Dairy in France
Premiumisation helps to revive cheese value growth
Cheese improved significantly in value sales terms in 2018, confirming the success of diversification strategies deployed by manufacturers to embrace consumers’ habits. Cheese is not consumed after regular meals as was traditionally the case in France; consumers request it as an appetiser, a snack, as part of a dessert or as a cooking ingredient.
Hard cheese is substituting soft cheese, owing to its greater convenience
Packaged hard cheese posted a stronger value sales performance than soft cheese in 2018 thanks to its greater convenience; soft cheese is perceived as “old fashioned” by some. The wider availability of diversified formats is intended to appeal to young generations and new usages have helped the hard cheese category to grow.
Alternative types of soft cheese record significant value growth
While traditional French soft cheese faces challenges, other types of soft cheese, such as Italian and goat, is boosting value sales. Consumer enthusiasm for Mediterranean and more particularly for Italian cheese is not a new tendency, but these products capitalise on their flexibility and the various ways they can be consumed.
Leading domestic players consolidate their positions with investments in snacking
The leading player, Groupe Lactalis, is mostly focused on its core brand, Président, which is positioned in soft cheese and hard cheese and is available in various formats, including Emmental, Comté, Camembert, Brie and grated cheese. Other Groupe Lactalis brands include Société, Chaussée Aux Moines, Galbani, Bridel, Salakis and Rondelé.
Diversification into niches is creating value sales growth
Manufacturers’ strategy of embracing niches in the cheese category seem to have produced value sales growth. For example, investments in winter cheese in 2018 were particularly relevant as raclette, tartiflette and fondue were commonly requested by consumers as such offerings provide high levels of convenience while being able to help provide a convivial dining experience during cold, winter evenings.
Initiatives are put in place to develop local and authentic supply chains
Following the EU’s lifting of milk production quotas in 2015, farmers are allowed to organise themselves in order to negotiate collectively with manufacturers on milk prices. In this context, Groupe Lactalis signed an agreement in 2018 with a group of farmers to shape the conditions for the provision of high-quality and local milk intended for its AOP brands Jorts, Lanquetot and Moulin de Carel.
Changes in breakfast habits combined with wholesale price volatility cause volume sales to decline
Milk consumption was negatively affected in 2018, especially because of the decline in production in 2017 following the heavy price fall that hampered farmers over the review period. In addition to the turmoil resulting from the lifting of EU quotas on milk in 2015, France’s dry climate during summer 2017 was not favourable to milk production and led to a volume sales decline.
Locally sourced and fairly priced milk is widely requested by consumers
Regionally produced and fairly priced milk that supports local farmers has significantly revived the category. There has been a milk crisis owing to higher price volatility for farmers and manufacturers, which are subject to a likely price decline as was the case over the review period, so ethical concerns are becoming more pertinent among consumers.
The popularity of milk alternatives is rising in line with new lifestyle trends
The emergence of vegetarian diets and milk alternatives is of significant importance to consumers. According to a study in 2016, 57% of French consumers are worried about dairy products.
A regional offering is emerging in drinking milk products
Drinking milk products was led by Groupe Lactalis followed by Cedilac SA in 2018. While the former relies almost entirely on its flagship Lactel brand, Cedilac has a more diversified brand portfolio with Candia, Viva and Nactalia.
Competition in milk alternatives intensifies
Over the review period, the competitive landscape in milk alternatives was relatively concentrated around two manufacturers, Distriborg France an organic-orientated player, which leads sales through its flagship brand Bjorg, and Triballat-Noyal SAS, owner of Sojasun, a Brittany-based brand specialising in dairy alternatives. Sojasun is a pioneering brand that has grown constantly owing to a position in soy milk.
Flavoured milk drinks manufacturer Sodiaal SA is investing in promotions
In flavoured milk drinks, Sodiaal SA dominates with its children’s brand Candy’Up, which is available in four flavours: chocolate, vanilla, banana and strawberry. In order to generate new revenues, Candy’Up has set up a licence contract with Nintendo, opening the possibility for young consumers to win prizes ranging from Nintendo video game consoles to Pokemon cards in order to maintain interest among its young target consumers.
