentaria Peñasanta | Carrefour 2 each

Source: Mintel, 2018.

Overall, Unilever has launched the highest number of products in 2017 in four out of the five main markets under review, with the exception of Italy, where it has not launched any.

Cheese

This sub-sector is the aggregation of processed and unprocessed cheese (hard cheese, soft cheese, spreadable, unspreadable, etc.).

Western Europe is the biggest market in the world for cheese, worth US$ 44.8 billion. From 2013 to 2017, retail sales have been growing at a CAGR of 1% in the region, and this value is expected to keep increasing at a CAGR of 3% from 2018 to 2022. According to Euromonitor International (2017), this growth has been sustained by lowering costs and because Europeans are now seeing cheese increasingly as a potential snack.

In Italy only, sales of cheese have fallen, reflecting again the consumer shift to non-dairy. Cheese is sometimes perceived as being less healthy, due to its high fat content, and experienced a decline of - 3% CAGR over 2013-2017.

Top cheese markets in the world, 2017 Retail sales value (US$ Billions) – Fixed 2017 exchange rates
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Country US$ Billions
USA 23.4
France 9.4
Germany 7.7
Russia 7.1
Brazil 6.5
Italy 6.5
Mexico 4.7
United Kingdom 4.1
Argentina 3.8
Japan 3.6
Canada 3.1
Spain 2.7

Source: Euromonitor International, 2018

Historic retail value sales of cheese in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2013 2014 2015 2016 2017 CAGR* 2013-2017
France 9,237.9 9,356.2 9,419.8 9,418.4 9,486.1 1%
Germany 7,114.1 7,247.4 7,429.6 7,436.1 7,716.0 2%
Italy 7,356.1 7,087.9 6,846.8 6,652.1 6,499.0 -3%
United Kingdom 4,136.2 4,151.9 4,090.0 4,059.7 4,138.1 0%
Spain 2,494.7 2,535.0 2,551.5 2,601.7 2,665.5 2%
Western Europe 43,570.4 43,933.6 44,148.6 44,185.9 44,771.2 1%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

Forecast retail value sales of cheese in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2018F 2019F 2020F 2021F 2022F CAGR* 2018-2022F
France 9,672.8 9,884.3 10,129.6 10,399.9 10,694.7 3%
Germany 7,999.3 8,271.5 8,525.2 8,771.0 9,011.3 3%
Italy 6,441.9 6,484.4 6,547.8 6,630.3 6,721.7 1%
United Kingdom 4,334.2 4,492.6 4,636.1 4,778.1 4,915.0 3%
Spain 2,762.8 2,861.2 2,956.2 3,048.1 3,131.7 3%
Western Europe 45,827.2 46,990.3 48,186.7 49,438.0 50,718.2 3%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

F: Forecast.

There were 2,173 cheese products launched in 2017 in the main European markets between January 2017 and December 2017. The country/region of origin of cheese is an essential part of product marketing. According to Mintel (2018), France was the only country that had more product launches without an import status in 2017. By contrast, Spaniards tend to prefer imported cheese, due to the wide variety and high quality of products coming from across Europe – especially France, Italy, the Netherlands, Germany and Switzerland.

Number of launches of cheese products in main European markets in 2017
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Country Launches
Germany 633
France 598
Italy 385
UK 351
Spain 206

Source: Mintel, 2018

Cheese product launches in main European markets in 2017, by sub-category (% breakdown)
Sub-category Germany France Italy U.K. Spain
Soft cheese and semi-soft cheese 21.8% 33.2% 22.0% 13.9% 8.9%
Hard cheese and semi-hard cheese 32.1% 24.4% 12.9% 20.8% 9.5%
Processed cheese 36.0% 22.4% 15.2% 14.8% 11.4%
Fresh cheese and cream cheese 35.9% 24.4% 22.8% 7.7% 8.9%

Source: Mintel, 2018.

