Can Butter Hold Lead Over Margarine?

Press, Volume XCVIII, Issue 28987, 31 August 1959, Page 16

Can Butter Hold Lead Over Margarine?

[Reprinted by Arrangement with the "Financial Times”]

LONDON, August 20.

This week most British housewives will be paying between 3s 8d and 4s 4d a pound for their butter. A year and a half ago butter could be bought at 2s 2d, and in some shops even fell as low as 2s a pound.

One of the main reasons for the sharp Vise in price is that lower milk supplies, due to the hot summer, have virtually stopped the production of British butter and severely restricted the imports of some Continental varieties.

Several European countries which were .exporting to the U.K. a year ago have now become importers themselves. The three major shippers shown on the diagram have held their position during 1959, but some of the smaller exporters whose cheap butter caused the New Zealand Government so much concern last year are now far less prominent. Butter Allegiance The chief question facing butter importers and margarine manufacturers at the moment is whether or not the public will continue its growing allegiance to butter in the face of higher retail prices. Only yesterday the Deputy-Chairman of the New Zealand Dairy Board* said that British housewives would probably switch to margarine if butter prices remained high, and that he would welcome a reduction.

However, there seems to be no likelihood at present that butter prices will drop until the full flow of the new season’s Australian and New Zealand products are on sale next January. In the meantime the possibility exists of the cost of Continental butter rising ever further.

Available statistics suggest that the British public cannot be persuaded to eat more fat than it is now doing. As the diagram indicates, combined butter and margarine consumption has stabilised at between 30 and 34 lb a head per year, which is exactly what it was in the pre-war decade. So what is gained by butter tends to be lost by margarine, and vice versa.

Since the end of rationing butter has been gaining ground steadily, finishing with a sudden spurt in 1958. Figures for the first five months of this year suggest that the consumption pattern of 1958 will be repeated, but this does nM take into account the current high prires. Thus if butter’s position is to be consolidated it is probable that a certain amount of promotional pressure will have to be brought to bear on the public. - £lm On Advertising

Advertising expenditure on butter has always lagged far behind that on margarine. Comparative figures for the first half of 1959 on press and television combined were just under £lm on margarine and about £350,000 on butter. Roughly half of the butter expenditure was in the name of the Butter Information Council, which is pledged to support the product rather than the makes of individual companies or countries. As a result, housewives may be country-conscious, but they are rarely brand-conscious. The situation may be partly due to the extreme complexity of the butter market: the product frequently has to go through the board of the exporting government, its

agent, and a wholesaler before it restches the blender or the shop counter. Blended Brands

However, the new Unigate group, which is among the leading blenders in the U.K., advertises its products to some extent and each of its three divisions— Wilts United Dairies, Aplin and Barrett and Cow and Gate—produces at least one leading brand of butter. Together their market share is considerable.

Margarine, on the contrary, is sold primarily by brand. Stork, Echo, Summer County and Blue Band, which are among the leaders, all come from Van den Berghs <part of the Unilever organisation), which in addition sells a small quantity of margarine to other companies marketing it under their own name. Other important manufacturers include Kraft Foods and the Co-operative Wholesale Society. Thomas Hedley, too, has had a margarine called Golden Harvest on testmarket for some time, and appears to have broken with tradition by entering a field in the U.K. which is untouched in the U.S. by the parent company, Procter and Gamble. It is thought that the various Van den Berghs’ brands account for just over two-thirds of the margarine market, with Stork by itself taking up some 40 per cent. If the market is divided into three price levels—upper, medium and lower —then Stork comes in the central and biggest division. “Poor Sister”

The upper price bracket was the first to suffer when butter prices fell sharply 18 months ago, and has been slow to recover, although Summer County has been making considerable progress. Some brands at the time were priced above the cheapest butter—an unenviable position when margarine is still generally regarded as the poor sister. The margarine manufacturers have always to counteract the “superior, natural” brand image of butter. This is particularly important where the product is designed to be used on bread, so the more expensive margarines are given pastoral advertising hemes (without cows) and slightly rural names. The cheaper brands are generally aimed at a “kitchenuse” market, with the emphasis on economy. It is probable that the butter distributors were slow to make capital pf the low prices existing in 1958. For some time margarine sales held up well. Rather the reverse is happening at the moment, where margarine is making very marginal gains in the face of high butter prices. The housewife generally seems slow to react to changing retail prices and it may be a few months before it is possible to see whether the pendulum is really swinging back to margarine.