WORLDBUTTERMARKETREPORT2000-2020

PMFOOD&DAIRYCONSULTING2016

TheWorldButterMarketReportPM FOOD&DAIRY CONSULTING ispublishinganewreport:TheWorld ButterMarketReport2000-2020 .The new report contains 230 pages of valuable information and analysis of the world buttermarket(seecontentofthereport).The report gives the overall view of the development on the world market for butter/butterblendsproductsfrom2000-2015inallregionsoftheworld.The future prospects for global butter market from 2015 to 2020 are analyzed with focus onconsumer trends, developments in the emerging dairy markets, new markets and the futurestructureofthebutterproducingcompanies.Thereportalsoprovidesindebtanalysis42countriesfromallregionoftheworldandseveralnewcountriesareaddedtotheanalysissincethelasteditionespeciallyinAsiaandAfrica.Thisprovidesall the necessary information for evaluating the different buttermarkets in the world and thefuturepotentialforexpansion.Is your company seeking new opportunities in the global butter market thisreport isamust!Subscribe now by replying to PM FOOD & DAIRYCONSULTINGonmikkelsenpreben@hotmail.com

Price:€3,500or$4,000You wil l receive an invoice and when the payment is registered the report wil l be sentelectronically.

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Content

1.Introduction............................................................................................................................71.1.Background....................................................................................................................................71.2.Objectiveandscope.......................................................................................................................71.3.Contentofthereport.....................................................................................................................71.4.Productcoverage...........................................................................................................................91.5.Timescale......................................................................................................................................91.6.Reportsources...............................................................................................................................9

PARTI:GENERALANALYSIS.......................................................................................................11

2.Worldbutterproduction........................................................................................................122.1.Butterdefinition...........................................................................................................................132.2.Worldbutterfatproduction.........................................................................................................132.3.Worldbutterproduction..............................................................................................................152.4.EUbutterproduction....................................................................................................................172.5.Productionprognosis2020...........................................................................................................192.6.Butteroil......................................................................................................................................20

3.Worldbutterconsumption....................................................................................................223.1.Historicallydevelopment..............................................................................................................223.2.Butterconsumption.....................................................................................................................223.3.Butterconsumptionpercapita.....................................................................................................263.4.Consumertrends..........................................................................................................................28

3.4.1.Convergingconsumertrends........................................................................................................283.4.2.Retailchains..................................................................................................................................293.4.3.Healthissues.................................................................................................................................323.4.4.Returntodairy..............................................................................................................................33

3.5.Futurebuttermarketprospects....................................................................................................34

4.Tradepatterns.......................................................................................................................364.1.Globaltrade.................................................................................................................................364.2.Majorexporters...........................................................................................................................36

4.2.1EU..................................................................................................................................................404.2.2.TheUS...........................................................................................................................................424.2.3.NewZealand.................................................................................................................................43

4.3.Majorimporters...........................................................................................................................444.3.1.Russia............................................................................................................................................454.3.2.TheUS...........................................................................................................................................474.3.3.China.............................................................................................................................................47

4.4.Internationalbutterprices...........................................................................................................494.5.Futuretradewithbutter...............................................................................................................504.6.Tradeagreements........................................................................................................................51

4.6.1.Introduction..................................................................................................................................514.6.2.WTO..............................................................................................................................................524.6.3.Othertradeagreements...............................................................................................................534.6.4.CommentsonTPPagreement......................................................................................................564.6.5Summary........................................................................................................................................58

5.Majorbuttermanufacturingcompanies................................................................................595.1.Worldlargestdairycompanies.....................................................................................................59

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5.2.Worldlargestbuttermanufacturingcompanies............................................................................62

6.Foodserviceandfoodindustry..............................................................................................666.1.Utilizationinfoodserviceandfoodindustry.................................................................................666.2.Marketsegment...........................................................................................................................67

7.Butterblends.........................................................................................................................697.1.Definitions....................................................................................................................................697.2.Production...................................................................................................................................707.3.Marketdevelopments..................................................................................................................717.4.Industrialapplications..................................................................................................................737.5.Futurepossibilities.......................................................................................................................73

8.Oilsandfatsmarket...............................................................................................................748.1.Butterandtheoilsandfatsmarket..............................................................................................748.2.Futuretrends...............................................................................................................................76