Top claims associated with cheese products launches in main European markets in 2017, % of total cheese product launches
Claim Germany UK France Italy Spain
Low/no/reduced Allergen 37% 5% 22% 8% 33%
Vegetarian 12% 8% 3% 67% 7%
Low/no/reduced Lactose 35% 4% 11% 3% 10%
Convenient Packaging 15% 11% 7% 17% 14%
No additives/preservatives 10% 4% 21% 17% 6%
Organic 16% 12% 7% 4% 8%
Gluten free 8% 3% 11% 6% 27%
Ethical - environmentally-friendly package 1% 15% 2% 11% 4%
Low/no/reduced fat 9% 2% 4% 16% 3%
Premium 4% 2% 4% 11% 5%
Total number of cheese product launches 633 598 385 351 206

Source: Mintel, 2018.

New cheese product launches in 2017, by import status*
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Country Imported Not imported
Germany 138 63
France 88 150
Italy 49 39
UK 140 127
Spain 38 6

Source: Mintel, 2018.

*Note: Not all launches are assessed on this criteria.

Number of cheese products launched in 2017, by company
Country Top three companies Number of products
Germany Lidl 107
Aldi Nord 39
Aldi Süd 35
France Fromageries Bel 20
Lidl 18
Scamark 18
Italy Lidl 40
Granarolo 13
Mondelez | Eurospin 11 each
U.K. Asda 43
Waitrose 39
Tesco 26
 Spain Scamark 11
El Corte Inglés 11
Grupo IFA 10

Source: Mintel, 2018.

Drinking milk products

This is the aggregation of fresh/pasteurised milk, long-life/shelf stable milk, goat milk, flavoured milk drinks, non-dairy milk alternatives (soy drinks and other alternatives explicitly positioned as milk substitutes), powder milk and flavoured powder milk drinks.

Despite recording the poorest performance amongst all sub-sectors in Western Europe with a negative 1% CAGR from 2013 to 2017, drinking milk should experience moderate growth up to 2022, except in Italy. A few categories still recorded strong historical growth figures, especially milk alternatives. This is aligned with the rising trend towards dairy alternatives and free-from lactose products as a growing number of consumers consider these products healthier. In Western Europe, milk alternatives registered a CAGR of 12% over 2013-2017 (20% in Italy, 15% in France, 13% in the U.K., 8% in Spain and 4% in Germany). The most common varieties include soy, coconut, hazelnut, almond and rice milk.

Top drinking milk markets in the world, 2017 Retail sales (US$ Billions) – Fixed 2017 exchange rates
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Country Retail sales
China 36.0
USA 17.7
India 12.3
Brazil 9.7
Japan 6.4
Russia 4.4
United Kingdom 4.2
Mexico 3.6
Spain 3.4
Australia 3.4
Canada 2.9
Germany 2.8

Source: Source: Euromonitor International, 2018.

Historic retail value sales of drinking milk products in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2013 2014 2015 2016 2017 CAGR* 2013-2017
United Kingdom 4,467.0 4,430.9 4,288.3 4,209.2 4,167.3 -2%
Spain 3,430.5 3,472.1 3,535.6 3,441.3 3,381.4 0%
Germany 2,886.5 2,993.6 2,906.7 2,737.3 2,828.3 -1%
Italy 2,924.8 2,859.7 2,683.5 2,555.3 2,461.3 -4%
France 2,368.4 2,357.0 2,351.1 2,381.1 2,428.2 1%
Western Europe 23,600.3 23,699.6 23,225.1 22,760.3 22,742.5 -1%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

Forecast retail value sales of drinking milk products in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2018F 2019F 2020F 2021F 2022F CAGR* 2018-2022F
United Kingdom 4,249.4 4,312.1 4,368.7 4,439.0 4,529.7 2%
Spain 3,400.2 3,460.1 3,560.3 3,698.3 3,872.4 3%
Germany 2,894.1 2,956.2 3,011.5 3,064.9 3,114.1 2%
Italy 2,401.2 2,360.5 2,337.7 2,328.3 2,326.1 -1%
France 2,512.1 2,598.3 2,686.0 2,775.6 2,873.2 3%
Western Europe 23,044.6 23,420.0 23,863.2 24,391.3 25,002.5 2%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

F: Forecast.

Number of launches of drinking milk products in main European markets in 2017
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Country Launches
Germany 192
Spain 171
France 132
UK 118
Italy 85

Source: Mintel, 2018.

