Yellow Fats and Edible Oils - UK - September 2016

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Overall market sees values and volumes fall over 2011-16
Maturity of market limits scope for growth 2016-21
Figure 1: UK retail value sales of yellow fats* and edible oils, 2011-21
Decline in cooking oil pulls down whole market
Olive oil values rise but volumes largely static
Weak farmgate milk prices bring down butter prices
Unpredictable factors influence olive oil prices
Weakened pound and economic uncertainty could lead to inflation
Companies and brands
Lurpak extends lead
Focus on provenance boosts Country Life and Kerrygold
Benecol bucks negative trend in spreads
Figure 2: Leading brands’ shares in the UK retail yellow fats market, by value, 2015/16*
Own-label remains dominant in weak oils market
Majority of launches in oils, but increased NPD in spreads
Spread brands highlight a lack of artificial ingredients, while butter focuses on regional origins
Growth in organic and premium oils
Unilever and Arla continue to dominate advertising
Targeting the home cooking occasion
Flora carries strong family associations
Filippo Berio has a premium reputation
Frylight seen as healthy, but also as fun and vibrant
Figure 3: Attitudes towards and usage of selected brands, August 2016
The consumer
Butter usage is higher than spreads, but half of people use both
Butter and spreads have contrasting demographics
Figure 4: Buying of butter and spreads, by type, July 2016
Edible oils usage highest among families, most people use more than one type
Olive oil usage undiminished by price rises
Figure 5: Buying of edible liquid oils and solid oils/fats, by type, July 2016
Block butter the top choice for baking, but chefs’ recommendations could help to boost spreads
Scope to encourage use of oils on cooked food
Many oil buyers unaffected by price
Low saturated fat seen as especially important for cooking oils
Scope for packaging innovation
Figure 6: Factors considered important when buying oil, by purpose, July 2016
Low saturated fat seen as key to making a spread healthy
All-natural ingredients are of particular appeal to over-65s
Figure 7: Factors judged to make a spread healthy, July 2016
Opportunities for products with farmers’ pay guarantees
Focus on convenience could grow usage of spray and flavoured oils
Figure 8: Attitudes towards yellow fats and edible oils, July 2016
What we think
ISSUES AND INSIGHTS
Farmers’ pay guarantees offer a promising means to build value
The facts
The implications
Convenience aspects of spray oils could be mined further
The facts
The implications
Focus on individual flavours could boost uptake of non-dairy spreads
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Overall market sees values and volumes fall over 2011-16
Maturity of market limits scope for growth 2016-21
Decline in cooking oil pulls down whole market
Olive oil values rise but volumes largely static
Gains made by speciality oil swallowed up by weakness of cooking oil
Weak farmgate milk prices bring down butter prices
Unpredictable factors influence olive oil prices
Weakened pound and economic uncertainty could lead to inflation
MARKET SIZE AND FORECAST
Overall market sees values and volumes fall over 2011-16
Maturity of market limits growth potential 2016-21
Figure 9: UK retail value sales of yellow fats* and edible oils, 2011-21
Figure 10: UK retail value and volume sales of yellow fats and edible oils, 2011-21*
Butter values fall but volumes grow 2011-16
Butter revival to lose momentum
Prices expected to creep up
Figure 11: UK retail value sales of butter, 2011-21
Figure 12: UK retail value and volume sales of butter, 2011-21
Spreads continue to decline 2011-16
Ageing population should provide a boost
Tightening of household incomes could benefit spreads
Figure 13: UK retail value sales of spreads, 2011-21
Figure 14: UK retail value and volume sales of spreads, 2011-21
Price volatility in edible oils over 2011-16
Exchange rates crucial to edible oils values
Mature market offers limited scope for growth
Figure 15: UK retail value sales of edible oils, 2011-21
Figure 16: UK retail value and volume sales of edible oils, 2011-21
Forecast methodology
The impact of the EU referendum vote
Figure 17: Alternative scenarios for the yellow fats and oils market, 2016-21
Figure 18: Alternative scenarios for the yellow fats and edible oils market, at current prices, 2016-21
Little immediate impact on consumer buying habits
Some potential for economic slowdown to prompt switching within yellow fats…
…limited by ingrained savvy shopping habits
Weakened pound could spark oil price inflation…
…but edible oils have seen little economising
MARKET SEGMENTATION
Spreads lose market share
Figure 19: UK retail value and volume sales of yellow fats, by segment, 2014-16
