The Icelandic Butter Dilemma

The most expensive butter in the world is ten times more expensive than Icelandic butter. And the Icelandic butter is equally good or better. How can this be?

The french Échiré butter is 11 times more expensive than Icelandic butter. The flavors and quality are similar.

One of the most famous butter sauce in the world is Beurre Blanc made from shallots, white wine and cream or butter (some use both). Although the sauce is French in origin, Julia Child is undoubtedly to be thanked for its popularity. Julia was fascinated with butter for cooking and despite previous years’ recommendations for reducing butter consumption, she promoted this fascinating product all her live.

A real influencer

Juliet Child was an American chef, cookbook writer and TV star who had a major influence on Western food tradition and her contribution to expanding the French cuisine is invaluable. She claimed that butter and cream are the magic behind French cuisine. 

Julia Child is probably one of America’s most famous television chefs. She taught her fellow Americans to appreciate the French cuisine.

But butter is not just butter. There are countless types and brands of butter and although it is most often made from cow’s milk, sheep and goat’s milk butter can be found in many countries. Butter is not all of the same quality. It depends on production methods, the animal breeds and feed.

Icelandic butter considered to be in the Premier League

The Icelandic traditional cow breed is unique on a global scale and is listed in the Slow Food Ark of Taste. Icelandic cows are also mostly fed on grass or hay as they have been for centuries. The Icelandic butter is beautifully yellow and the taste is unique. Several attempts have been made to export it and the reputation of Icelandic butter among chefs and foodies is good. Famous food bloggers claim that the best butter available in the United States is Icelandic. Comparison of independent parties gives the same result.

I myself am a big fan of butter. Living in Italy, I have tried many types of butter and although some are fine, nothing compares to the Icelandic butter in terms of texture and flavor. Butter is probably one of the best agricultural products produced in Iceland and totally world class… and very cheap for it´s standard of quality.

Icelandic butter is considered, by culinary professionals, to be of superb quality.

What about the export of Icelandic butter?

But why is it not one of Iceland’s main export products? Why it is not sold abroad at the highest possible price? Icelandic butter has certainly been exported to the Netherlands, Finland, the United Kingdom, the United States and other countries. The price that has been obtained has, at least at times, has been considerably higher than the wholesale price in Iceland. So this export has paid off, at least at times. However, last autumn we got the news by a local Icelandic newspaper, Frettabladid, that excess supplies of Icelandic butter would be exported at boot sale prices.

The world most expensive butter!

The most expensive butter in the world is probably the French Echiré butter. On Amazon, the French butter can be ordered for the equivalent of 88 US$ pr. kg. Of course, it has a European Union Geographical Indicators origin certificate. In Netto, a local Icelandic online store, the Icelandic butter costs about 8 US$ pr. kg.

But why have Icelanders not been able to market their butter in the better part of the market for higher prices? The answer is simple … but still in five paragraphs.

1. There has never been a real professional attempt to market Icelandic butter in other countries which both the cow farmers and dairies have backed up … with full commitment.

2. Icelandic cow farmers and their dairies have failed to obtain the necessary international certifications.

Studies show that European consumers are willing to pay significantly higher prices for products with a Geographical Indicator of Origin.

3. The products from milk from animals that are fed on genetically modified feed usually ends up in the cheaper part of the market. According to a US study, consumers pay 10% – 62% higher prices for NON-GMO products.

4. Successful marketing takes years and costs a lot of money. But also, the manufacturers need to be fully behind all such efforts and have the stamina and faith in the project.

5. Farmers’ leaders and production managers must be market-minded. Short-term thinking, greenwashing and over-emphasis on the public support system, do not generate increased sales revenue.

The revenue and profits that never came into being.

Finally, here is a small play with number.

Assuming that the wholesale price of the French Echiré butter is half of the retail price (it is probably higher), its 44 US$ pr.kg. At least that’s the number we’re going to use. In Fréttablaðið’s news story last fall, it is stated that the kilo price of exported Icelandic butter is less than 4 US$ pr.kg. It is not stated whether this is a CIF price, but if so, the share of Icelandic farmers and their dairy company is even less. The difference is about 40 US$ pr.kg. Based on 300 tonnes of exports (as reported by the Fréttablaðið news story), the difference is about 12 million US$.

If all the 650 tonnes that were in surplus last autumn, according to said news story, were sold at 44 US$ pr.kg, instead of 4 US$ pr.kg, the farmers and their company would get 26 million US$ instead of 2,6 million US$. Of course, this is a numbers game and nothing is in hand. But the difference is still 23,4 million US$. That is something to think about.

By comparison, the equivalent of about 52 millions US$ of Icelanders tax money goes to cow farmers this year.

If Icelandic butter was sold at a similar price abroad as other butter of the same quality, it would generate significantly increased revenue for the farmers.

Those who do not see the opportunities … miss out!

And just to be absolutely on the save side, even if we divide the numbers game by ten … it still pays of to start a professional long-term marketing campaign of Icelandic butter abroad.

But in order to do so, the manufacturers need to see the opportunities, learn from those who have succeeded, and adopt modern and professional marketing approach. Of course, this will not happen while export duty and dumping are in the industries vocabulary.

Icelandic cow farmers produce butter of the highest quality but export it at a low price, at the same time as the industry is partly funded by the government with tax money.

And just to make it absolutely clear one more time! Icelandic butter is a world-class premium product in terms of taste, color and texture. I myself, ask all the Icelanders who come and visit me in Italy, to bring me some Icelandic butter.

But at the same time, it is sad to look at the lack of ambition and the indifference by industry leaders, toward this wonderful product. But the good thing is, that we Icelanders can enjoy one of the best butter in the world … at a raffle price!

The author is a university lecturer and a consultant at European Food Marketing –www.europeanfoodmarketing.com