Cheese retail volume in main European markets (‘000 tonnes)
Sub-Category Germany Spain France U.K. Italy
White milk 34.9% 38.0% 44.7% 18.6% 37.6%
Flavoured milk 27.1% 19.9% 16.7% 33.9% 7.1%
Plant-based drinks (alternatives to dairy) 38.0% 42.1% 38.6% 47.5% 55.3%

Source: Mintel, 2018.

Top claims associated with drinking milk product launches in main European markets in 2017, % of total drinking milk product launches
Claim Germany Spain France UK Italy
Ethical - environmentally-friendly package 58% 71% 88% 65% 76%
Low/no/reduced allergen 40% 71% 39% 64% 61%
Low/no/reduced fat 31% 35% 46% 25% 44%
Low/no/reduced lactose 35% 46% 25% 24% 42%
Gluten free 21% 48% 19% 44% 51%
Organic 43% 20% 37% 14% 35%
Ethical - environmentally-friendly product 30% 25% 24% 14% 15%
No animal ingredients 35% 13% 15% 28% 21%
Vegan 35% 12% 15% 29% 21%
Low/no/reduced sugar 17% 13% 20% 35% 29%
Total number of drinking milk product launches 192 171 132 118 85

Source: Mintel, 2018.

New drinking milk product launches in 2017, by import status*
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Country Not imported Imported
Germany 24 15
Spain 14 12
France 42 19
UK 28 25
Italy 17 3

Source: Mintel, 2018.

*Note: Not all launches are assessed on this criteria.

Number of drinking milk products launched in 2017, by company
Country Top three companies Number of products
Germany Alpro 13
Aldi Süd 10
Lidl 9
Spain Calidad Pascual 16
Lactalis Puleva 13
Corporación Alimentaria Peñasanta 11
France Candia 20
Lactel 17
Bjorg 6
U.K. Müller Wiseman Dairies 14
Morrisons 12
Asda 8
Italy Granarolo 9
Parmalat 6
Unigrà 5

Source: Mintel, 2018.

Yogurt and sour milk

Around US$ 17.8 billion worth of yogurt and sour milk was consumed in Western Europe in 2017, down from US$ 18.1 billion in 2013. This decline in retail sales is not expected to continue, however, as this sub-sector is expected to grow at a compound annual growth rate of 2% from 2018 to 2022.

Yogurt is the aggregation of spoonable and drinking yoghurt (soy-based yoghurts are not included in this category), and sour milk, which includes kefir, lassi as well as buttermilk and whey drinks. While kefir is traditionally significant in Eastern Europe, it is still much less popular in Western Europe.

Top yogurt and sour milk markets in the world, 2017 Retail sales (US$ Billions) – Fixed 2017 exchange rates
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Country Retail sales
China 17.9
USA 9.1
Japan 9.0
Brazil 4.1
Russia 3.8
Germany 2.9
France 2.7
United Kingdom 2.3
India 2.3
Italy 1.9
Spain 1.8

Source: Euromonitor International, 2018.

Retail sales in this sub-sector declined in France, Italy and Spain, and remained stagnant in the U.K.. Yogurt and sour milk only recorded some growth in Germany. Despite increasing health concerns with regard to sugar or dairy products in general, many Germans eat yogurt on a daily basis at breakfast time and are open to trying new products. According to Euromonitor International (2017), brand loyalty in yogurt tends to be low, with consumers willing to try new varieties.

It is forecast that products such as sour milk drinks, plain yogurt, lactose-free and soy-based yogurt will benefit from health-related concerns and new trends such as the emergence of snacking habits. Other emerging niche categories like sheep and goat milk based yogurts are also starting to attract consumers interested in natural and authentic products, as is the case in France.

Historic retail value sales of yogurt and sour milk in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2013 2014 2015 2016 2017 CAGR* 2013-2017
Germany 2,813.6 2,866.7 2,907.5 2,859.0 2,904.4 1%
France 2,964.8 2,960.3 2,876.8 2,806.6 2,746.0 -2%
United Kingdom 2,359.8 2,341.5 2,340.2 2,312.8 2,338.6 0%
Italy 1,965.8 1,884.1 1,876.0 1,869.3 1,866.9 -1%
Spain 2,000.0 1,960.6 1,922.3 1,855.7 1,778.2 -3%
Western Europe 18,190.3 18,121.8 18,016.8 17,816.8 17,798.0 -1%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