9.Analysisofthefuturepossibilitiesforbutter.........................................................................779.1.Megatrends.................................................................................................................................779.2.SWOTanalysis..............................................................................................................................789.3.Futuremarketsforbutterfat........................................................................................................809.4.Strategiesforthebutterproducingcompanies.............................................................................83

10.Conclusionsandrecommendations......................................................................................8510.1.Conclusions................................................................................................................................8510.2.Recommendations......................................................................................................................88

PARTII:REGIONALANDNATIONALANALYSES...........................................................................89

EU-27........................................................................................................................................90Germany.............................................................................................................................................91France.................................................................................................................................................95Poland................................................................................................................................................99Netherlands......................................................................................................................................103Ireland..............................................................................................................................................106UnitedKingdom................................................................................................................................109Italy..................................................................................................................................................113Finland..............................................................................................................................................116CzechRepublic..................................................................................................................................119Spain.................................................................................................................................................122Denmark...........................................................................................................................................124Austria..............................................................................................................................................128Belgium.............................................................................................................................................131Sweden.............................................................................................................................................134Portugal............................................................................................................................................136Slovakia............................................................................................................................................138Romania...........................................................................................................................................141Hungary............................................................................................................................................144

OtherEurope...........................................................................................................................147Switzerland.......................................................................................................................................148Norway.............................................................................................................................................151

CIS...........................................................................................................................................154

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Russia...............................................................................................................................................155Ukraine.............................................................................................................................................159Belarus..............................................................................................................................................162

NorthAmerica.........................................................................................................................165USA...................................................................................................................................................166Canada..............................................................................................................................................171Mexico..............................................................................................................................................174

SouthAmerica.........................................................................................................................177Brazil.................................................................................................................................................178Argentina..........................................................................................................................................181Chile..................................................................................................................................................184Uruguay............................................................................................................................................187

Oceania...................................................................................................................................189Australia...........................................................................................................................................190NewZealand.....................................................................................................................................194

Asia.........................................................................................................................................197India.................................................................................................................................................198Pakistan............................................................................................................................................201Iran...................................................................................................................................................203China................................................................................................................................................206Japan................................................................................................................................................209

MEA........................................................................................................................................212Egypt.................................................................................................................................................213Israel.................................................................................................................................................216SaudiArabia......................................................................................................................................219Turkey...............................................................................................................................................222SouthAfrica......................................................................................................................................225

1.Introduction1.1.BackgroundButterhasbeenthemainproductforthedairyindustryforcenturiesandthedairieswasclassified

accordingtothebutterquality.Formanyconsumersbutterwasaluxuryproductconnectedwith

highstatus.Fromthelate19thcenturyuntil1970sthemajorityoftheexportofdairyproductswas

butter and major brands like Président, Anchor, Lurpak, Land O´Lakes and Kerrygold was

establishedontheinternationalmarket.

In the last twodecades, the consumer focus has changed frombutter as a luxury product to a

majorconcernaboutsaturatedfatsandcholesterolproblems.Theconsequencewasadeclinein

theconsumptionoftraditionalbutterandthistrendhascontinueduntilnow.Theresponsefrom

thedairyindustrywaslaunchinglowfatbutterandbutterblendsandthishastosomeextendkeptupthetotalbutterfatsales.

However, in recent years the critic of butter and saturated fats has been changed by several

studies indicating that butter is not unhealthy and at the same time the critic of palm oil hasintensifiedduetotheunsustainableproductionmethods

Meanwhileotheroutletshavebeencreatedinthefoodserviceandfoodindustrywherebutteris

replacingothertypesoffats.

1.2.ObjectiveandscopeTheobjectiveofthisreportistoanalyzethemarketforbutterandbutterblendsinrelationtothe

future challengesandpossibilities. The reportaims to identify thegeneral trends for the future

world butter market combined with an analysis of the regional developments and the butter

market in 41 countries. Thismakes it possible to point out the future possibilities andmarket

potentialsforbutterandbutterblendsandfinallytosetupstrategiesforthedairyindustry.

