BMi Research reveals that Covid-19 and its aftermath played a central role in the performance of dairy and plant-based products in the market.

The product range is a mix of essential low-price foods and luxury products. The biggest volume increases in the aftermath of Covid came from the Flavoured Milk and Value-Added Dairy (VAD) sectors. This contrasts to 2020 when the Buttermilk and Maas category surprised by having recorded growth in both the previous years. But in 2021 it was the second worst performer behind Spoonable Yoghurt. The other dairy beverages – Dairy Juice Blends and Drinking Yoghurt – both registered small declines in volume in 2021.

The 2022 flooding that occurred in KwaZulu Natal affected one of the biggest milk producing areas of the country, but fortunately had little impact on milk production other than the actual period of flooding. The same applies to drought in the Eastern Cape, another milk producing region, which has not yet impacted on supply. The major constraint on the market is therefore economic, pricing, as well as loadshedding which affects production, and particularly reduces its shelf-life.

Against positive predictions, one of the largest dairy beverage categories, Buttermilk and Maas, declined slightly in volume in 2021 compared to the prior year though value increased slightly. During the Covid pandemic in 2020, demand for the two products had been notably positive as these products remain well priced compared to proteins and other alternate products – and were effectively promoted as providing good sustenance during the lockdowns and economic hardship for many. Thus, in 2020 volumes were higher than expected, and players were not able to maintain those volumes in 2021 as some consumers reverted to their primary products as they go back to work.

Maas is typically a low-income rural product and its demand is highly price sensitive, with local taste preferences being an important factor for manufacturers. The category is expected to remain stable in the short term and see growth in the medium to long term.

The Drinking Yoghurt category in 2021 saw a small increase in value and a slight decrease in volume compared to 2020. The slow pace of the post-Covid recovery has resulted in a continued focus on value-based purchasing by consumers, with this category having a relatively higher average price compared to some alternatives. Drinking Yoghurt is generally perceived as an on-the-go beverage, and volumes have consequently been dampened by the remote and hybrid working environment in which consumers have been somewhat less active on average.

Drinking Yoghurt is expected to perform better over the medium term as economic activity improves. The category volume is expected to grow notably in 2022 and then stabilise in the medium to long term.

Courtesy of Bizcommunity – read full article here.