Forecast retail value sales of yogurt and sour milk in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2018F 2019 2020 2021 2022 CAGR* 2018-2022F
Germany 2,965.3 3,032.1 3,097.0 3,162.0 3,237.9 2%
France 2,729.8 2,726.2 2,734.0 2,749.7 2,771.4 0%
United Kingdom 2,408.9 2,462.1 2,511.3 2,558.3 2,604.5 2%
Italy 1,894.7 1,935.4 1,983.4 2,040.2 2,101.9 3%
Spain 1,744.8 1,725.9 1,717.8 1,717.0 1,719.7 0%
Western Europe 18,018.9 18,289.6 18,590.2 18,926.3 19,306.0 2%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

F: Forecast.

There were 1,300 yogurt and sour milk products launched in the five main European markets between January 2017 and December 2017.

Number of launches of yogurt and sour milk products in main European markets in 2017
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Country Launches
Germany 391
UK 301
France 221
Spain 213
Italy 174

Source: Mintel, 2018.

According to Mintel (2018), only five products launched in 2017 in the five top dairy markets belonged to the liquid dairy category, which includes whey-based drinks and eggnog, and these launches all took place in Germany. In Italy and Spain, most of the new products launched in 2017 had an import status.

Yogurt and sour milk product launches in main European markets in 2017, by sub-category (% breakdown)
Sub-category Germany U.K. France Spain Italy
Spoonable yogurt 76.2% 70.4% 60.6% 68.5% 77.0%
Drinking yogurt and liquid cultured milk (sour milk) 13.8% 20.6% 28.0% 22.0% 17.2%
Plant-based spoonable yogurts (dairy alternatives) 8.7% 8.9% 11.3% 9.3% 5.7%
Liquid dairy – other 1.2% 0.0% 0.0% 0.0% 0.0%

Source: Mintel, 2018.

Top claims associated with yogurt and sour milk product launched in 2017 in main European markets, % of total yogurt and sour milk product launches
Claim Germany Spain France UK Italy
Low/no/reduced allergen 16% 33% 26% 56% 51%
Ethical - environmentally-friendly package 9% 41% 71% 19% 10%
Gluten free 10% 29% 23% 50% 47%
No additives/preservatives 23% 35% 26% 8% 39%
Low/no/reduced fat 15% 38% 13% 28% 34%
Vegetarian 6% 73% 1% 0% 2%
Organic 21% 12% 18% 17% 16%
Social media 6% 36% 12% 4% 6%
Vitamin/mineral fortified 6% 13% 16% 6% 6%
Low/no/reduced lactose 11% 7% 5% 11% 12%
Total number of yogurt and sour milk product launches 391 301 221 213 174

Source: Mintel, 2018.

Number of yogurt and sour milk launches in 2017, by import status*
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Country Not imported Imported
Germany 80 24
UK 84 54
France 51 8
Spain 14 27
Italy 5 36

Source: Mintel, 2018.

*Note: Not all launches are assessed on this criteria.

Number of yogurt and sour milk products launched in 2017, by company
Country Top three companies Number of products
Germany Lidl 39
Danone 21
Molkerei Alois Müller 21
U.K. Müller Dairy 39
Danone 36
Asda 24
France Yoplait 34
Lactalis Nestlé Ultra Frais - LNUF 19
D.P.F.F. 16
Spain Danone 31
Scamark 15
Dia 13
Italy Danone 26
Molkerei Alois Müller 23
Lidl 14

Source: Mintel, 2018.

Other dairy products

This sub-sector includes the following: chilled and shelf stable desserts (dairy-based and soy-based), chilled snacks, coffee whiteners, condensed milk, evaporated milk, cream (all types of cream, including soy-based cream), and fromage frais and quark.

Top markets for other dairy products in the world, 2017 Retail sales (US$ Billions) – Fixed 2017 exchange rates
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Country Retail sales
USA 8.9
Germany 4.3
France 3.5
Russia 3.5
Brazil 2.1
United Kingdom 2.1
Japan 1.7
Peru 1.3
Netherlands 1.1
Mexico 1.1
Canada 1.0
Spain 1.0

Source: Euromonitor International, 2018.

Other dairy includes basic dairy products such as cream and condensed milk, for which it is often difficult to stress the advantages of branded products over private label. These products are seldom used as a main dish and rather as an ingredient, and therefore consumers do not generally prioritise quality.

