Churning out growth in butters and spreads

The dairy market  had a strong twelve weeks to the 26th February in terms of both volume and value, as the sector grew by 1.6%,  just behind the grocery market overall (2.4%).

In this report we look specifically at BSM (butters, spreads and margarine) - an important  dairy sector where value growth (2.7%) has been achieved despite volume declining (-3.3% YOY).

The key driver of this phenomenon has been consumers moving away from larger dairy spread formats towards smaller block and spreadable butter. In the last year over 2200 tonnes of volume sales moved from dairy spreads to spreadable butter, with a further 925 tonnes redirected to block butter.  As well as shoppers moving directly from dairy spreads to block and spreadable, a further 7000 tonnes left the sector as shoppers simply bought less or dropped it from their repertoire entirely.

And even though dairy spreads are purchased more often,  they’re bought in larger volumes. On average, consumers took home 701 grams of dairy spread per trip, compared to 657 for spreadable butter, and just 391 grams of block butter.

This move away from dairy spreads has caused a fall in volume for the sector as a whole, but value growth has been sustained because in many cases consumers have selected a more premium replacement. The average price of block and spreadable butter in the last year was £4.17 and £4.52 per kg respectively; more than double that of dairy spreads.

We have seen huge shifts in consumer ideas around health more widely, with more natural and less processed food becoming increasingly important. And with health being increasingly cited as a motivating factor in BSM purchases, this macro-trend has had a huge impact in this sector, driving the decline of the more processed dairy spreads in favour of more natural butter products.