Weakness of cooking oil brings down entire market
Olive oil values rise but little movement on volumes
Rapid growth in speciality oils
Figure 20: UK retail value and volume sales of edible oils, by type, 2014-16
MARKET DRIVERS
Weak farmgate milk prices bring down butter prices
Weakened pound could lead to price inflation
Brexit vote creates economic uncertainty
Unpredictable factors influence olive oil prices
Ageing UK population could benefit spreads at the expense of butter
More favourable media coverage of saturated fat enables butter revival
Declining sales of carrier products affect butters and spreads
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Lurpak extends lead
Focus on provenance boosts Country Life and Kerrygold
Benecol bucks negative trend in spreads
Own-label remains dominant in weak oils market
Majority of launches in oils, but increased NPD in spreads
Spread brands highlight a lack of artificial ingredients, while butter focuses on regional origins
Growth in organic and premium oils
Unilever and Arla continue to dominate advertising
Targeting the home cooking occasion
Flora carries strong family associations
Filippo Berio has a premium reputation
Frylight seen as healthy, but also as fun and vibrant
MARKET SHARE
Lurpak benefits from butter’s revival and strong advertising investment
Figure 21: Leading brands’ sales and shares in the UK retail yellow fats market, by value and volume, 2013/14-2015/16
Figure 22: Leading manufacturers’ sales and shares in the UK retail yellow fats market, by value and volume, 2013/14-2015/16
Benecol bucks downward trend in spreads
Focus on British origins boosts Country Life
Marketing focused on family farms helps Kerrygold to grow
Own-label remains dominant in cooking oil
Figure 23: Leading brands’ sales and share in the UK retail cooking oil market, by value and volume, 2013/14-2015/16
Figure 24: Leading manufacturers’ sales and share in the UK retail cooking oil market, by value and volume, 2013/14-2015/16
Filippo Berio avoids losing sales in weak olive oil market
Figure 25: Leading brands’ sales and share in the UK retail olive oil market, by value and volume, 2013/14-2015/16
Figure 26: Leading manufacturers’ sales and share in the UK retail olive oil market, by value and volume, 2013/14-2015/16
NPD helps own label to strengthen lead in speciality oils
Coconut oil brands grow sales despite rising prices
Figure 27: Leading brands’ sales and share in the UK retail speciality oil market, by value and volume, 2013/14-2015/16
Figure 28: Leading manufacturers’ sales and share in the UK retail speciality oil market, by value and volume, 2013/14-2015/16
LAUNCH ACTIVITY AND INNOVATION
Increased NPD on spreads
Figure 29: New product launches in the UK butter, spreads market and edible oils market, by sub-category, 2011-16
Flora Freedom focuses on both health and the environment
Other dairy-free brands look to appeal to wider group of users
Supermarkets hope to capitalise on food trends with avocado and coconut oil spreads
Brands and retailers look to appeal to home cooks with flavoured butters
Smaller companies and retailers highlight regional provenance
Spread brands highlight the absence of artificial ingredients
Spreads and spreadable butters draw on their key advantage over block butter
Sustainable palm oil pledges drive rise in environmental claims 2015
Figure 30: New product launches in the UK butter and spreads market, by top ten claims (sorted by 2015), 2011-16
Growth in organic coconut oils
Princes expands into coconut oil
Figure 31: New product launches in the UK edible oils market, by top ten claims (sorted by 2015), 2011-16
Retailers build up their premium oil ranges
A wider variety of flavoured oils
ADVERTISING AND MARKETING ACTIVITY
Unilever retains its advertising lead
Associating Bertolli with authentic Italian cooking
Flora draws on dinosaurs to champion plant-based ingredients
Flora Freedom focuses on the environment
Unified campaign targets home baking occasions
Figure 32: Above-the line, online display and direct mail advertising expenditure on yellow fats and edible oils, by top advertisers, 2012-16
Arla consolidates position as second largest advertiser
Lurpak encourages adventurousness in cooking
Lurpak Infusions put the focus on flavour
Anchor hopes to aid in parenting challenges
Dairy Crest focuses on health and naturalness
Associating Clover with family time
Frylight continues its associations with Pancake Day
Nielsen Ad Intel coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 33: Attitudes towards and usage of selected brands, August 2016
Key brand metrics
Figure 34: Key metrics for selected brands, August 2016
Brand attitudes: Flora seen as caring most for the environment
Figure 35: Attitudes, by brand, August 2016