Germany is the market presenting the best performance for other dairy in 2017, in all categories except condensed milk and coffee whiteners. All of the products in other dairy have a long tradition in Germany, so there are little yearly variations. Innovation in this category is not frequent, but quark with a high protein content was one key product innovation in 2017 (Euromonitor International, 2017).

Historic retail value sales of other dairy in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2013 2014 2015 2016 2017 CAGR* 2013-2017
Germany 3,897.8 4,028.3 4,116.5 4,096.7 4,329.9 3%
France 3,629.1 3,686.3 3,658.8 3,598.1 3,544.4 -1%
United Kingdom 1,977.7 1,958.3 1,991.4 2,028.6 2,054.7 1%
Spain 1,036.4 987.2 982.4 989.6 997.5 -1%
Italy 774.3 773.2 772.7 774.1 776.9 0%
Western Europe 16,525.1 16,805.9 16,986.0 17,005.9 17,291.4 1%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

Forecast retail value sales of other dairy in key European markets US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Country 2018F 2019F 2020F 2021F 2022F CAGR* 2018-2022F
Germany 4,519.2 4,685.8 4,828.9 4,949.4 5,047.2 3%
France 3,549.4 3,571.1 3,611.6 3,660.6 3,724.0 1%
United Kingdom 2,131.4 2,167.6 2,191.2 2,207.9 2,219.2 1%
Spain 1,023.2 1,053.1 1,086.0 1,121.0 1,157.1 3%
Italy 787.3 801.6 817.8 835.7 854.3 2%
Western Europe 17,700.2 18,083.3 18,467.0 18,841.0 19,208.8 2%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

F: Forecast.

There were 361 other dairy products launched in 2017 in the five main European markets from January 2017 to December 2017.

Number of launches of other dairy products in main European markets in 2017
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Country Launches
Germany 137
France 72
UK 70
Italy 44
Spain 33

Source: Mintel, 2018.

Other dairy product launches in main European markets in 2017, by sub-category (% breakdown)
Sub-categoryGermany France U.K. Italy Spain
Cream 36.5% 61.1% 35.7% 40.9% 36.4%
Soft cheese desserts 29.2% 23.6% 30.0% 6.8% 21.2%
Curd and quark 25.5% 11.1% 20.0% 45.5% 21.2%
Evaporated milk 1.5% 2.8% 8.6% 0.0% 9.1%
 Creamers 5.8% 0.0% 2.9% 4.5% 0.0%
 Sweetened condensed milk 1.5% 1.4% 2.9% 2.3% 12.1%

Source: Mintel, 2018.

Top claims associated with other dairy products launches in main European markets in 2017, % of total other dairy product launches
Claim Germany Spain France UK Italy
Ethical - environmentally-friendly package 16% 68% 44% 36% 48%
Low/no/reduced fat 30% 19% 32% 16% 33%
Vegetarian 10% 0% 80% 7% 18%
Low/no/reduced allergen 15% 13% 13% 39% 64%
No additives/preservatives 11% 18% 24% 27% 9%
Organic 16% 21% 8% 11% 12%
Gluten free 5% 8% 7% 30% 48%
Low/no/reduced lactose 13% 3% 7% 9% 27%
Functional - slimming 4% 22% 8% 11% 15%
High/added protein 11% 0% 18% 7% 9%
Total number of other dairy product launches 137 72 70 44 33

Source: Mintel, 2018.

Number of other dairy product launches in 2017, by import status
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Country Not imported Imported
Germany 20 5
France 14 7
UK 27 25
Italy 4 5
Spain 3 3

Source: Mintel, 2018.

*Note: Not all launches are assessed on this criteria.

Number of other dairy products launched in 2017, by company
Country Top three companies Number of products
Germany Lidl 13
Ehrmann 13
Danone 7
France Yoplait 8
Lactalis Beurres & Crèmes - LB&C 8
Elle & Vire 6
U.K. Morrisons 10
Asda 7
Nestlé 6
Italy Parmalat 8
Granarolo 4
Exquisa | Centrale del Latte di Salerno | Egidio Galbani 2 each
Spain Arla Foods 3
Consum 3
Corporación Alimentaria Peñasanta 3

Source: Mintel, 2018.

