Report from the Commission to the Council on the evolution of the market in milk products and competing products
Date: 2007-06-27
Institutions: European Commission
Subjects: market, milk, milk product, product designation, trade statistics

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 27.6.2007 
COM(2007) 360 final 

REPORT FROM THE COMMISSION TO THE COUNCIL 

on the evolution of the market in milk products and competing products 

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REPORT FROM THE COMMISSION TO THE COUNCIL 

on the evolution of the market in milk products and competing products 

INTRODUCTION 

Council Regulation (EEC) No 1898/87 on the protection of designations used in marketing of 
milk  and  milk  products1  lays  down  in  its  Article  4(3)  the  obligation  for  Member  States  to 
report every year, not later than 1 October, on developments in the market in milk products 
and competing products. The Commission shall subsequently present a report to the Council 
before the following 1 March. 

However these communications have not been sent to the Commission for years and no report 
was therefore presented to the Council during those years. In 2006, the Commission asked the 
Member Sates again to provide input for such a report but only 10 Member States presented 
some information, most of them after the deadline laid down in Article 4(3), i.e. 1 October. 

None were in a position to provide statistics on the market in products competing with milk 
and milk products, but in terms of other information Member States consider that quite often 
some  designations  may  in  fact  mislead  consumers.  In  retail  shops  milk  products  and 
competing products are frequently present on the same shelf, similar packaging may be used 
and the consumer may be misled by the competing product if it is not clearly identified as an 
alternative non-dairy product. 

This report gives some information on the markets for milk products, with different situations 
in  the  various  Member  States  producing  different  milk  products  or  with  a  preference  for  a 
particular category of drinking milk. 

Practically no data is available for competing products but there is a general feeling that the 
impact of such products is still marginal. The cheaper price is nevertheless working in favour 
of those products. 

The industry appears to apply the labelling for competing products correctly but at retailers' 
level there is not always the same respect of the Regulation, with a clear risk of misleading 
the consumer as a consequence. 

Regulation (EEC) No 1898/87 is still considered justified as it ensures both a correct labelling 
of milk and milk products and a level playing field for milk products and products competing 
with milk products. However, the annual reporting no longer seems justifiable. 

1 

OJ L 182, 3.7.1987, p. 36. 

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EVOLUTION OF THE MARKET IN DAIRY PRODUCTS 

It is well known that consumption trends show a decline of interest for the fat fraction of milk, 
due  to  health  concerns  and  new  consumption  habits  (such  as  less  home-made  cooking  in 
smaller families), and a wider use of the protein fraction of the milk, in particular in the form 
of food ingredients. 

The  consumption  of  basic  products  such  as  butter  and  liquid  milk  has  changed  to  more 
sophisticated  products,  fitting  the  consumer's  choice.  Instead  of  plain  milk  children  now 
prefer flavoured milk, a trend clearly noticed in the school milk scheme. Milk, as such, has 
lost some attraction, but foods and drinks with dairy ingredients are very trendy: mixtures of 
fruit  juices  and  milk  or  milk  products,  cappuccino  and  similar  drinks,  hot  or  cold,  are  now 
widely available and consumed. 

Health concerns have led to availability of less fatty products, but the content of fat or sugar 
in some processed food, consumed instead of the basic products, may be at least as important 
as in the 'old' basic products. 

Basic milk products may also be replaced by food with milk ingredients based mainly on the 
protein fraction. Whey products, once a by-product causing environmental disposal problems, 
are now presented in the category 'healthy foods' or as an essential part of dietary products. 
By the beginning of 2007 whey market prices were the highest ever recorded. 

The drinking milk evolution clearly shows that consumers are showing growing interest for 
semi-skimmed  or  skimmed  milk,  and  some  Member  States  have  been  granted  derogations 
allowing the marketing of drinking milk2 with fat contents outside the usual categories (whole 
milk in the range 2.8 – 3.2%, instead of 3.5% minimum and semi-skimmed milk in the range 
1.0 – 2.5% instead of 1.5 to 1.8%). These derogations limit the production and the marketing 
of such milk to the Member State concerned. A proposal has been presented to the Council in 
February  2007  to  liberalise  the  fat  content  of  the  drinking  milk  within  the  EU,  opening  the 
internal  market  to  milk  produced  in  any  Member  State  and  offering  a  wider  choice  for 
consumers. 