1.3.ContentofthereportThe reportwill focuson thedevelopmentof theglobalbuttermarket in relation toproduction,

consumption,trade,andmajorplayersbothcountriesandcompanies.Thereport isdividedintotwopartswhere:

• PartI isanalyzingtheglobaltrendsandprospectsforbutterandbutterblends inthefuture

• PartIIistheregionalandnationalbuttermarkets(50countries)

The development of the global butter production is described and analyzed in chapter 2identifying themajor butter producing countries. The focus is also on the national or regional

policies that regulate the butter production – especially the intervention system in EU and the

buy-upschemeintheUSthathasasignificanteffectontheinternalandinternationalpricesfor

butter.Whatwillhappenwhenandiftheseregulatorymeasuresaredismantledandfinallywhatarethefutureprospectsfortheglobalbutterandbutterfatproductionuntil2015.

Chapter 3describes and analyses the consumption of butter and butter blends in the last two

decadesandidentifiesthemajortrendsinthedifferentregions.Whataretheexpectationsforthe

buttermarket inthefutureandwhichconsumertrendswilldominatetheconsumptionpattern.Thereisalsofocusonthealternativeoutletforbuttertofoodserviceandthefoodindustry.

Chapter4analysestheworldbuttertradeandidentifiesthemajorexportersandimporters.There

isalsofocusonEUintra-tradewhichamountsto70%oftheworldtrade.Thedevelopmentofthe

world market prices for butter is assessed. The prospects for the world butter market in the

medium term (2020) and long term (2025) is outlined. Finally, the impact of bilateral andmultilateraltradeagreementsontheworldbuttermarketisanalyzed.

Themajorbuttermanufacturingcompaniesintheworldareidentifiedinchapter5andatop30issetup.Thebutterindustryiscomparedtotheoverallpictureoftheworlddairyindustry.Finally,

thefutureprospectsforthebuttermanufacturingindustryareassessed.

In chapter 6 the utilization of butter fat in food service and the food industry is analyzed. Thisoutlet is expected to be expanding in the future and one of the major growth areas in the

emergingeconomieswherethereisnotraditionforconsumingtraditionalbutter.Bothbutteroil(AMF)andbutterblendsareincludedintheevaluations

Chapter7isanalyzingbutterblendsasafuturedevelopingareafortheoutletforbutterfat.Thenewproductswithvegetableoilandfunctionaladditiveshaveproventobeasuccess inseveral

countriesandthetotalsalesofbutterfathas increased.Whataretheprospectsforpenetratingnewmarketswiththeseproductsandwhatistheglobalpotential.

Inchapter8thescopeisbroadenedtoanalyzetheroleofbutterandbutterblendsintheoilsandfatsmarketingeneralincludingvegetableoil,margarineandcookingfats.Thisincludesidentifying

regional differences. The key questions are if the vegetable oils will squeeze the butter basedproductsduetotheconsumersincreasingfocusonsaturatedfatsandhealthissues.

Chapter9outlinesthepossibilitiesforbutterinthefuture.First,theaimisidentifyingthemajor

megatrendsthatwillcharacterizethenextdecade.Secondly,anopportunityandthreatsanalysis

specificforthedairyandbuttersegmentinthefuture.Thirdly,thepotentialnewmarketswillbeidentifiedandalsothepossiblefuturebutterproducts.

Finally,thechapterconcludesandsummarizestherecommendationsforthedairyindustry.

Chapter10summarizesthefindingsintheanalysisinrelationtothefuturemarketpossibilitiesfor

butter fat in the next decade. On this basis the recommendations for the dairy industry isformulated.

Part II contains the 8 world regions (EU-28, other Europe, CIS, North America, South America,

Oceania, Asia and MEA) and 41 national analyses of the butter markets. The national buttermarketsisselectedfromthecriteriathatthecountryhasabutterproductionover10,000MT.

Thesenationalmarketanalysesinclude:

• Generalinformation

• Butterproduction

• Consumption

• Majorbutterproducingcompanies

• Oilsandfatsmarket

• Futureprospects

1.4.ProductcoverageThereportconcentratestheanalysisontraditionalbutter,butteroilandbutterblends.However,

forseveralcountriesinAsiathebutterproductionismeasuredliketotalbutterfatproductionandthisalsoincludesghee.

Butterblendsconsistofwiderangeofproductswithavaryingbutterfatcontentbutmostofthe

productshavemorethan50%butterfat.Inrelationtotheanalysisofthenationalmarketstheoils

and fatsmarket in general is used as a reference and this includes vegetable oil, cooking fats,spreadableoilsandfats,andmargarine.

