here is optimism that the global economic and financial conditions of high inflation and rising food and energy prices, which have impacted consumer confidence and post-pandemic spending, will improve in 2024. However, as dairy prices are still rising, consumers will still be on the hunt for value as they visit the dairy aisle.
It is, though, important to remember that there are opportunities for dairy brands away from price, with health and convenience still playing a role in purchasing decisions.
Shoppers are responding to the increasing prices of dairy products in different ways. Some opt to continue buying dairy products but are switching to cheaper options or private-label products. Others are reducing their spending in other grocery categories to offset the greater amount they are spending on dairy.
Overall, there are three trends set to shape the dairy market in 2024. Foremost among those is affordability but shoppers are also looking for products that offer nutritional benefits, while convenience will also be a factor in buying decisions.
While shoppers will always look for product quality, the pressure on consumer spending has put more emphasis on affordability. The cost inflation faced by dairy processors in recent quarters has led to companies pushing through price increases, which has weighed on demand and manufacturers’ sales volumes.
For example, Lurpak and Castello owner Arla Foods generated revenues of €13.7bn ($14.99bn) in 2023, roughly the same level as its 2022 figure of €13.8bn. Sales were flat in the first half of the year as cash-strapped consumers opted for discounted products.