Dairy - butters & spreads 2025: ‘Challenging’ year amid inflation

Branded butters & spreads are on a slippery slope as rising prices prompt shoppers to switch to own label or buy fewer packs.

Total branded volumes have fallen 6.1% while own label’s are up 2.2%. That leaves overall category volumes in the red by 2.7%.

“It has been a challenging year for the butter & spreads category, with ongoing double-digit inflation impacting both overall volume sales and the branded and own label mix,” concedes Louise Reuby, marketing head for butter, spreads & oils at Saputo Dairy UK.

Her views are echoed by Arla Foods marketing director Catriona Mantle: “Inflation has encouraged trade-down into own label, as shoppers have become more price-sensitive, cutting frequency and basket size.”

That inflation has led to a 10.7% increase per average kilo across the category. To avoid having to further raise prices, suppliers continue to turn to cutting the size of their packs – just as Arla did in 2023, when it cut Anchor and Lurpak blocks from 250g to 200g in 2023.

“As shoppers seek better value, brands and own labels are turning to shrinkflation,” explains Prashant Chahal, NIQ senior analytics executive. “The result is consumers leaving stores with less volume in their baskets, reshaping purchasing habits across butters, spreads and margarine.”

It’s a strategy that’s working for some brands. Take Country Life. Its 20.6% decline in kilos is one of the category’s steepest.

But volumes are now showing signs of recovery following the downsizing of its block butter from 250g to 200g in March, claims owner Saputo.

“It is already starting to deliver results as consumers have rushed to benefit from buying the well-loved brand at the resulting affordable price point,” says Reuby.

More recently, Ornua Foods UK cut the size of its Kerrygold block from 250g to 200g in September. The brand is now available in 100g, 200g and 500g across stick, block and tub. That variety of sizes and formats has helped Kerrygold become one of the category’s few branded success stories. Its value is soaring 45.3% on volumes up 29.3%.

“Underpinning this strong performance has been a sustained pipeline of exciting NPD launches, compelling marketing campaigns and a doubling in our investment in shopper marketing programmes,” says Nicola Blackmore-Squires, Ornua marketing director.

Kerrygold has also benefited from the underlying growth in sales of block butter, “reflecting the trend for shoppers seeking out products that deliver when it comes to great taste, natural goodness and simplicity”, she adds.

To tap that trend, it added a range of flavoured butters (see Top Launch, p98) in March – the same month in which it relaunched a spreadable butter line after a seven-year hiatus.

“Since its launch, Kerrygold Spreadable has gained extensive nationwide distribution with most major retailers now stocking the tubs,” says Blackmore-Squires. “It is adding value to the category, as well as attracting new entrants into the spreadable segment of the market.”

Arla brands under pressure

Kerrygold’s performance is in stark contrast with that of Arla brands Lurpak and Anchor. The top two players have lost a combined 7.1 million kilos.

But Arla insists Anchor is “trending positively” following the relaunch of its ‘Butter the Food, Butter the Mood’ campaign, which ran for most of this year.

The supplier is hoping to further reengage shoppers in 2026 with a new push focused on comfort and taste. Lurpak will also receive investment next year when Arla marks the brand’s 125th anniversary.

“Despite global market volatility, brands can win back shoppers by leaning into what consumers value most: taste,” says Mantle. “Lurpak and Anchor lead the category on taste, and we’re backing them with strong 2026 plans.”

Saputo’s also looking ahead to 2026. “Bigger and bolder marketing support is planned for Clover next year, to drive brand penetration and bring even more consumers into the spreads category,” says Reuby.

The brand’s already in relatively good nick – volumes are down 1.7% – due in part to non-dairy spreads not facing the same intensity of price pressures as butters.

Flora’s also looking pretty good: its volumes have dipped just 0.1%. But its sister brands haven’t fared so well. Bertolli’s kilos are down 13.8%, while I Can’t Believe It’s Not Butter has dropped 10.8%.

That may be down to increased competition in non-dairy. Lurpak made its hotly anticipated plant-based debut in August 2024, rolling out a tubbed line made from just nine ingredients.

“Lurpak Plant Based targets consumers seeking premium, flavour-forward alternatives, while addressing rising expectations around simple ingredient lists,” says Mantle.

“Crucially, it spotlights functionality – performing across cooking, baking, and spreading – so shoppers don’t have to trade off taste for versatility.”

As well as tasty innovation, promotions have also played a key role for suppliers in the past 12 months. They’ve been a major factor shaping brand performance, NIQ’s Chahal points out. “Some brands have struggled from losing promotions and off-shelf space this year, leading to a volume decline,” he says.

“Mid-tier brands have faced pressure from both premium brands and own label as they were caught between quality and affordability.”

Looking ahead, brands seem confident they can combat the challenge of own label.

“While private label has expanded, brands are crucial for delivering innovation and driving value through marketing and product development,” says a Flora Food Group spokesperson. “Compelling innovation and exceptional quality truly resonate with consumers.”

They’ll need to if brands ever want to see meaningful growth again.