Drinking milk consumption habits are different in the Member States. For EU-25 aggregate 
whole  milk  represents  more  than  1/3  of  the  drinking  milk  produced,  semi-skimmed  milk 
represents  more  than  50%  and  skimmed  milk  represents  10%.  National  data  however  show 
wide  differences,  with  some  Member  States  where  the  consumption  of  skimmed  milk  is 
marginal, below 3%, and Denmark where this category represents 49% of the drinking milk. 

Drinking milk 

Whole milk 

Semi-skimmed milk 

Skimmed milk 

100% 

36% 

54% 

10% 

2 

Council Regulation (EEC) No 2597/97 laying down additional rules on the common organisation of the 
market in milk and milk products for drinking milk (OJ L 351, 23.12.1997, p. 13). 

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In the spreadable fats sector specific standards have been laid down3 because margarine and 
blends but also dairy spreads, with a lower fat content (typical 40% or 60% fat), represent an 
alternative  to  butter  (80  or  82%  fat).  Consumption  data  indicates  that  rather  than  the  butter 
denomination  it  is  the  fat  content  which  leads  the  consumer's  choice.  Butter  still  remains, 
however,  as  a  top  reference  in  quality,  as  may  be  demonstrated  by  the  use  of  marketing 
denominations  such  as  'ice  cream  with  butter  flavour',  without  butter  as  an  ingredient,  or 
'butter biscuits', where the consumer would not know for sure whether they are manufactured 
with butter or with other fats. It is worth noting that Poland reported higher butter sales in the 
weeks preceding the traditional holidays, while other fats are largely used for other occasions. 

The choice of butter is also driven by economic considerations. The same happens with most 
dairy products where wealthier consumers tend to choose high-flavour and tasty products. 

Yoghurt is a success product, showing a firm upwards production trend. Some basic, plain, 
unsweetened or sweetened products, have given place to flavoured yoghurt or products with 
added  fruits,  nuts  or  cereals.  The  fermented  drinks  categories  are  in  general  developing,  in 
some probiotics are used. In the 'healthy food' sector the price does not appear to be the main 
parameter  as  products  using  arguments  such  as  light  or  healthy  food  are  significantly  more 
expensive than products which do not claim a new property.  

Cheese is another success story, showing continuous increases in production. Cheese is more 
and more consolidated as a major element in a regular diet due in particular to the increased 
product  range  with  lower  fat.  New  speciality  cheeses,  cheese  widely  used  in  sandwiches  or 
salads,  grated  or  in  powder  for  culinary  uses  or  in  form  of  processed  cheese  have  also 
stimulated  the  consumption  as  well  as  cheese  being  an  alternative  to  meat  products  when 
consumers confidence was affected by sanitary crisis. 
Furthermore,  shorter  ripening  time  and  cheaper  brands  have  contributed  to  some  cheese 
products being increasingly affordable for more and more consumers. 

The nutritional indications, such as the 'traffic light' colours used in the United Kingdom, may 
have some impact on the consumption of products such as cheeses. Many of them will bear 
the red light, meaning rich in fat. Such labelling does not however take into consideration the 
size of the usual portions but only the absolute fat value of the product. 

THE COMPETING PRODUCTS 

In the preparation of this report the Commission Services have detected some products who 
do  not  respect  the  provisions  of  Regulation  (EEC)  No  1898/87  in  particular  the  following 
designations were noticed: 

– 

– 

– 

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soy 'cheese', 

milk with royal jelly (seen on the internet), 

milk with soy isoflavones, 

milk with vegetable sterols. 

Council Regulation (EC) No 2991/94 laying down standards for spreadable fats (OJ L 316, 9.12.1994, 
p. 2). 

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Some Member States have different interpretations of Regulation (EEC) No 1898/87. While 
some do not allow those designations, others appear to take no action to avoid such abusive 
designations. 

Member  States  did  not  report  particular  cases  but  it  may  be  assumed  that  manufacturers  of 
products based on soy, rice or oat, correctly label their products as soy, rice or oat drinks or 
products, even if in some cases they refer to the advantages of such products when compared 
to milk products (lactose or cholesterol free). 

Cases of non-compliance with Regulation (EEC) No 1898/87 have rather been reported in the 
distribution and catering sectors. 

