Scope of report

The dairy products market includes milk, cream, cheese, yogurt, dairy desserts including fromage frais, spreads of all types, butter, margarine, and flavoured milk and yogurt drinks. Ambient dairy desserts, which do not need to be sold from the chilled cabinet, are not included.

Summary

Total output of the German milk processing products has held very steady recently.

A sharp increase in cheese production meant that the overall output level hit a new high in 2000.

The retail dairy market is worth around DM30bn.

The butter market has been troubled recently, and margins are slim.

The overall white line market is expanding in both volume and value terms, but there is some price deflation.

The cheese market continues to expand. It is now worth some DM10-11bn. But here too there is price erosion as own-brands gain market share, and as retailers' special offers become more extensive. The self-service cheese sector now accounts for about 60% of cheese sales in value terms, and some two-thirds by volume.

The probiotic market, worth some DM400mn, is losing some of its premium cachet.

The industry, except for the powdered milk and cheese sub-sectors, is undergoing marked rationalisation. There have been some 37 mergers and take-overs in the last three years. Despite rationalisation, a number of dairies, particularly the regional co-ops, remain in poor financial shape. Further concentration within the industry looks likely. Dairies without a niche look unviable below an annual processing level of 500mn kg.

Brands are becoming more important.

Cheese will gain further ground, as meat is regarded with continued suspicion.

Desserts, especially chilled desserts, will gain ground, as snacking remains popular.

04/2001