Food Bites
Dessert Sauces and Creams
Annual Market Quantification
June 2011
Market context
Canned milk category is comprised primarily of condensed milk and, to a lesser extent,
evaporated milk and caramel treat tins. These products have a strong presence within the
retail trade, with the application being primarily for baking within private households. The
category is well-established and is dominated by Nestlé, with smaller producers forming the
second tier of the market. Overall, this is a relatively small market in volume terms and is
fairly consistent in production levels year on year.
The dessert sauces category is very limited in volume terms. Given this, the market volumes
are prone to volatility as the entry or exit of a player or any product variations result in
substantial market changes. The category is quite seasonal due to the close link to ice
cream, with sales seen primarily within summer.
The dessert sauces market may be divided into two – those products destined for retail
production versus those designed for foodservice usage, with pack sizes designed for this.
Dairy creams comprise larger established players right through to the smaller dairies that
make up the balance of the market. The dairy cream category is closely related to the butter
market as both compete for the same raw materials. However, dairy cream is generally more
profitable and thus is often favoured over butter. Overall, there is a steady demand for dairy
cream with usage firmly established within dessert and baking.
2
Market context
(Cont.)
Non-dairy cream is based on palm oil and is marketed as an alternative to dairy cream. It is
used almost exclusively in the industrial baking sector with Rich Food Products and Unilever
being key suppliers to this portion of the market. The category has a limited presence in retail
through the likes of Unilever and Orley Foods.
Non-dairy cream offers the benefit of longer shelf life compared to dairy cream. And, given
the usage of the category in industrial baking, it extends the shelf life of baked goods too.
A challenge currently faced by the category is the need to rename the category. As the
category is essentially not cream, the new labeling laws demand an alternative name. It
remains to be seen the direction that the industry will take in the renaming exercise.
3
2010 Category
Volume Shares
Non-Dairy
Cream
24.6%
Canned Milk
31.4%
Dessert
Sauces
2.5%
Dairy Cream
41.5%
4
Annual Growth
Rates
Dessert Sauces
Canned Milk
2010
11.7%
2010
10.4%
20.3%
-3.4%
18.9%
-5.1%
4.6%
-8.9%
2006
2006
5.4%
-20.0%
20.0%
-20.0%
Dairy Cream
2010
3.7%
20.0%
Non-Dairy Cream
2010
3.3%
0.2%
1.8%
-5.8%
10.8%
-6.6%
8.4%
2006
-20.0%
6.1%
2006
4.5%
20.0%
-20.0%
-4.5%
20.0%
5
Canned milk growth
short lived
The canned milk market saw a spate of declines running from 2007 through to 2009.
The good growth seen in 2010 (11.7%) represents a partial recovery of these volumes
but is not growth in real terms.
The canned milk category is often regarded as secondary to other dairy products, such
as milk powders or ice cream, that compete for the same supply of raw materials. As a
result, the category volumes often show a volatility that is not indicative of end-user
demand, but rather of the supply situation for the category. With milk supply being
variable in itself, producers often play a balancing game between these competing
categories.
Canned milk is retail focused and usually performs well in better economic conditions.
However, the retail demand for the product has been waning, possibly as consumers
become more health conscious and try to avoid the likes of sweetened, concentrated,
dairy products. In addition, with the trend to convenience, consumers appear to be
baking less, and thus hampering the demand for canned milk products.
The category is expected to see a decline in volumes during 2011 but make a recovery
again in 2012.
6
Dairy cream sees
innovation
Dairy cream makes profitable use of the available raw materials and has shown average
annual growth of 2.6% over the last decade despite some periods of volume contraction.
Dairy cream has generally shown good growth historically with the foodservice usage of
the category being slightly more resilient than that of the overall market.
More recently, some of the medium-sized dairies have placed greater emphasis on dairy
cream sales. It is believed that line extensions into sour cream, low fat and double thick
cream have sparked renewed interest in the category. In addition, rebranding exercises
with more sophisticated, resealable packaging options have bolstered sales. These
market activities have served to grow the fresh cream portion of the market but canned or
long life creams have had little focus and have merely held their position.
Overall, dairy cream is expected to show limited but consistent growth in the medium
term. Increases of 3.5% and 3.8% are anticipated for 2011 and 2012 respectively.
7
Little focus on dessert
sauces
Dessert sauces is a small category in volume terms and currently comprises only 2.5%
of the dessert sauces and creams market. Given this, if a player changes focuses or
exits the market it impacts on the category growth rate quite substantially. As a result,
dessert sauces has traditionally seen a fair amount of volatility.
The category is generally not a core product for many of the players, and thus there is
little or no advertising focus or spend. There has been some innovation in the form of
syrups being extended into dessert sauces but otherwise there has been little activity
within the category.
Foodservices maintains nearly a half share of the total market volumes. This sector has
not shown much growth with catering usage remaining fairly static.
The growth in dessert sauces is expected to taper off somewhat in the medium term.
Following the 7.9% increase expected for 2011, only a limited 1.3% growth is anticipated
for 2012.
8
Limited growth in non-dairy
cream
The non-dairy cream category has stabilised somewhat, showing a small volume
increase (1.0%) after two consecutive years of volume declines. Further volume growth
is expected in the short term returning the expected volume of the market to 2005/2007
levels by 2012.
In terms of focus, non-dairy cream still maintains a strong presence within the industrial
and foodservice sectors. Retail offerings offer better margins but consumer demand for
these remains limited and thus they form only a limited proportion of production.
Within foodservices, dairy and non-dairy cream consumption are at almost equal volumes
with usage for both focused on the commercial sector. The foodservice and industrial
trade is supplied by a few key players and these sales are heavily dependent upon the
Rand/Dollar exchange as most of the required raw materials are imported. There were a
number of supply problems a few years ago due to fires in international palm plantations
but supply has since stabilised, albeit at a higher input cost.
Growth of around 5.0% is expected per annum for the category in the short term
9
Food Bites
Dessert Sauces
and Creams
For more information,
contact:
Jan Wegelin
Research Manager
Tel: (011) 615 7000
Mobile: 082 938 0744
www.bmi.co.za