1.5.TimescaleDescriptivemarketanalysis:2000/2010-2014

Prognosisforthebuttermarketdevelopments:2014-2020

1.6.ReportsourcesThereportisbasedonPMFOOD&DAIRYCONSULTING´sresearchoftheinternationalbutterandoilsandfatsmarketandthemainsourcesare:

• International statistics: FAO, EUROSTAT, OECD, USDA, FAPRI, ZMB, IDF, CLAL,

AgraMarkets,PZZuviel,EuromonitorInternational

• Nationalstatisticalinformation

• Embassyenquiries

• Interviewswithkeydairyindustrypersons

• Nationaldairyassociations

• Professionalpublications

• Dairycompanywebsites

The evaluations andprognosis of global, regional and countrymarkets ismadeby PMFOOD&DAIRYCONSULTING

Extractsfromthereport

2.WorldbutterproductionButter has through the history been the primary dairy product for the dairy industry and thedevelopmentforbuttercanbedescribedinthreephases:

Phase1(-1970):Thecrownjewelofthedairyindustry

Butterwasthemostvaluableproductforthedairyindustryandthedairieswasclassifiedbythe

butterquality.Themilkpricewascalculatedonthebasisofthefatcontentandtheproteinpart

wasnotcountedasavalueforthedairyprocessinginitself.Theconsumersconsideredbutterto

bealuxuryproductofmuchhigherqualitythanmargarineandvegetableoil.Thebutterpricewashighreflectingthispositiononthemarket.

Phase2(1970-2009):Butterasabalancingproduct

Butter becamea surplusproduct due tooverproduction in theOECD countries combinedwith

stagnatingglobaldemand.ButterwasusedasabalancingproducttogetherwithSMPinbothEU

andUSAand this lead to the creationof huge surplus stocks in the 1980swith a recordof 1.2

millionMT in 1986 in EU equalizingmore than one year of internal consumption. These huge

balanceproblemshaveaffectedthepricelevelforbutteranditdeclinedto$1,000-1.500inmostofthe1980sand90s.

Butterchangedstatusfromaluxuryproductandthecrownjewelofthedairyindustrytosurplus

productinthelowpricesegmentandtheincreasingfocusonhealthissuesandtheproblemswith

saturatedfataffectedtheconsumptionnegatively.

Thedairyindustrytookaverydefensivelystrategytowardtheproblemsbyhangingontothestrict

definitions of butterwith no butter blends allowed. The effectwas no innovation and productdevelopmentforbutterinthe1980´sandmostofthe90s.

Aftertheturnofthemillenniumthebuttermarkethasimprovedinrelationtoinnovation,prices

anddemand,butthesegment isstillvulnerabletofluctuationswhichtheperiodsince2008hasshownwithdecliningpricesandcreationofnewpublicstocksofbutterinEUandUSA.

Phase3(2010-):Newopportunities

Thenextdecadecanmarkashiftinthemarketprospectsforbutterandbutterblendsandthisis

the major objective for this report to analyze this. Several factors point in the direction ofrevitalizingtheworldbutterproductionanddevelopthemarket:

• The growingworld population andmainly the emergingof newmiddle class of nearly 2

billion inthenextdecades.However,thiswillmainlybe inAsia,LatinAmericaandAfrica

but it creates thepotential for expanding thebutter consumption.However, itwill be a

longprocesswithgraduallyincorporatingdairyproductsandbutterintothediet.

• Thewesternization of the diet inmany parts of theworld paves theway for traditional

westernproductsinclusivebutter.

• The spread and fast penetrationof retail chains anddiscounters in emerging economies

createsanaturaloutletfornewproductsandeffectivemarketingcampaigns.

• The main driver to release the potential is that the world economy is dynamic and

increasestheconsumerspurchasingpower

2.1.ButterdefinitionButtermaybedefinedasa fat concentrate,obtainedby churning cream,gathering the fat into

compactmass.AccordingtothePFArules(1976),tablecreamerybutter istheproductobtained

fromcoworbuffalomilkoracombinationthereof,or fromcreamorcurdfromcoworbuffalo

milkoracombinationthereofwithorwithoutadditionofcommonsaltandannattoorcarotene

ascoloringmatter.Itshouldbefreefromotheranimalfats,wax,andmineraloils(vegetableoils

andfats).Nopreservativesexceptcommonsaltandnocoloringexceptcaroteneandannattocan

beadded.Buttermust containnot less than80%byweightofmilk fat,notmore than1.5%by

weightofcurdandnotmorethan3%byweightofcommonsalt.Butterisveryrichinfatandthe

fatsolutevitaminsA,D,E,andK.Thisisthemostcommondefinitionofbutterusedmostofthe

westernworld.