Health & Wellness dairy

Overall retail sales of health and wellness dairy products have been declining in recent years in Western Europe. That trend is being offset by the growth of organic dairy, free from dairy alternatives (such as soy milk), and free from lactose dairy which are getting stronger. These two last categories have been growing the fastest at a 6% compound annual growth rate. In several Western European countries, it is becoming fashionable to avoid dairy without having a specific food intolerance, and thus it is expected that growth will come from both those needing to avoid it and those wanting to avoid it. More local and international players are starting to invest in new product development for this type of product.

In Spain, dairy sales should continue to be driven by health and wellness categories, such as free-from lactose dairy and organic products, which have higher added value, as well as greater potential for penetration in the market due to their lower sales bases (Euromonitor International, 2017).

With the emergence of snacking in Western Europe and consumers recognising dairy foods as nutritious and natural snacks, many traditional snack companies are now looking to gain a foothold in dairy as a new generator of growth within the health arena (Euromonitor International, 2017).

Historic retail value sales of health and wellness (HW) dairy products in Western Europe, by type US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Type 2013 2014 2015 2016 2017 CAGR* 2013-2017
Functional/fortified dairy 13,262.1 13,147.4 10,950.1 10,455.2 10,237.9 -6%
Free from dairy alternatives 1,920.3 2,046.1 1,926.8 2,136.2 2,400.2 6%
Free from lactose dairy 2,403.6 2,657.5 2,507.3 2,782.0 3,067.7 6%
Naturally healthy dairy 1,215.9 1,199.5 1,001.9 973.3 965.9 -6%
Organic dairy 4,249.9 4,550.3 4,071.1 4,210.8 4,380.1 1%
Reduced fat/reduced salt/ reduced sugar products 25,061.8 25,166.1 20,891.8 19,630.7 19,116.4 -7%
Total HW dairy 48,510.0 49,152.5 41,669.8 40,485.8 40,454.5 -4%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

Forecast retail value sales of health and wellness (HW) dairy products in Western Europe, by type US$ millions and period growth (%) – Current prices – Fixed 2017 exchange rates
Type 2018F 2019F 2020F 2021F 2022F CAGR* 2018-2022F
Functional/fortified dairy 10,533.5 10,660.4 10,820.3 10,890.9 11,035.5 1%
Free from dairy alternatives 2,792.0 3,170.5 3,570.8 3,974.8 4,439.7 12%
Free from lactose dairy 3,497.0 3,906.7 4,329.6 4,728.9 5,171.6 10%
Naturally healthy dairy 998.3 1,016.1 1,034.3 1,045.3 1,063.2 2%
Organic dairy 4,726.6 5,001.9 5,293.8 5,539.9 5,816.2 5%
Reduced fat/reduced salt/ reduced sugar products 19,842.6 19,935.9 20,096.2 20,110.4 20,260.1 1%
Total HW dairy 42,389.9 43,691.6 45,145.0 46,290.1 47,786.2 3%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

F: Forecast.

Distribution channels and top brands

Dairy products in Western Europe are being sold primarily through grocery retailers, especially supermarkets, hypermarkets and discounters. However, the proportion of dairy products being sold through the Internet is growing rapidly, with this channel recording a CAGR of 9% in the region over the five-year review period (2013-2017), and achieving a consistently positive CAGR in all five main markets under review in this report (12% in France, 11% in Germany, 7% in Italy and the U.K. and 6% in Spain).

With the growth of internet retailing, new possibilities arise, even for smaller manufacturers who can benefit from a wider distribution chain such as Amazon Fresh, through their inclusion of local cheese manufacturers in their product range (Euromonitor International, 2017).

