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Fresh milk sales growing after VAT slashed

Milk and dairy products represent a growing business at supermarket chains, with annual revenues reaching nearly HUF 40 billion, reports business daily Világgazdaság. The growth has been partly fueled by the reduction of VAT on dairy products.

According to data released by market research firm Nielsen, milk accounted for HUF 38.5 billion in sales between December 2016 and November 2017 in hypermarkets and supermarkets, corresponding to 193 million liters. This is a growth of 9% year-on-year in value, although a 5% drop in quantity, Nielsen says, quoted by business news portal vg.hu.

The research did not cover small shops, but only hypermarkets and supermarkets. The percentage of UHT milk was 51%, while fresh milk accounted for 49% of all milk sold in such outlets. The vast majority of the milk, 98%, was sold in packages of 1 liter.

In specific chains, the UHT vs. fresh milk split differs. At Tesco, the mix is 65/35, while Spar sells 81% UHT and 19% fresh milk. Tesco, Lidl and Spar buy their milk from Hungarian suppliers, while only Spar purchases a small amount of lactose-free milk from an Austrian supplier.

The cut in the rate of VAT on fresh milk from 18% to 5% this year has led to an increase in fresh milk sales. At Hungarian-owned chain CBA, sales have risen by 10% year-on-year, and at Tesco even more, by 12-14%, while Spar has seen a 5-6% increase.