French dairy segmentation

Transform to the power of digital

Market Segmentation for a French Dairy CooperativeCC IndiaJan 2014

Transform the power of digital

Contents

Objective

Cluster Summary

Recommendations

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The objective of the analysis is to undertake market segmentation to identify new opportunities around the dairy world

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DATA

Data provided on 38 countries:

Dairy consumption-Consumption of milk, butter, cheese,

cream and whey ( kg/capita/year weighted in milk

equivalent)

Demographics

Sources:

To segment the countries into different groups based on

similarities on account of dairy consumption

The segmentation should reflect regional behaviors and

specificities

CHALLENGES FACED

The average for some variables could not be calculated

due to lack of population data

Copyright © 2014 Capgemini Consulting. All rights reserved.

TOOLS USED

SPSS

MS Excel

Objective Cluster Summary Recommendations

OBJECTIVE

It was felt that there was a lot of untapped market potential

in the dairy segment globally

There was a need to understand the global scenario

BACKGROUND


Contents

Objective

Cluster Summary

Recommendations

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Based on consumption patterns of four major dairy products the countries were divided into four categories

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4.Countries with moderate cheese

and butter consumption

3.Countries with low dairy consumption

2.Countries with high milk consumption



1.Countries with high cheese consumption

0.5 1 1.5 2 2.5 3 3.5 40

50

100

150

200

250 236

43

172

69

CLUSTER

0.5 1 1.5 2 2.5 3 3.5 40

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.1

0.38

0.72

0.15

CLUSTER0 1 2 3 4

00.10.20.30.40.50.60.70.80.9

1

0.89

0.750.67

0.89

CLUSTER

Whey consumption is not a determinant for these clusters and human development index(HDI) is taken as a proxy for some demographic variables

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Whey consumption was removed as it had an insignificant effect in differentiating clusters

Clusters are, therefore, formed are on the basis of consumption level of other products(milk, butter, cheese and cream)

HDI index is used as a proxy for the following variables due to high correlation(around 0.80):

• GDP per capita

• Engertic(Kcal/day/capita)

• Population from 0 to 5 in %

• Population above 70 in %

• Percent of rural population


AVG HUMAN DEVELOPMENT INDEX(HDI) AVG LACTOSE INTOLERANCE INDEX(LII) AVG DENSITY

CLUSTER 1 : European nations with the highest demand for cheese, high per capita GDP and the highest average density

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Cheese Cream

40%

47%

Top 4 consumers of cheese, constituting 40 % of the global cheese consumption

Belong to the top 7 cream consuming nations, representing 47% of the global consumption

Amongst the richest 5 European nations, and have the least LII value of 0.10

Average density, at 236, is the highest for this group


1.Countries with high cheese consumption

France

Italy

Germany

Netherlands

KEY CHARACTERISTICS

CLUSTER 2 : Top milk consuming nations, with a low density

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Milk

36%

Among the top 8 milk whole consuming nations, constituting 36% of the global consumption

Romania is a major outlier, being the top most milk consuming nation with 264 kg/capita/yr, followed

by Sudan at 167 kg/capita/yr

Has the least average density of 43


2.Countries with high milk consumption

Russian Federation

RomaniaIreland

Ukraine

USA Argentina

Sudan

KEY CHARACTERISTICS

CLUSTER 3 : Countries with relatively low consumption levels of the four dairy products, low per capita GDP and high lactose intolerance

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Cream consumption is negligible for most of the countries

Represents 43% of the global milk consumption, but none of these countries feature in the top 10 milk consumers,

indicating that the huge aggregate consumption is just the result of a large group

Countries with low levels of GDP per capita

Average LII value, at 0.72, is also the highest for countries within this group

…and 15 others

3.Countries with low dairy consumption

Belarus

Brazil

India

Bangladesh

Japan

Egypt

Kenya

Rwanda

KEY CHARACTERISTICS

CLUSTER 4 : Countries with moderate consumption of cheese and butter, but low consumption of whey and cream, with the exception of Canada

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These countries have positive but not very high consumption levels of milk, cheese and butter.

Canada is an outlier within this group, being the highest global consumer of whey(which is not a determinant in cluster

formation) and cream. Other nations in this group do not consume whey and have negligible cream consumption.

The average HDI index is 0.89 for this group

Other countries have the lowest LII of 0.10


4.Countries with moderate cheese and butter consumption

Australia

New Zealand

Canada

United Kingdom

KEY CHARACTERISTICS


Contents

Objective

Cluster Summary

Recommendations

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The dominant demands for specific dairy products in different segments provide an opportunity to the French cooperative to undertake properly targeted strategies

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CLUSTER Milk Butter Cream Cheese Recommendations

HIGH CHEESE

Belong to the top 11

Belong to the top 7

Biggest 4 consumers globally

•Focus on cream and cheese•Higher prices could be charged•Low distribution cost

HIGH MILK Belong to the top 8

All have positive consumption

•Target Romania’s milk market

LOW DEMAND

22 belong to the bottom 27

18 belong to the bottom 21

17 belong to the bottom 21(10 do not consume)

Are the least 18 •Start at a small scale to assess the market•Offer cheaper products

MODERATE Belong to the top 13

Canada is the biggest global consumer

Belong to the top 14

•Target Canada’s whey market

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French dairy segmentation

Data & Analytics

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