July 19, 2011

 

Germany's milk sales face slight decrease last year

 

 

Last year, Germany's sales of drinking milk products decreased less than 1% to touch EUR2.6 billion (US$3.7 billion), according to Euromonitor International.

 

Research suggests that sales continue to suffer from declining unit prices across the market. However, the analysts see some recovery in sales in the years ahead.

 

The sales volume sales of drinking milk products in Germany rose by over 1% in 2010 but revenues dipped mainly due to declining unit prices, unit prices of dairy products continued to decline despite attempts by dairies to stabilise prices. The unit price of milk, in particular, declined during 2010 to an average of EUR0.59/litre (US$0.83), down from EUR0.61 (US$0.86) the previous year. Only soy beverages saw an increase in average unit price from EUR1.32 in 2009 (US$1.87) to EUR1.35/litre (US$1.91) in 2010.

 

In response to falling milk prices, January 2010 saw the launch of the "Die Faire Milch" (Fair Milk) brand from a number of independent dairies in southern Germany in order to guarantee fair and sustainable milk prices for manufacturers and consumers. The milk was available through some 1,200 Rewe and 300 Tegut outlets across the states of Hesse, Bavaria and Baden-Württemberg.

 

Overall, drinking milk products continue to be dominated by ambient milk drinks, rather than chilled ones. The importance of long-life/UHT milk, as well as more recently the introduction of ESL (extended shelf life) milk, means that this trend is unlikely to change.

 

According to Euromonitor International, long-life/UHT milk continues to dominate sales, in addition to the new ESL milk, introduced during the second half of the review period. While fresh milk accounted for around 39% of retail value in 2010, ESL milk in particular is becoming increasingly popular with younger consumers, mainly because it is regarded as combining the taste of fresh milk with the longevity of UHT.

 

Interestingly, soy beverages are mainly consumed by individuals who do not want to purchase milk products. This consumer group contains a wide range of individuals, including non-mainstream consumers such as vegans, as well as people suffering from lactose intolerance or allergies, and those who generally consider soy milk as being healthier than traditional dairy. Interestingly, flavoured milk drinks with fruit juice outperformed drinking milk products as a whole, albeit growing from a still very small base. Sales rose by over 5% in 2010 to EUR1.1 million (US$1.6 million), which was mainly helped by increasing demand for smoothies and smoothie-like products.

 

Sales of drinking milk products continue to be dominated by private label, as well as smaller regional brands. Private-label products accounted for approximately 63% of retail value sales in 2009.

 

Sales of drinking milk products in Germany are expected to grow after the fall in 2010. However, Euromonitor forecasts that sales will increase by an average of less than 1% per year over the 2010-15 period. The main trend anticipated during this period is likely to be the ongoing regionalisation of brands spilling over into private label, whereby milk will be increasingly identified as "North German Milk", "South German Milk", "East German Milk", "Bavarian Milk" and so on.

 

According to Euromonitor International's projections, average volume growth of almost 2% clearly indicates a certain recovery in milk consumption across Germany. However, this change should not necessarily be seen in connection with declining unit prices for drinking milk products but rather in terms of milk consumption having reached a certain minimum level from which per capita consumption could only recover.

 

Distribution of drinking milk products is expected to change little over the 2010-15 period, although, in particular, sales through independent small grocers are expected to continue to decline. This type of outlet is increasingly suffering from the growing competition from chained supermarkets and discounters, as well as the emerging convenience store format.

 

Finally, little further potential activity is expected across drinking milk in Germany over the next few years. The main trend anticipated is further co-operation between smaller dairies and other small manufacturers due to the experience gained during their first attempt at joint marketing during 2010 in order to achieve stable and sustainable prices for their products.