Magazine: When cheese meets the price-sensitive consumer

Because of the Russian embargo that started in August 2014, an oversupply occurred in the Hungarian milk and cheese market in 2015 and 2016. Cheese prices started to decrease at the end of 2014, falling from HUF 1700/kg at the end of 2013 to HUF 1400/kg. At the same time the proportion of sales realised in promotion started to grow: for a year and a half almost of half of cheese volume sales were realised at promotional prices. The cheese category’s quarterly penetration is constantly around 95-96 percent. Households reacted to lower prices by buying more – volume sales increased by 15 percent from 2014 to 2015; value sales didn’t change. At the end of 2016 the price of raw milk augmented by 30-40 percent in the world market, which led to an increase in cheese prices; because of this, by the end of last year the price of cheese was about the same as two years earlier, and the proportion of sales in promotion also returned to that level. Consumers started to buy less cheese, but the sales drop wasn’t dramatic.