2.2.WorldbutterfatproductionThe total butter fat production in the world was 21.1 million MT in 2014 from a world milk

productionofapproximately663millionMTcow´smilkofwhich424millionMTwasdeliveredto

dairies.Thebutterfatisutilizedindifferentways,firstlyasnaturalpartofthedairyproductslike

in drinkingmilkwith a fat content between0.1% for skimmedmilk and3.5-4% forwholemilk,

yoghurt,cream,cheeseandWMP.Secondlythefat isseparatedfromthemilkandthecreamis

processed into different butter fat types: traditional butter, AMF, butter oil and other butterfractions.

Butterfatutilization2014(1000MT)

Product Production Fatcontent Butterfatutilization ShareperproductDrinkingmilk 138,331 2% 2,766 10%Yoghurt 27,600 2% 552 2%Cream 6,500 30% 1,950 7%Cheese 21,109 20% 4,223 16%WMP 4,900 30% 1,470 5%Butter 10,439 82% 8,560 31%Ghee,AMF,butteroil 5,500 100% 5,500 20%Otherusesofbutterfat 2,300 100% 2,300 9%Total 27,361 100%Source:ZMB,IDF,USDA,PMFOOD&DAIRYCONSULTING

The totalworldbutter fat production is basedon theworldmilk production and thebutter fat

utilizationiscalculatedonthebasisoftheaveragebutterfatcontentinthespecificproduct.The

relativelyhighamountofgheeiscausedbythehighrateofproductioninIndiaandPakistanand

the2millionMTforotherusesisforlocalconsumptionoutsidethedairyprocessinglineandfor

usageofbutterfatinthefoodindustryandfoodservice.Alsotheuseofbutterfatinbutterblends

andbutterspreadsisnotcalculatedinthestatisticsforbutterandbutteroil.

-----------------------3.2.ButterconsumptionTheworldbutterconsumptionhasbeen increasing40%from2000to2010with2.4millionMT.

The growth in consumption of ghee in India and Pakistan wasmore than 2.4millionMT so it

compensatedforthedeclineinconsumptioninEUandalotofotherWesterncountries.USAhas

on the other hand experienced a growth in the consumptionwith 100,000MT due to growingpopulationandincreasingconsumerfocusonnaturalness.

Regionalbutterconsumption2010-2020(1000MT)Region 2010 2014 2015 2020 Share2014 Change14/20

EU-28 1,875 1,912 1,929 2,044 19% +6%OtherEurope 55 61 61 64 0.6% +5%CIS 444 490 405 435 5% -11%NorthAmerica 839 1,000 1,036 1,135 10% +14%SouthAmerica 168 186 189 213 2% +15%Oceania 103 115 117 125 1% +7%Asia 4,958 5,897 6,095 7,016 59% +19%MEA 218 259 273 322 3% +24%World 8,660 9,920 10,105 11,354 100.0% +13%Source:ZMB,CLAL,IDF,USDA,PMFOOD&DAIRYCONSULTING

Overall, theworldbutter consumption improvedwith1.2millionMT (15%) from2010 to2014.

The consumption in EU recovered and increased by 2% but all other developed dairy regions

showedhighergrowth.OtherEuropeincreasedby11%andthesamepercentage–SouthAmerica

andOceana.Asiaexpandedby19%andthegrowthespeciallywasduetofastexpansioninIndia

andPakistan.

Exampleofthecountryanalysis:

Ireland

GeneralinformationIrelandistogetherwiththeNetherlandsandDenmarkthemajorexportersofdairyproductsinEU.Theyallexportmorethan60%ofthemilkprocessedinthedairyindustryandforIrelanditis80%.Themainexportproductsarebutter,milkpowder,cheese,milkanddairyingredients.TheIrishmilkproductionisverysimilartotheNewZealandsystemwithpasture-basedproductioncharacterizedbyahugeseasonaldifference.Thisimpactthedairyindustry´sproductioncapacityandproductmix.TheeliminationwillreleasethepotentialintheIrishmilkproduction.From2014to2015,themilkproductionhasalreadyincreasedby

8%sotheexpansionisontheway.From2014to2020,themilkproductionisexpectedtoincreasebynearly3.5millionMT(+40%)

The extra milk will be utilized for production of cheese, butter, milk powder and infant formula where the industry is investing

significantlybutalsothebutterproductionisexpectedtoexpandsubstantially.

