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Home arrow Market Research Findings arrow FMCG arrow Milk experiences a growth spurt in China
Milk experiences a growth spurt in China PDF Print E-mail
Written by Euromonitor International   
16 Jan 2005

Milk experiences a growth spurt in China, by Euromonitor International

Milk sales are growing at an unprecedented rate in China due to increased consumer awareness and improved distribution networks, according to a new report from Euromonitor International.

Euromonitor’s latest research shows that the milk sector in China grew by 188% between 1999-2004. Long-life/UHT milk is driving sales in the sector, with value growth of 753% between 1998-2004, while fresh/pasteurised milk achieved 72.9% growth over the same period. The success of long-life milk is due to its convenience and ease-of-storage. However, fresh milk is starting to gain market share as more and more consumers begin to own refrigerators and distribution networks are improved.

Milking the media
The major driver behind milk’s growth is greater consumer awareness. In 2001, the Chinese government spearheaded a public awareness campaign to communicate the health benefits of dairy products. For example, the State School Milk Programme involved supplying milk to selected schools at discounted prices in order to encourage milk consumption. Milk also gained popularity following the outbreak of SARS in 2003. Numerous media releases and features on health-related issues ensuing the epidemic listed dairy products as an excellent source of vitamins and minerals, essential for building up the immune system.

The major Chinese dairy players have also helped to raise awareness of the health benefits of milk by investing heavily in advertising to raise their profile in the fragmented and competitive industry. In 2003, dairy company Inner Mongolia Mengniu Group won the bid for primetime commercial slots for the year 2004 on national television network CCTV, followed closely by Inner Mongolia Yili Industrial Group Co Ltd. In addition, Mengniu is the only dairy player to sponsor Chinese astronaut Yang Liwei’s expedition in space, a first for the Republic, thereby further boosting its brand image among Chinese consumers.

Milk flows throughout the country
Improvements in distribution networks are also contributing to strong growth in the Chinese milk sector, according to Euromonitor International’s new research. The top dairy players are expanding geographically to set up local production bases in various regions. Localised distribution helps to minimise transportation costs and maintain product freshness, making the distribution of milk across the country more efficient. Manufacturers now have access to more consumers, which has led to increased sales.

The development of supermarkets across China is also central to the success of milk and other dairy products. Economic development across China means that more consumers own refrigerators and as a result, demand for fresh dairy products is growing. Major supermarkets, such as Carrefour, that carry fresh dairy products are springing up across China into regions that were typically served by small, independent food stores. Dairy players are now able to penetrate lesser-developed regions, providing Chinese consumers with easier access to milk and other dairy products.

What’s in store for the future?
Currently China has the lowest per capita of consumption of milk in the world – an estimated 2 litres in 2004 – which leaves room for significant growth in the market. Euromonitor International expects milk to continue its strong performance in the next five years, with value sales growth of 73% between 2004 and 2009. Education on the health benefits of milk consumption and companies’ deeper retail penetration will continue to be key drivers of growth. New product development is also expected to boost sales, as milk with varying fat contents and fortified milk are introduced to the market.

"Packaged Food in China" is a new report from Euromonitor International. Its analysis presents an accurate picture of trends and developments impacting the national industry. This report includes detailed sector coverage confectionery, bakery products, ice cream, dairy products, sweet and savoury snacks, baby food, snack bars, soup, spreads, meal replacement products, ready meals, oils and fats, noodles, chilled food, canned/preserved food, pasta, frozen/processed food, dried/processed food and sauces and dressings and condiments.

Please visit Euromonitor International for more information

Last Updated ( 14 Sep 2011 )
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