Dairy product distribution in Western Europe, by outlet (% share)
Outlet 2013 2014 2015 2016 2017 CAGR* 2013-2017
Grocery retailers 97.0 96.8 96.6 96.5 96.4 0%
Convenience stores 5.0 5.0 5.0 4.9 4.9 -1%
Discounters 19.1 19.3 19.4 19.8 20.3 2%
Forecourt retailers 1.2 1.2 1.2 1.1 1.1 -2%
Hypermarkets 23.4 23.4 23.5 23.1 23.0 0%
Supermarkets 39.9 39.7 39.4 39.6 39.4 0%
Food/drink/tobacco specialists 1.8 1.7 1.7 1.7 1.7 -1%
 Independent small grocers 4.8 4.6 4.5 4.4 4.2 -3%
Other grocery retailers 1.9 1.9 1.8 1.8 1.8 -1%
Non-grocery specialists 0.4 0.4 0.4 0.3 0.3 -7%
Health and beauty specialist retailers 0.1 0.1 0.1 0.1 0.1 0%
 Other foods non-grocery specialists 0.3 0.3 0.3 0.3 0.2 -10%
Mixed retailers 1.0 1.0 1.0 1.0 1.0 0%
Internet retailing 1.6 1.8 2.1 2.1 2.3 9%
Total 100.0 100.0 100.0 100.0 100.0

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

Fastest growing and declining outlets for dairy product distribution in main European markets
Country Fastest growing outlet (*CAGR 2013-2017) Fastest declining outlet (*CAGR 2013-2017)
France Internet retailing 12% Discounters -1%
Germany Internet retailing 11% Convenience stores -16%
Italy Health and beauty specialist retailers 19% Food/drink/tobacco specialists -2%
Spain Other foods non-grocery specialists 7% Forecourt retailers -8%
U.K. Discounters 8% Non-grocery specialists -6%

Source: Euromonitor International, 2018.

*CAGR: Compound Annual Growth rate.

Private label is a major component of the dairy market in Western Europe, with an overall share of 29.5% in 2017, reaching as much as 40% retail sales in certain countries, such as the U.K. Cooperatives and smaller producers play a significant role in dairy products in some of the region’s markets. In Italy for example, regional and artisanal players accounted for more than 40% of retail value sales in 2017 (Euromonitor International, 2017).

Share of top brands VS. private label for dairy in main European markets - France
Brand Company Share (%)
Président Lactalis, Groupe 5.7
Yoplait General Mills Inc 3.0
Entremont Sodiaal SA (Société de Diffusion Internationale Agro-alimentaire) 2.8
Lactel Lactalis, Groupe 2.4
Milkmaid/La Lechera/La Laitière Lactalis, Groupe 2.1
Candia Sodiaal SA (Société de Diffusion Internationale Agro-alimentaire) 2.1
Private label Private Label 28.7
Share of top brands VS. private label for dairy in main European markets - Germany
Brand Company Share (%)
Kerrygold Ornua Co-op Ltd 1.8
Zott Zott GmbH & Co KG 1.7
Landliebe Royal FrieslandCampina NV 1.6
Kinder Ferrero Group 1.4
Ehrmann Ehrmann AG 1.4
Rama Unilever Group 1.4
Private label Private Label 37.6
Share of top brands VS. private label for dairy in main European markets - Italy
Brand Company Share (%)
Galbani Lactalis, Groupe 5.1
Granarolo Granlatte Societá Cooperativa Agricola arl 4.9
Parmalat Lactalis, Groupe 3.8
Yomo Granlatte Societá Cooperativa Agricola arl 2.4
Kinder Ferrero Group 2.2
Private label Private Label 15.4
Share of top brands VS. private label for dairy in main European markets - Spain
Brand Company Share (%)
Danone Danone, Groupe 6.9
Central Lechera Asturiana Central Lechera Asturiana SAT (Clas) 4.1
Puleva Lactalis, Groupe 3.4
Activia Danone, Groupe 3.3
Pascual Grupo Leche Pascual SAU 2.8
Private label Private Label 34.7
Share of top brands VS. private label for dairy in main European markets - United Kingdom
Brand Company Share (%)
Müller Theo Müller GmbH & Co KG 4.4
Lurpak Arla Foods Amba 3.1
Cathedral City Dairy Crest Group Plc 2.8
Alpro Danone, Groupe 1.6
Activia Danone, Groupe 1.6
Private label Private Label 40.0

Conclusion

Western Europe is a mature market for dairy, yet opportunities exist through premiumisation, the emergence of trends such as snacking, or the growth of new technologies for distribution, mostly online retailing. Changes in consumer diets, partly due to the rising lactose-free trend, could also open up new opportunities in the future.

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Resources

Sector Trend Analysis - Dairy products in Western Europe
Global Analysis Report

Prepared by: Josique Lorenzo, Market Analyst

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