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EU faces a possibly butterless Christmas as prices reach all-time highs

August 07, 2017

The price of butter has skyrocketed in Europe over the past months due to cold weather and farmers going out of business, which is fuelling concerns among food manufacturers.

, EU faces a possibly butterless Christmas as prices reach all-time highs

According to several reports, butter costs have reached record highs over the past year. Bakery and Snacks wrote on 23 May that butter prices had pushed past €400 (US$470)/100kg in October 2016, a level not reached since 2013.

Butter prices in the UK had increased by more than 20%, The Guardian reported on 7 July, while the French bakery association Les Federation des Pain Entrepreneurs de la Boulangerie L’Avirnir said general prices had rocketed by as much as 90%.

The upturn in prices was caused, according to Financial Times on 25 June, by many producers in the UK – 2.5% of the total – deciding they had had enough of the economic difficulties and calling it quits.

Consumers had also become more health-conscious, which had prompted them to switch from vegetable oil spreads to butter, further increasing demand and dragging up the price of the dwindling supply.

“The increase in the price of basic raw materials – namely milk – appears as the key factor contributing to the rise in the price of butter. The increase in milk prices is due to the poor growth of dairy cattle stock, on average, worldwide, and the decrease in the number of livestock in the EU,” Sergey Avramenko, head of global market research at IndexBox, told Bakery and Snacks.

Butter prices were rising faster than any other grocery item, wrote Financial Times. The high prices and straight-up lack of butter was impacting food manufacturers who were facing lower profit margins and reduced production.

UK dairy company Dairy Crest, for example, experienced lower than expected profit margin growth despite an increase in sales, due to a larger amount capital used to acquire cream.

“Despite the pressure on butter input costs, the strong performance of our cheese business means that our expectations for the year remain unchanged,” Dairy Crest CEO Mark Allen told Food Manufacture on 19 July.

Not all manufacturers might be so lucky, however, and Peder Tuborgh, CEO of the Danish dairy giant Arla, warned The Guardian that the UK, and perhaps all of Europe, could be facing a butter shortage by Christmas.

“At Christmas time there will simply not be enough butter and cream around in Europe,. We know that as an industry. I know that from our forecasting,” Tuborgh said.

While consumer prices had not witnessed a noticeable upturn yet, if the worst came to worst, supermarket shelf prices might dash upwards come Christmas as well.


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