1.1 Definition and scope of the study
Butter is a solid emulsion of fat globules, air, and water made by churning milk or cream and used as food. The earliest evidence of butter dates back to 2000 B.C.
The global market for butter is expected to grow at a strong pace of a CAGR of 4.52% until 2025. The growth comes amid a larger use and demand for butter in food processing, but also because demand on food which contains butter (pastries for example) is increasing.
This falls into the hands of France, a country recognized for its' gastronomical heritage and cuisine. Indeed, France is the world's largest consumer of butter, with some 8 kg per person per year in 2017.
The French market has suffered from market volatilty in the last couple of years. This is due to several macroeconomic and political key events: first, in 2015, the EU abolished their price quotas for dairy farmers. The result was a price collapse, which in turn led to a sharp contraction of the market size amid lower revenues. Moreover, in 2017 French farmers experienced another chock, this time in the supply of butter, coming from a rise in the cost of cow milk but also due to poor weather conditions. The rise in cost came as a result of 2015's political decisions; the production ceased as farmers were wary on the ability of selling their stock. Meanwhile, demand remained stable, which pushed prices up drastically. In 2016, one ton of butter cost €2,500; in 2017 it had increased to €7,000. Consumers did not bear this cost, instead the supply-side did, as retailers (super-and hypermarkets) did not want to increase their prices.
In France, the market for butter is very concentrated. According to INSEE, there were ten companies registered under the NAF code 10.51B in 2019. Moreover, two companies, Lactalis and Savencia, accounted for around 70% of the revenue in 2016.
Going forward, market trends in the French butter market include the rise of biological products. Overall, the consumption of both butter and margarine is down, whilst bio butter has been increasing steadily.
1.2 Strong growth in the global market
The global butter market size World, ****-****, in $US billion Source: ****
The global butter market is expected to demonstrate strong growth between **** and ****, equivalent to a CAGR of *.**%.
The growth comes amid a larger use and demand for butter in food processing. On top of this, consumer demand for restaurant food ...
1.3 A volatile domestic market in decline
The butter market size (***) France, ****-*****, in € million Source: ****
The butter market in France has decreased since ****. Between then and ****, the market turnover shrunk by some *.*%. This figure, however, is not representative of the volatility of which milk (***) producers have endured during these years. Between **** and ****, the French market for butter ...
1.4 International Trade
In this section we analyse France's trade of butter. In particular, we use UN Comtrade's database and the code ****** - Dairy produce; derived from milk, butter.
Trade of butter France, ****-****, in $US million and in % Source: ****
The graph above depicts France's trade with butter between **** and **** through exports and imports. ...
2.1 Profile analysis: the French consumer
Number of people using butter, by frequency France, **** & ****, in million users Source: ****
Butter consumption in France is high; in ****, the majority of respondents (***).
Do you prefer salted butter or sweet butter? France, ****, in % Source: ****
The distribution between sweet and salted butter is almost equal, with a small preference for sweet butter ...
2.2 Consumption of butter
Despite the fact that France is the country with the highest per capita consumption of butter in the world, French household consumption of butter is decreasing. Butter is penalised by the decrease in rates in which breakfast is consumed, but also due to a consumer shift to vegetable fats. [***]
Moreover, alternatives ...
2.3 Demand Trends
Search interest "Beurre" France, ****-****, in index value Source: ****
The graph above represents the proportion of searches for a given term in a given region during a specified amount of time, compared to when it was the most searched (***). Thus, a value of ** means that the keyword has been used ...
2.4 Les marques de beurre préférées des Français
Le graphique ci-dessous a été obtenu à partir du sondage mené par OpinionWay au sujet des marques préférées des Français en mars ****. Il s'agit des réponses des sondés à la question "aimez-vous telle marque de beurre ?" pour chaque marque, le pourcentage correspond à la part de sondés ...
3.1 Market Overview
Employees and companies in the butter producing sector (***) France, ****-****, in units Source: ****
The French butter market is concentrated, with only ** companies registered under the NAF code **.**B. This number has remained unchanged since ****, which implies that the stability and market power of the existing companies is large.
In fact, the ...
Production of butter France, ****-****, in '*** tonnes Source: ****
Production volumes of butter in France have decreased somewhat since ****; between **** and ****, volumes decreased by *.*% in aggregate.
One explanation for this could be the fact that imports increased more relative to exports between **** to **** as we saw in section *.*
Average production ...
3.3 Distribution & brand preference
Sales by distribution channel for butter France, ****, in % Source: ****
Butter predominantly sold in hypermarkets, where almost half (***) of sales occured in ****. Supermarkets came in second place with a quarter of sales.
E-commerce, which is growing across all products in society, still holds a relatively small share of around *%.
Brands of butter ...
3.4 A market faced with volatility as a result of uncertainty
Dairy farmer face uncertain conditions on the market for butter. First, the European Union's quotas put in place which would mitigate this uncertainty were abolished in ****. Adding to this, there is uncertainty of production amid volatile weather conditions. Finally, competition is strong, not only domestically but also from substitute products and ...
4.1 Product Overview
There are many types of variations of butter, depending on how it is produced or the additives. Below we list a comprehensive list:
Raw butter or raw cream butter: this butter is derived exclusively from cream that has been "untouched", in the sense that it has not undergone any sanitisation treatment, ...
4.2 Price analysis
Household purchase price for butter France, ****-****, in €/kg Source: ****
The graph above depicts the price evolution for butter. As previously explained, the prices decreased between **** and **** amid the termination of EU quotas.
Since, prices have increased since supply has been limited and demand has increased. For example, foreign demand for ...
4.3 Supply trends
A decrease in milk production in a context of unfavourable milk powder prices and heat waves: In the last quarter of **** and the second half of ****, the weak dynamism of milk production, particularly from New Zealand (***), created tensions on the supply of butter to the sector The underproduction of milk in ...
The regulations that cover butter are summarised in the following legislations:
Regulation (***) Regulation (***) Decree no. **-**** of ** December **** regulating the manufacture and sale of butters and certain dairy specialities. Decree No. **-**** of ** December **** regulating the manufacture and sale of margarine and other fat blends that are not exclusively of dairy ...
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