Why is private label milk selling out so quickly? The irrationalities of margin caps in the dairy market

By: Trademagazin Date: 2025. 07. 09. 12:08

🎧 Hallgasd a cikket: Nyelv: Sebesség: 1.05×

The situation of private label dairy products on the shelves of Hungarian stores has never been so uncertain: cheaper products are increasingly disappearing from the refrigerators, even if there is demand for them. The reason for this is often not a supply problem, but a complex regulatory anomaly: the margin freeze – the article by G7.hu points out.

Starting from March 17, 2025, the government once again intervened in the food market processes: according to the decree, the margin of designated products, including milk, may not exceed the level of January 2025, but may not exceed 10%. In addition, two additional rules make things more difficult for stores:

The proportion of private label products had to be limited to the average of January-February 2025.

A minimum requirement also applies: the designated products must be made available continuously in the average daily quantity of 2024.

The problem begins when the lower consumer price of private label products no longer deviates significantly from the price of branded products. Due to the margin freeze, stores are less able to differentiate between prices, while the profit generated on private label products has become even lower. According to the Hungarian Competition Authority, it “goes beyond the scope of store logic” that a retailer cannot sell more private label products, even if there is demand for them.

The milk will be muddy, but it is not certain that it will reach the customer

In many cases, stores are therefore unable to replace the run-out private label milk even if it is in stock, since they cannot stock more due to the ratio limit. At other times, however, they are forced to order more despite a decreasing demand, since they have to maintain the daily minimum, even if they know that the product will spoil. This is especially problematic for fresh dairy products, which lose their quality quickly.

Stores can expect severe penalties if they do not comply with the rules: violating the margin freeze can result in a fine of up to five million forints, and violating the private label ratio can result in a fine of between 500,000 and two million forints. It is no wonder that most retailers try to follow the regulation to the letter, even if it means selling the product at a loss.
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