ProductionIreland is the European country that produces the relatively largest quantity ofbutter.60%ofthewholemilkutilizationisusedforbutterproduction.Thisismainlyduetothegrass-basedmilkproductionsystemthatcreatesaseasonalityproblemforthedairyindustry.From2010to2014,thebutterproductionhasincreasedby30,000MT(+23%)duetotheutilizationoftheannuallyexpansionofthemilkquota.TheeliminationofthemilkquotasystembyApril2015hasreleasedthepotentialtoexpand the milk production in Ireland and the butter production is expected toincreaseby14,000MT(8%).ButterproductioninIreland2010-20201000MT 2010 2014 2015 2020Butter 135 166 201 270

Source:IrishDairyBoard,PMFOOD&DairyConsultingFrom2014to2020,thebutterproductionwill increasewithmorethan100,000MT(+62%)andthisrepresentsthelargestexpansionofthebutterproductioninEU.Theextra production will be for export and it will be a huge task to expand currentmarketsanddevelopnew.

MajorbutterproducingcompaniesThe Irish dairy industry is characterized by very

strong cooperatives and during the recent 30

years the sector has restructured and

concentrated significantly. In the last ten years,

theIrishdairyprocessingindustryhasdiversified

enormously and Irish processors is now

technologically advanced and a world leader in

the research and development of many

importantdairyingredientswithawiderangeof

applicationsinthefoodindustry.

The Irish dairy industry has the capability toexpand and invest in the future marketorientation.Themajorproblemistheseasonalityof the milk production that results in a hugeovercapacity in the dairy industry to be able toprocessthehugeamountofmilkinthesummerpeakseason.

ButterproducingcompaniesinIrelandRank Company Production

(MT)

1 LakelandDairies 45,000 2 Glanbia 35,000 3 Dairygold 30,000 4 ConnactGold 15,000 5 KerryGroup 10,000

Source:PMFOOD&DAIRYCONSULTING

ConsumptionTheIrishbutterconsumptionis lowcomparedtoothermajordairycountries inEU.The total consumption has been stable on a level of 11,000 MT in recent years.However,theconsumptionpercapitahasdecreasedfrom3.0kg in2003to2.4kg in2014due to a fast growingpopulation. The consumptionofpurebutterproduct istendingtowardslowfatbutterproducts.Thebutterconsumptionisexpectedtoincreaseby1.5-2,000MTfrom2014to2020duetoconsumerpreferencesfornaturalproducts.InIreland,approximately50%ofthebutterisconsumedintheprivatehouseholdsandtheremaininghalfisusedforindustrialpurposes.

TradeIreland is the largestexporterofbutter inEU larger thanGermany,Franceand theNetherlands.Themajorityof themilk in Ireland isprocessedintobutter,milkpowder,anddairyingredients.From2000to2014,theexporthasincreasedby50,000MTandin2015itisexpectedtoincreasebyfurther30,000MT.Butter/butteroiltrade2003-20201000MT 2003 2010 2014 2015 2020Export120 134 170 201 275Import 5 8 10 10 10Netexport 115 126 160 191 265

Source:IrishDairyBoard,ZMB,PMFOOD&DAIRYCONSULTINGTheIrishmilkproductionisexpectedtoincreaseby40%or3.5millionMTuntil2020andthiswillalsoincreasetheproductionofbutterandalltheextraproductionwillbeexported.Thismeansanincreaseofmorethan100,000MTfrom2014to2020.ButteroiltradeinIreland2010-20201000MT 2010 2014 2015 2020Export 1.2 25 22 30Import 1.6 4 4 7Net-export -0.4 21 18 23

