Poor prospects for French dairy market

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The chances of growth returning to the French dairy market in the
medium term are extremely slim, according to a recent report from
French market analysts Xerfi.

According to the report, virtually every segment of the market is mature, and while there are a few isolated pockets of growth, these are unlikely to be enough to revitalise the market as a whole.

Xerfi​ estimates that the dairy market as a whole will show just 0.2 per cent growth in 2003, rising slightly (0.5 per cent) in 2004, but this is still far below the growth rates seen as recently as five years ago. In 1998, the market grew by nearly 1.2 per cent, the report claims, falling sharply in 1999 with growth of just 0.1 per cent and actually shrinking by 0.2 per cent in 2000 and by 0.1 per cent in 2002.

The segment showing perhaps the most opportunities for growth is that of yoghurts and dairy desserts, according to the report, with both production and consumption rising steadily year-on-year.

This growth is being fuelled by a steady stream of new product launches, backed by national and international advertising campaigns, and yoghurts continue to persistently outperform liquid milk and butter, the two other main dairy product categories.

According to the report, yoghurt and dairy dessert sales in France are likely to grow by around 3.9 per cent in 2003, compared to a 3 per cent decline in milk sales and a 5 per cent fall for butter, a slight improvement on the 7 per cent decline noted over the first nine months of the year.

Milk is likely to rally somewhat in 2004, the report claims, with sales remaining in line with those for 2003, helped by the introduction of a number of added value products, such as fortified and 'health' milks. Butter sales are expected to fall by 2 per cent, with feeble demand both at home and abroad mainly due to the increasing popularity of margarine as a healthier alternative. Yoghurt sales should grow by around 3 per cent

What growth there will be for 2003 and 2004 will come mainly from continued price control, the report suggests, but this will not be enough to kick start a major leap forward in consumption, the report suggests.

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