LISTEN: Price of butter leaves bitter taste

Listen to Wendy on the topic below, or read the details under the podcast.

Betty Botter bought a bit of butter, but the butter was bitter, so Betty Botter bought a better bit of butter. 

Well, Betty would need a lot of money to buy all that butter these days.

The price of butter is skyrocketing, not just in South Africa, but globally.  

And that’s because a huge spike in demand for it, to the point that there have been quite a few empty fridge shelves where local butter brands used to be in recent weeks.

Pick n Pay Hyper has a sign up saying: “Dear Valued Customer, we would like to apologise for the short supply on butter and butter spread due to shortage of raw cream as per the supplier.”

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Butter is suddenly a very hot item. There’s not enough of it to meet world demand, and shortage always leads to a hike in price.. 

That Hyper has a 500g brick of imported Lurpak for sale at R98. A year ago, that would have been an expensive per-KILO price for butter. Now it’s an astonishing R198 per kilo.

According to independent consumer website Retail Price Watch, the average price of the Clover 500g pack of butter at Checkers, Shoprite, Pick n Pay and Spar was R45.25 in January 2016. This month it is R61.84 — a 36.7% increase. 

In Europe the butter price has doubled in the last year, leading to predictions of a "croissant apocalpse”.

So what’s causing the shortage?

1. Consumers have warmly embraced the news that recent studies have cast big doubt on the link between butter and cardio vascular disease, and in SA we have the Banting brigade to thank for the big swing away from low-fat diets to full fat or even double fat products such as yoghurt. So huge demand for cream, which is what butter is - churned cream.

And of course when there was a big demand for low-fat products, the cream which was skimmed off went to make butter. And there’s less of that now.

2. The weather in various dairy producing regions around the world, including New Zealand, hasn’t been ideal, affecting production.

3. The dairy industry globally hit hard times around 12 years ago, due to massive oversupply, which led to a dramatic drop in prices, and then to a shrinkage in supply. 

So it’s not that simple to just produce more milk and hence more cream  - it takes time to build up dairy herds.

With the right kind of cows.

Stuart Mackenzie, CEO of a recently formed KZN dairy company called Dairyday, told me that traditionally the local market has only focused on volumes, with little consideration for the protein and butterfat content of the milk. So the breeding selection criteria was volume.

“But I think as the world has placed more demand on things like protein, the protein component of milk has become more and more valuable.  Butterfat too.

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“And to change a herd of cows to meet new production requirements, takes a few generations of breeding.”

So the bad news is there’s no quick fix.

I asked a few retailers to comment, but there’s not much they can do about it - they are  at the mercy of the suppliers such as Clover,  Parmalat and Crystal Valley -the Shoprite group’s private label. 

Shoprite said it sources 95% of its butter from local manufacturers and it will look to supplementing volumes from abroad when necessary “or if a price advantage can be gained in the interest of the consumer”.

But the current high prices aren't making large scale imports a viable option for Shoprite-Checkers, the group said.

Pick n Pay’s Brian Austin, Head of Groceries and Perishables, said: “We buy the vast majority of our products locally and only import when there are shortages."

Jacques van Heerden of Clover said the company was uncertain how long the dire situation was going to last.

“We are typically hesitant to import butter due to our strict quality requirements,” he said. “But due to the major shortage we are trying to import some butter to be used as an ingredient in the reconstitution of certain final products.”

So if you’re a butter lover, be prepared to pay a lot for your bit of butter, for the foreseeable future. And chase the specials.

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