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Yellow Fats and Edible Oils - UK - September 2016

“A guarantee of fair pay to farmers offers a promising means for butter/spreads/oils producers to establish a point of difference and to drive sales given the strong consumer interest in the issue. The fact that many oil buyers are not influenced by price further underlines the possibilities in this area.”
– Alice Baker, Research Analyst

This report discusses the following key topics:

  • Farmers’ pay guarantees offer a promising means to build value
  • Convenience aspects of spray oils could be mined further
  • Focus on individual flavours could boost uptake of non-dairy spreads

This Report covers the UK retail market for yellow fats and edible oils.

Yellow fats include butter, margarine and spreads.

For the purposes of this Report, spreadable butter (including variants with vegetable oil) and ‘light’ butter are included as butter in the market segmentation.

Edible oils include blended vegetable oil (which is usually rapeseed) and single-seed oils such as sunflower and corn, plus olive (including extra virgin) along with groundnut, walnut, sesame and other varieties of speciality oil, for use in domstic food preparation. Spray oils (including aerosols) are also included.

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Table of contents

  1. 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

                                                                                                                                                                                                                                                                                                            Companies Covered

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                                                                                                                                                                                                                                                                                                            Yellow Fats and Edible Oils - UK - September 2016

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