Some  retailers  advertise  their  products  by  associating  the  protected  milk  designations  with 
non  dairy  products,  in  folders  or  in-shop  posters.  Consumers  may  be  misled  by  products 
which  have  the  appearance  of  milk  products,  are  located  close  to  milk  products  or  with 
unclear explanation of the ingredients of a particular product. 

Ice cream with soy or rice 'milk' has also been noticed. 

Even  traditional  manufacturers  of  milk  products  are  among  those  who  have  developed 
products competing with milk products and consumers may be misled by the confidence they 
put in the brand, associated with milk products, and they do not necessary know what is inside 
the product they buy. 

It has been reported that some food producers do not use designations on their products but 
associate  their  brand  with  some  qualitative  guarantees.  This  shows  the  confidence  of  the 
consumer in a brand rather than towards a product. 

Consumers eating out are very much depending on reliable information from restaurants and 
similar  establishments  as  they  are  not  in  a  position  to  know  whether  they  are  served  milk 
products or other products. Creams, sauces or desserts do not indicate the products used and 
even  the  coffee  cream,  in  bulk  or  in  individual  portions,  is  not  clearly  identified  as  a  milk 
product vis-à-vis a competing product.  

Finally,  magazines  or  health  publications  do  not  always  use  the  protected  designations 
correctly,  e.g.  using  in  description  or  recommendations  the  designation  "soy  milk"  or  other 
protected designations. 

INNOVATIONS 

Dairy products seem to some extent to have lost their image of being necessary for children 
"in order to grow up healthy" and they are more and more seen and marketed as a source of 
pleasure  associated  with  good  food  while  providing  essential  nutrition  elements,  such  as 
calcium. 

Products labelled "bio" are now widely available in retail shops whereas they were expensive 
niche products some years ago. They are sold at a premium and may also represent a bigger 
return for milk producers. 

Among the recent innovations in the milk products sector it is worth highlighting a product 
denominated Labam (fermented milk drink) answering to the habits of populations originating 
in the north of Africa. 

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CONCLUSIONS 

It  is  overall  positive  that  consumers  find  in  the  market  place  products  responding  to  their 
needs or preferences. However it is also essential that each consumer knows exactly what he 
is buying, avoiding any confusion. 

Regulation  (EEC)  No 1898/87  has  constituted  a  guarantee  for  the  consumers  and  dairy 
producers  that  milk  products  are  correctly  designated  while  avoiding  the  use  of  protected 
designations by other products which could find a place on the same shelves. Fair competition 
should prevail, with the consumers being able to make their preferred choice based on full and 
reliable  information.  Dairy  products  manufacturers  should  be  in  a  position  to  market  their 
products in an environment of fair competition with competing products. 

The labelling of competing products seems to be correctly applied by industry but retailers do 
not  always  use  the  same  approach,  with  a  clear  risk  of  misleading  the  consumer  as  a 
consequence. 

Some  Member  States  are  likely  to  have  on  their  internal  market  products  which  are  not  in 
conformity with Regulation (EEC) No 1898/87. The Commission will closely follow up the 
application of this regulation while Member States are reminded that they shall act to enforce 
EU legislation and to prevent abuses. 

Furthermore,  some  Member  States  may  have  on  their  market  products  referred  to  in  the 
second paragraph of Article 3(1) of Regulation (EEC) No 1898/87. Such products are listed in 
Decision  88/566/EEC.  Where  appropriate,  Member  States  are  invited  to  contact  the 
Commission  with  pertinent  comments  in  order  to  have  those  designations  analysed  and,  if 
justified, the Commission shall propose an amendment of the Decision referred to. 

A limited amount of data is available for competing products but there is a general feeling that 
the  impact  of  such  products  is  still  marginal.  The  cheaper  price  is  nevertheless  working  in 
favour of those products. 

Finally,  the  frequency  for  a  report  on  products  competing  with  milk  products  should  be 
reconsidered  as  the  value  of  annual  reporting  on  the  evolution  of  these  markets  may  be 
questioned.  A  report  every  three  to  five  years  seems  sufficient  to  follow  the  trends  in 
consumption  of  those  products.  The  Commission  will  therefore  consider  to  submit 
accordingly a proposal for an amendment of Council Regulation (EEC) No 1898/87. 

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