Market Forces
“The butter shortage in French supermarkets is the direct consequence of the 2016 milk crisis which prompted a 3 percent drop in production,” Xavier Hollandtsni , a Kedge Business School strategy teacher and an expert on agricultural matters, said in a note Thursday.
The butter market also encountered a push from the demand side. Butter and cheese remain the dairy products in highest demand, especially in Asia, according to Agritel’s Begoc.
“Global demand started to pick up, with China starting to buy again after having stopped for a few months to tap into its stocks, leading to a substantial rise in milk and butter prices,” Begoc said.
French retailers have not adapted to the new market reality and have kept a cap on prices, Roquefeuil said. For French dairy companies, it’s easier to export to countries such as Germany, where retailers are willing to pay a higher price, he said.
“There’s an evolution of butter consumption,” he said. “Demand is strong and the industry has to adapt to the new consumption.”
Panic Buying
The shortage in France has been compounded by a panicked rush by consumers to stock up in the past few weeks. The food retail group has said any butter shortage will be short-lived.
Industry projections show that after the recent peak, butter prices may head down slightly as milk production is now picking up, Agritel’s Begoc said.
That should come as a relief to French consumers who need butter for not just their tartines and croissants but also for cooking sauces and baking everything from a tarte tatin to an eclair au chocolat.