September 29, 2014

 

China to overtake US as largest dairy market by 2017--Euromonitor

The Euromonitor, a leading global market researcher and analyst, has predicted that China will become the world's largest dairy market in three years' time, overtaking the United States.

 

At the rate China's appetite for milk, cheese and yogurt is growing, according to Euromonitor'sfresh data, China will leapfrog the world's No. 1 economy by 2017.

 

Euromonitor added that the Chinese dairy market will double in size to US$70 billion by 2019.

 

"Rising average annual incomes, greater availability of supermarkets, and increasing ownership of refrigerators in rural as well as urban areas have all had a positive effect on the development of dairy sales," said Lianne van den Bos, Euromonitor's food analyst.

 

Meanwhile, Euromonitor expects Russia and Brazil to take fourth and fifth place in the global dairy rankings in 2014, overtaking France and Germany, which would fall to fifth and sixth, respectively.

Dairy affordability 

 

It added that the global dairy sector experienced "another year of strong growth" in 2014, up 7% on 2013.

 

"To a great extent, top line value growth is still being generated by emerging markets, underpinned by China and Brazil, whilst developed markets are struggling against maturity," said Van den Bos.

 

He said Brazil has added US$13 billion to global dairy sales in the last five years, more than France, Germany and Japan.

 

"To put that figure in perspective, this is double the additional sales of the whole Western European region combined, a region which has the second-highest per-capita spending on dairy globally, just behind Australasia," she said.

 

"Driving this growth," said Van den Bos, "is the somewhat recent affordability of dairy products."

 

Brazil's class C, made up of manual and clerical workers and small business owners, has also contributed to the growth,he added.

 

"The rapid growth of this class is creating a number of opportunities for brands, as various food items such as cheese and yogurt, once considered expensive or extravagant, are now within reach of formerly poor consumers," Van den Bossaid.

Use of provenance

 

On the rankings of Western Europe, Van den Boscommended: "Maturity of the dairy category is a problem in these markets, where deeper penetration is not very likely."

 

"Instead, product innovation, the use of provenance and introducing new consumption patterns in dairy products is helping to drive forward value growth whilst per capita consumption in most mature markets, including France and Germany, is in decline," he said.

 

For example, French manufacturers' efforts to commercialize cheese with European Union (EU) geographical indication (GI) status have "proved to be successful in boosting sales and establishing brand presence," Van den Bos said.

 

The same is true in Scandinavia, where traditional dairy products such as Icelandic skyr and quark "are driving double-digit growth for the whole category."

 

Euromonitor predicts that half of new sales between 2014 and 2019 will come from eight markets, namely (in order of influence) China, the US, Brazil, Russia, France, Japan, Germany and the UK.