Switzerland continued its process of trade liberalisation with the EU, thus greatly affecting the Swiss cheese industry. As a result, any existing trade barriers were abolished for imported cheese, affecting both consumers and producers with the Swiss cheese industry now having to deal with competition from neighbouring countries, such as France. This development led to notable decreases for locally-produced cheese and renewed campaigns enticing Swiss customers to consume local produce.
Migros Genossenschaftsbund is expected to be the leading company in 2013 with a 14% value share. After them, competition is more even, with Coop Genossenschaft, Bongrain and Emmi set to account for value shares of 6% each. Lactalis Groupe is next with an expected 4%.
The competitive landscape of Swiss cheese is expected to continue being impacted by the growing availability of cheaper imported products. In addition, the strength of the Swiss franc and the weakening of the euro have encouraged massive cross-border shopping. This has resulted in leading retailers embarking on a cost-cutting war by withdrawing dozens of branded items from their shelves, as foreign suppliers were not willing to reduce their prices in spite of the weak euro. Discounters Denner, Aldi and Lidl also started reducing the prices of many items, and Migros Genossenschaftsbund slashed the cost of more than 1,000 branded items by at least 10%.
Drinking Milk ProductsSwiss drinking milk products was one of the categories that were most affected by the decline in milk prices. According to the OFAG (Federal Office for Agriculture), over a 12-year period, the price of milk paid to producers declined by 27% in Switzerland. The average price was CHF0.80 in 2000, while it reached only CHF0.58 in 2012, thereby affecting the milk industry.
Retai giant Migros Genossenschaftsbund is holding its grip on drinking milk products up to 2013. The retailer was able to do so by offering the main drinking milk products in all its ranges. Coop Genossenschaft, one of its direct competitors, has fewer outlets and thus weaker share for the mass product of drinking milk. The biggest branded player was meanwhile Emmi, notching the third position in drinking milk products in 2013. For the top three players, the destabilising effect of fluctuating milk prices have been a challenge
The agricultural industry in Switzerland is expected to continue undergoing fundamental changes triggered by the abolishing of export subsidies and further trade liberalisation. Drinking milk products are therefore expected to be deeply impacted not only by internal regulations, such as the reduction of funds allocated to milk producers, but also by further bilateral agreements with the EU.
Yoghurt and Sour Milk DrinksManufacturers of yoghurt and sour milk products continued to innovate within the category over the review period, constantly seeking to bring enhanced benefits to consumers while trying to focus on greater brand differentiation and increased value for shoppers. Most players also focused on innovation as it represents a major competitive advantage and is the key factor to their development.
The retail giants Migros Genossenschaftsbund and Coop Genossenschaft dominate the yoghurt and sour milk drinks competitive environment in Switzerland, while third position is set to be held by the domestic company Emmi. In 2013, these three companies are expected to account for respective value shares of 36%, 19% and 13%. Through its innovative brands and successful advertising campaigns, Emmi was able to consolidate its position in yoghurt during the review period.
During the forecast period, one of the most important factors will be the competition between private label and branded products. Migros Genossenschaftsbund and Coop Genossenschaft’s marketing strategies involve promoting their own brands of cheaper yoghurt and sour milk drinks, which is helping to foster growth of their private label ranges, while manufacturers of branded products are likely to continue to see a decline in sales.
Other DairyThe health and wellness trend is continuing to affect consumption patterns and is fuelling demand for healthier food options. Increasing health consciousness, together with campaigns sponsored by the Federal Office of Public Health (FOPH) and major consumer associations, are prompting Swiss consumers to migrate to healthier dietary alternatives. This development had a detrimental effect on many categories within other dairy over the review period, which underperformed due to the perception of these products as being unhealthy.
Other dairy will continue to be led by the domestic retailers Migros Genossenschaftsbund and Coop Genossenschaft, which are set to achieve value shares of 31% and 17% respectively in 2013. These two retailers were able to hold onto their respective positions by segmenting their product ranges in response to changing consumer behaviour seen during the recession.
Alongside health concerns, a new trend towards natural and organic foods is expanding quickly, with manufacturers of products in other dairy placing a special emphasis on organic ingredients and fair-trade products. As consumers become more aware of the world surrounding them, they increasingly look for products prepared with ingredients that are not detrimental to the environment or other people’s lives. This consumer perception is expected to play a significant role in the performance of other dairy over the forecast period.
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