Danone shuts Barcelona plant as dairy consumption drops 20%

Dairy consumption plunges 20% and Danone closes Barcelona plant

Danone is shutting down its factory in Parets del Vallès (Barcelona), which produced Oikos and Vitalinea yogurts as well as the Alpro plant-based line. The announcement came on a Friday, with a restructuring plan already underway for two years. The company describes it as a "local process." The trigger that no one hides is another: Spaniards are drinking less milk and eating less yogurt than before. Significantly less.

The latest monthly data from the Ministry of Agriculture and Food, corresponding to August 2023, show the dairy preparations market falling by 20% year-on-year. This is not a one-month blip. The sector has chained several years of decline, and multinationals are starting to make moves: first adjusting catalogs, then closing factories.

What stops being bought: fruit yogurt falls 44%

The setback is not uniform. Milkshakes drop by 10.4%, yogurt by 2.4%, cured cheese by 7.5%, sheep cheese by 11.5%, and custards by 3.9%. Within yogurt, the sharpest fall is in specific varieties: fruit-flavored loses 44% of volume in kilos, those with additives lose 17.5%, and skimmed loses 13.9%.

The exception is flavored yogurt, which rises by 10%. Some interpret this as cheap products growing while premium positioning collapses. Others summarize it simply: if the shelf has become an obstacle course of nearly identical and increasingly expensive products, shoppers grab the plain natural option and leave the rest. And some go further: added sugar, once a selling point, is now the reason to leave it on the shelf.

Why are milk and yogurt prices rising?

Prices rose, and significantly. Between summer 2022 and summer 2023, skimmed milk became 15.1% more expensive and yogurts 8.6%. From this starting point, various participants assume wages have been stagnant for years, that a liter costs around a euro, and that four branded yogurts exceed two euros, reaching the same conclusion: private label, basic format, and move on.

At the high end, one participant notes that premium milk went from €0.78 to nearly €1.20 in a few years, while the same product under store brand stays at €0.80. The question hanging over the issue is how much of this drop is habit change and how much is simple lack of money. Much of the discussion points to the latter.

Danone sells less but charges more in Europe

Here is the paradox that explains the closure better than any press release. In the Q3 2023 balance sheet presented by CEO Antoine de Saint-Affrique, Danone recorded European sales 5.1% higher than the same quarter in 2022, with prices up 9.2% and product volume down 4.1%.

In other words: selling less, but at higher prices. With this cocktail, a plant dedicated to medium-value-added products facing fierce competition from private labels is the first candidate for the guillotine. The plan is called Renew Danone and has been reviewing the business piece by piece for two years.

Plant-based alternatives, boycotts, and fewer children at home

There are three explanatory currents circulating in parallel. The first points to the avalanche of plant-based drinks and desserts, which have eaten into the mental space of classic yogurt. The second refers to the boycott of products manufactured in Catalonia, attributed part of the commercial damage; there is no official data quantifying this. The third is purely demographic: milk and yogurt are associated with child consumption, and fewer children are born each year.

None of the three stands alone. Together, they paint a different consumer: adult, with fewer children, more price-sensitive, and with an offer of alternatives that did not exist twenty years ago.

---

Raw milk at €0.80 and hard-shelled eggs

On the margins of the official market, life continues. According to one participant, in rural areas people access raw milk at €0.80 per liter and a dozen free-range eggs for €2.90, provided the farmer trusts whoever knocks on their door. Untreated milk yields so much cream that, they say, degreaser is almost needed to clean the pot. The eggs have hard shells and thick whites.

The business operates discreetly. Those selling free-range eggs door-to-door ask that word does not spread, because regulations do not make it easy. The scene is tiny and perfect: the same country closing industrial yogurt plants buys raw milk secretly from a neighbor who asks for silence.

With this picture, it would be logical to think the drop in consumption is irreversible. Yet, the fact that only flavored yogurt grows says just the opposite: people have not stopped eating dairy, they have stopped overpaying. How long will it take the industry to manufacture what consumers buy, instead of trying to get consumers to buy what the industry wants to manufacture?