Brand personality: Flora and Filippo Berio seen as the most vibrant
Figure 36: Brand personality – Macro image, August 2016
Frylight is seen as the healthiest brand
Figure 37: Brand personality – Micro image, August 2016
Brand analysis
Filippo Berio is seen as most worth paying more for
Figure 38: User profile of Filippo Berio, August 2016
Napolina is seen as traditional and wholesome, but as standing still by 60%
Figure 39: User profile of Napolina, August 2016
Frylight is seen as the healthiest, but also as fun and vibrant
Figure 40: User profile of Frylight, August 2016
Flora is most popular among parents with young children
Figure 41: User profile of Flora, August 2016
Crisp ‘n’ Dry will need to work to improve its image
Figure 42: User profile of Crisp ‘n Dry, August 2016
THE CONSUMER – WHAT YOU NEED TO KNOW
Butter usage is higher than spreads, but half of people use both
Butter and spreads have contrasting demographics
Edible oils usage highest among families, most people use more than one type
Olive oil usage undiminished by price rises
Block butter the top choice for baking, but chefs’ recommendations could help to boost spreads
Scope to encourage use of oils on cooked food
Many oil buyers unaffected by price
Low saturated fat seen as especially important for cooking oils
Scope for packaging innovation
Low saturated fat seen as key to making a spread healthy
All-natural ingredients are of particular appeal to over-65s
Opportunities for products with farmers’ pay guarantees
Focus on convenience could grow usage of spray and flavoured oils
BUYING OF YELLOW FATS
Butter usage is higher than spreads, but half of people use both
Butter and spreads have contrasting demographics
Figure 43: Buying of butter and spreads, by type, July 2016
Taste is crucial in spreads usage
BUYING OF EDIBLE OILS
Oil usage highest among families
Majority of buyers use more than one type of oil
Figure 44: Buying of edible liquid oils and solid oils/fats, by type, July 2016
Price rises have not dented olive oil usage
Usage of extra virgin olive oil is higher, but little awareness of what makes it different
USAGE OCCASIONS FOR SELECTED TYPES OF YELLOW FATS AND EDIBLE OILS
Block butter remains the top choice in baking
Chefs’ recommendations could appeal to younger consumers
Marketing spreads as offering a tangible advantage
Figure 45: Usage occasions for selected types of yellow fats and edible oils, July 2016
Butter’s taste associations help it target special occasion cooking
Spreads could push health credentials more strongly to encourage use in cooking
More people use olive oil for frying than for dressing
Focus on flavour combinations could help to encourage use of oil on cooked food
FACTORS CONSIDERED IMPORTANT WHEN BUYING OIL
Price seen as more important for cooking than dressing oil
Figure 46: Factors considered important when buying oil, by purpose, July 2016
Low saturated fat seen as important by many
Need for further innovation in packaging formats
Further work needed to persuade consumers on value of production methods and ingredient origins
DEFINITIONS OF A HEALTHY SPREAD
Low saturated fat seen as key to a healthy spread
Figure 47: Factors judged to make a spread healthy, July 2016
All-natural ingredients enjoy strong health halo
Spreads with functional heart health benefits remain niche
ATTITUDES TOWARDS YELLOW FATS AND EDIBLE OILS
Convenience aspects of spray oils could be leveraged more
Strategic positioning in-store and cross-promotion could boost flavoured oils
Figure 48: Attitudes towards yellow fats and edible oils, July 2016
Opportunities for butters, spreads and oils with farmers’ pay guarantees
Milk can offer cues in supporting farmers
Potential for fair trade in oil
Emphasis on unique flavours could boost usage of non-dairy spreads
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 49: Best- and worst-case forecasts for retail value sales of yellow fats and edible oils, 2016-21
Figure 50: Best- and worst-case forecasts for retail volume sales of yellow fats and edible oils, 2016-21
Figure 51: Best- and worst-case forecasts for retail value sales of butter, 2016-21
Figure 52: Best- and worst-case forecasts for retail volume sales of butter, 2016-21
Figure 53: Best- and worst-case forecasts for retail value sales of spreads, 2016-21
Figure 54: Best- and worst-case forecasts for retail volume sales of spreads, 2016-21
Figure 55: Best- and worst-case forecasts for retail value sales of edible oils, 2016-21
Figure 56: Best- and worst-case forecasts for retail volume sales of edible oils, 2016-21
Figure 57: UK retail volume sales of yellow fats and edible oils, 2011-21
Figure 58: UK retail volume sales of butter, 2011-21
Figure 59: UK retail volume sales of spreads, 2011-21
Figure 60: UK retail volume sales of edible oils, 2011-21
Forecast methodology