Changing consumer habits hurt yoghurt consumption
Yoghurt and sour milk products continued to decline in 2018 as the category is very mature in France and there are many options for consumers. Moreover, the emergence of the snacking trend, which is reducing the number of desserts and breakfasts eaten, is hampering yoghurts.
Niche categories become more popular
Anti-dairy campaigns have significantly hindered sales of dairy-based yoghurt. Moreover, the flexitarian diet is becoming increasingly popular among consumers as they are concerned about animal wellbeing, environmental issues surrounding intensive farming but also about eating healthier and more digestive products.
Consumers trade up from flavoured yoghurt to plain yoghurt and drinking yoghurt
While flavoured yoghurt constitutes the largest share of overall yoghurt sales in France, plain yoghurt and drinking yoghurt continued to perform better than it in 2018, probably because of health concerns regarding sugar in yoghurt. The category’s lack of naturalness is another key consumer concern, with some players being suspected of misleading consumers through their packaging illustrations when their products do not in fact contain any fruits.
Previously strong functional and high-protein brands suffer
Danone France and Yoplait collectively dominated yoghurt and sour milk products in 2018, with both owning strong brand portfolios that cover every yoghurt category. Danone’s brands include Activia, Danacol, Taillefine, Actimel and Velouté, while Yoplait’s sales are more concentrated around its main brand, Yoplait, although it is also positioned in fruited yoghurt through Panier de Yoplait.
Naturalness and authenticity trend in new product developments
To counteract the decline in yoghurt consumption, manufacturers opted for strategies ranging from brand renewal to investment in niche categories in order to trigger value growth in 2018. Danone launched its eponymous brand Danone in plain yoghurt and flavoured yoghurt, producing it with full fat milk collected in France and using natural ingredients.
Competition intensifies within free from dairy categories
Free from dairy yoghurt was at the heart of an intense innovation effort in 2018 as several manufacturers entered or developed this category with new releases, resulting in tighter competition. Eurial Poitouraine SA for example launched five versions of oat-, almond- and rice-based yoghurts under a new brand, A bicylette, in 2017.
The decline of family formats in chilled and shelf stable desserts adversely impacts sales, while the premium segment still thrives
Value sales declined in 2018 even though chilled dairy desserts are still purchased by many French households. With a penetration rate of 90%, chilled dairy desserts is a mature category but is on a downward trend.
Supply shortages constrain cream but demand has returned
Unit price increases, linked to a fall in milk collection and supply shortages, have somewhat limited sales growth in cream. Still, domestic demand for cream appears to have returned after years of mistrust and links with cholesterol.
The decline of reduced fat and fortified/functional products hurts other dairy
As is the case for yoghurt, other dairy is hampered by continual structural decline in its fortified/functional and reduced fat categories, which make up a significant part of chilled and shelf stable desserts as well as fromage frais and quark. These products are particularly affected by growing consumer concerns in regard to the real effectiveness of some of their nutritional properties and to their perceived lack of flavour.
Mixed fortunes for leading players
Lactalis and Nestlé hold shares of 60% and 40% in the Lactalis Nestlé Produits Frais joint-venture company, respectively, which in turn owns a wide range of significant brands in other dairy such as La Laitière, Bridélice and Viennois. In 2018, the company gained category value share and consolidated its position thanks to significant TV advertisement for its La Laitière brand in the year.
Premium innovations contribute to value growth
The development of premium other dairy products continued to be successful in 2018. Indeed, consumers are shifting from unpopular reduced fat desserts to gourmet desserts, demonstrating their preference for pleasure.
Manufacturers look for natural ingredients
Manufacturers’ ingredient lists are required by consumers to be more transparent and shorter, as preferences for naturalness and authenticity are becoming among the greatest in the entire packaged food industry. Several strategies have been adopted by manufacturers to meet these requirements; for example, the development of organic other dairy by Marie Morin with the release of a chocolate sponge cake and a crème brûlée product in 2018.
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