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Dairy Products

Dairy products at supermarkets

Andrea Villarino. Journalist

The dairy market registered a decline in consumption with respect to 2013; however, the average prices of both liquid milk and dairy products are on the rise, according to the 2014 Report on Food Consumption in Spain drafted by the Ministry of Agriculture, Food and the Environment (MAGRAMA).

According to that report, the dynamic channel (hyper- and supermarkets and discount stores) accounts for the bulk of sales: 92.9% of liquid milk and 94.6% of other dairy products.

Within that channel, supermarkets account for the greatest share, with 51.9% of milk sales and 55.8% of dairy product sales. However, those figures declined with respect to 2013, by 3.3% in the case of milk and by 1.7% in the case of other dairy products. It's also worth noting the decline at traditional stores: milk by 6% and other dairy products by 14.5%.

In both cases, the dynamic channel offers consumers more competitive prices (€0.71/liter in the case of milk and €3.21/liter for milk products) compared with traditional stores, which are unable to compete with department stores on price (€0.89/liter of milk and €7.96/liter of milk product).

Wiki Spanish Food wanted to take a closer look at the role played by dairy products for supermarket sector players. Caprabo, Eroski, Lidl, Condis and Covirán all underline the importance of these products in their stores, endeavoring to offer consumers the greatest variety of products. Eroski, for example, has more than 400 milk products at its stores throughout Spain.

A strategic product

Together with the fact that these products are important purchases, they are also a strategic product for consumers, a characteristic that many chains use to attract consumers to their stores. "As occurs with the other basic products consumers purchase, milk generates traffic at stores and, therefore, is an item that yields a more efficient result when used as a featured product. This is true provided that it's viewed as a reasonable strategy that manufacturers and producers agree on", say sources at Covirán. Lidl and Eroski highlight the Sustainable Dairy Product agreement, promoted by MAGRAMA in 2013 with a view to maintaining the value of milk and improving conditions for the various agents.

To avoid the trivialization of this category, Caprabo highlights the need to work in various areas: "From the source, providing value to the stockbreeder so he or she can produce a better quality product; from the public administration, protecting, controlling and incentivising consumption; and lastly, by appealing to the responsibility of the manufacturer and distributor".

Covirán is committed to strengthening R&D and innovation, which "would help stabilize cost prices and, as a result, sales prices", according to the Andalusian cooperative. Condis, Lidl and Eroski have a similar objective: highlighting products with added value which meet the demands of consumers, focusing mainly on health. There are enriched items, such as dairy products with extra calcium, protein and oils like omega-3, and there are also ranges of products adapted for consumers with food intolerances, such as lactose-free products and plant-based drinks made from soy, oats, rice and almonds.

Private label products start to fizzle

Private label products are not registering the same growth as years ago. In fact, supermarkets like Eroski and Caprabo note a slide in name brand prices, with the result that consumers are, once again, opting for those items. "We see qualitative changes in the consumer, who is looking at added value products once again. From our standpoint, the variety of the offer is starting to overshadow price as the main, and only, priority", say sources at Caprabo.

Along the same lines, Condis highlights the need for manufacturers to meet consumer demands to increase their sales. Covirán expects the gap between private label and brand name products to decline as the country's financial situation improves, provided that the difference in prices between the two decline.

Bespoke milk

Going forward, supermarkets are all committed to products with added value which meet the demands of consumers, such as healthy, enriched products, plant-based milks and items for people with food intolerances. According to Condis, "In the very near future, people will have two (today this is true), three and even four different types of milk at home in response to different consumer needs".

Nevertheless, Eroski highlights another major price-focused trend: "In a context of crisis, the customer wants products without all the bells and whistles which meets his or her day-to-day needs and, as a result, buys regular private label milk".

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10/09/2015