Report looks at Scottish butter and cheddar markets

By Jim Cornall

- Last updated on GMT

A report into butter and cheddar sales in Scotland says that there are many challenges and opportunities for the industry. Photo: iStock - Dmitry Naumov
A report into butter and cheddar sales in Scotland says that there are many challenges and opportunities for the industry. Photo: iStock - Dmitry Naumov

Related tags Butter Scotland

Scottish processors struggle to create strong cheese and butter brands that can compete with large multinational processors, according to a recent report. 

Scottish consumers have a higher propensity to purchase brands, yet such brands have not always succeeded in winning consumers, it added.

The report looked at Scottish added-value dairy products sold across Scotland and Great Britain in order to identify issues and new opportunities. Such opportunities, in turn, could create greater demand for Scottish milk and higher farmgate milk prices.

‘Added Value Dairy: Analysis of country of origin on butter and cheddar sold in Scottish and British Retailers’ was prepared for the Scottish Government by Scotland Food & Drink, and was written by Rick Allison, a UK market analyst.

Butter sales in Scotland

The report says that across the whole of Great Britain, the average household purchased 7.85kg of butter a year, compared to a Scottish figure of almost 9kg over the same period.

Across Great Britain, 2% of all butter volume sold is of Scottish origin, with 34% from Denmark.

In Scotland, however, 14% of all butter volume is of Scottish origin, with 51.6% Danish.

Private label butter

The report found that of the private label products in Scottish stores, 13.5% of butter SKUs were Scottish, with most retailers having a private label Scottish butter SKU.

The only retailers currently without a private label Scottish butter were Waitrose and Morrisons.

Branded butter

For branded butter products in Scottish stores, the amount of Scottish products found was 11.5%.

The main Scottish origin brands captured in the study were Graham’s and Lockerbie butters.

The study found little export of Scottish butter products. Currently, 99.6% of Scottish origin branded butter products are sold in Scotland.

That doesn’t translate to market domination, however. In Scotland, British butter brands outsell Scottish brands by more than two to one, whilst Danish brands outsell Scottish brands by ten to one.

The report says that while the total butter market is growing, it is clear the majority of this growth is from one origin and one brand – Lurpak, from Denmark.

In Scotland, £2 out of every £3 spent on branded butter goes on Lurpak, while only 7% of the Scottish butter spend is on Scottish brands.

In Scotland, almost 13% of total sales are of Scottish origin, with retailers performing generally well, in particular discount stores, as well as Sainsbury’s, Co-op and M&S. Only 0.4% of Morrisons butter sold in Scotland was of Scottish origin over the past year, compared to 50% at Aldi in the same period.

Cheddar results

The study found that, across Great Britain, 5.6% of all cheddar volume sold is of Scottish origin, with almost 75% from the rest of the UK, and 6.7% is from Ireland.

In Scotland, almost 27% of cheddar volume is Scottish, whilst 57% is from the rest of the UK.

Packaged elsewhere in UK

In the Scottish cheddar market, there is a trend of cheese being produced in Scotland but then packaged elsewhere in the UK, the report noted.

There were examples of Scottish brands where block cheddar was produced and packaged in Scotland, but the sliced and grated SKU products of the same brands were packaged in other parts of the UK.

The report noted that this suggests there is a gap in Scotland for packing, slicing and grating facilities for processors of both branded and private label cheddar.

Recommendations and conclusions

The report concludes that Scottish processors struggle to create strong brands that can compete with the large multinational processors. Scottish consumers have a higher propensity to purchase brands, but to date are supporting non-Scottish butter products.

Scotland performs better in cheddar, but the market is large and there is room for greater penetration, the research revealed.

The report noted that labeling across products from retailers is generally good, but lacking in consistency. It recommends that clearer labeling from some producers and retailers would be beneficial for both industry and consumers.

It adds that both Scottish cheddar and butter sectors have great potential, both in terms of private label and branded goods, and that there may be a need for an added-value cheese processing facility in Scotland.

Finally, the report recommends that it will be important for Scottish companies to have commercial, marketing and operational support to compete with large multinational processors both in the rest of the UK and Europe.

Scottish producer response

Robert Graham, managing director of Graham’s the Family Dairy, a Scottish producer that featured in the report, responded by saying, “It’s clear from this report that we need to find fresh, new ways to promote Scottish produce more effectively.

“While clear labeling plays a part, we believe that supermarkets should continue to offer more shelf space to home-grown food and drink, so that customers can better understand the impact of their shop.”

Graham said it was important that Scottish produce is prioritized, noting that this also directly supports local jobs and local farmers.

“Foreign butter might have travelled almost 2,000 miles before reaching your fridge. It’s often frozen and then defrosted when it reaches the UK. Much fresher local produce lies right here, on Scotland’s doorstep,”​ Graham added.

He added that Scottish products should not be promoted only in Scotland.

Scottish Dairy Summit

The day after the report came out, following the dairy summit held at the Scottish Parliament, Rural Affairs secretary Richard Lochhead agreed to work with the farming industry to explore what support the Scottish Government can offer to help address immediate challenges facing the dairy sector.

The meeting, which was chaired by Communities Minister Paul Wheelhouse and attended by representatives from the Scottish Government, NFU Scotland, processing and retail sectors, looked at how to help the sector and how to build on the government’s dairy action plan.

The cabinet secretary will take stock of the issues raised – including a request by the NFU Scotland to support the urgent establishment of an industry-led dairy task force involving the banking sector, and to support calls for a UK-wide review of the sector’s voluntary code of practice to encourage greater uptake.

Wheelhouse said, “Due to my previous role as Environment Minister, and living in a rural area myself, I pay close attention to what is happening in the industry and I hope that today’s meeting will help us to move forward and look at how we can improve the sales of added value Scottish dairy products, not just across Scotland but the whole of the UK, and ultimately strengthen the dairy sector again.”

Awareness will lead to sales

Responding to the cheddar and butter report, Lochhead said, “I would like to see the sales of Scottish cheddar cheese double across the UK over the next five years – if the industry and retailers work together we can make this a reality.

“Currently Scottish cheddar cheese is worth 5.6% of the UK market – which is around £82m ($118m) – by upping sales to 11% we will plough an extra £82m ($118m) each year into the sector.

“I believe that if consumers are aware a product is Scottish, they will be more likely to support their local producers and buy it – so I see a great opportunity here for dairy processors to look at the ways they market their products and encourage further sales of home-grown produce.”


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