Source:ZMB,IrishDairyBoard,PMFOOD&DAIRYCONSULTINGTheexportofbutteroilhasincreasedsignificantlyfrom2000to2014andthiswillcontinueuntil2020.ThemajormarketsfortheIrishbutterexportareUKandGermany,whichrepresentsnearly60%oftheexport in2014. Inthe lastfiveyearstheexporttootherEUcountriesandtheUShasexpanded.Irelandbutterexport2010-2015bydestination1000MT 2010 2014 2015UK 29.5 63.1 61.4Germany 43.2 35.8 39.4Netherlands 9.4 16.6 34.3France 14.0 16.6 18.6Belgium 20.9 22.1 18.2USA 0.4 4.2 8.8NorthernIreland 5.3 3.2 3.7Turkey 0.5 0.5 3.5Egypt 0.8 0.1 2.5Morocco 1.0 0.9 1.7

Source:ZMB,CNIEL,PMFOOD&DAIRYCONSULTINGThe Irish butter (Kerrygold) has been the market leader in Germany for years and the Irish Dairy Board are promoting the salessubstantially. The relatively large fluctuations in the export of butter are caused by the high degree of price sensitivity that leads toutilizingtheinterventionsysteminsteadofexportincertainperiods.

OilsandfatsmarketSpreadableoilsandfatsdominatestheoilsandfatsmarketinIrelandwith61%followedbybutterwith11,margarinewith10%andvegetableoilalsowith10%.TheoilsandfatsmarketinIrelandhasbeendecliningingeneralintheperiodfrom2010to2014asconsumersfocusesonusinglessoilsand fats in the diet. Besides, consumers are trading down with increasing focus on private label products which are perceived asequivalenttomanybrandedproducts.Butterwasthefastestgrowingcategoryinadecliningmarketbecauseofthechanginghealthrecommendationsforbutterinthesocial

media.Theconsumersarebeginningtoswitchbacktobutterandalsonewtypesofflavoredbutterforcookinghaveboostedthesales.

Oilsandfatsretailvolume2010-2020(1,000MT) 2010 2014 2020Butter 4.7 4.8 5.5Cookingfats 0.4 0.5 0.4Margarine 4.7 4.2 4.0Oliveoil 1.8 1.9 2.1Spreadable oil&fats

28.2 25.3 19.4

Vegetableoil 4.8 4.5 4.9Total 44.6 41.2 36.3

Source:EuromonitorInternational,PMFOOD&DAIRYCONSULTINGKerryFoods isthe leadingplayer inoilsandfats in IrelandIn2015withavalueshareof23%althoughitsoverallpositiondeclinedthemajorbrandsDairygoldandLow-Lowexpanded.TheIrishDairyBoard(Ornua)remainedtheleadingplayerwithintraditionalbutterwithavalue shareof26%.TheKerrygoldbrand remainsoneof themostpopularofallbrandsanddespiteof increasingcompetition fromprivatelabel.Oilsandfatscompanyshares2011-2015(%retailshares)Company 2011 2015KerryFoods 26.6 23.4Unilever 16.3 15.6McNielConsumerNutritionalsUK

8.0 6.7

IrishDairyBoard 4.5 5.0BoyneValleyFoods 4.2 4.0ValeoFoods 1.5 3.6Princes 3.4 3.5Glanbia 3.5 3.2AurivoCo-operative 1.1 2.2DairyCrest 3.1 2.1ArlaFoods 1.0 0.8Others 26.8 29.9Total 100 100

Source:EuromonitorInternational,PMFOOD&DAIRYCONSULTINGDomesticmanufacturescontinuestoaccountforsignificantproportionofsalesintheoilsandfatsparticularlywithinbutter.Privatelabelaccountsfor20%oftotalsaleshighestwithinoliveoilandvegetableandseedsoil.

FutureProspectsThefutureprospectsforthebutterproductionandbutterandfatsmarketinIrelandfrom2014to2020are:

Ø From2014to2020,themilkproductionisexpectedtoincreasebynearly3.5millionMT(+40%)

Ø From2014 to 2020, the butter productionwill increasewithmore than 100,000MT (+62%) and this represents the largest

expansionofthebutterproductioninEU.Theextraproductionwillbeforexportanditwillbeahugetasktoexpandcurrent

marketsanddevelopnew.

Ø Thedomesticbutterconsumptionisminimalaround11,000MTanditwillonlyincreasemarginallyintheperiod.

Ø The butter producing companies in Ireland will be confronted with huge investments in extra capacity to be able to

manufacture100,000MTofextrabutter.

Ø TheIrishmarketforbutterwillbenefitfrompositivehealthmessagesaroundbutterandanexpecteddeclineinconsumptionis

nowchangedtoagrowthscenario.