Increased health consciousness and more marketing have seen
double-digit sales growth in milk products, according to a report
by global market researcher Euromonitor.
Demand for milk is rising in both urban and rural areas as a
result of efforts to promote dairy products as healthy by the
government and manufacturers.
Affordable prices of products like ultra-high temperature (UHT)
and fresh/pasteurized milk are also encouraging more consumers to
drink milk on a daily basis.
Meanwhile, manufacturers have been developing different types of
milk to satisfy flavor and health demands. In 2007, milk product
sales increased 14 percent to 108 billion yuan.
Flavored milk drinks registered the highest growth of 21 percent
in value terms, according to the report. After the successful
launch of Mengniu Suan Suan Ru, a UHT milk product with a sour
flavor, more players have entered the sub-sector with similar
products, such as Yili's You Suan Ru and Sanlu's Suan Suan Ru.
Sales of milk drinks flavored with fruit juice have also seen
rapid growth, with Wahaha's Nutrition Express a strong performer.
According to industry definitions, milk drinks flavored with fruit
juice are referred to as "milk beverages". Milk beverages are
usually packaged with trendy designs to attract children and
teenagers.
More health and wellness products are available on the market
like high-calcium, low-fat or non-fat milk. The report noted these
products appeal to those concerned about their health, particularly
female consumers in big cities.
Although milk is regarded as inherently nutritious with high
calcium content, consumers are increasingly likely to prefer milk
fortified with healthy ingredients.
In 2007, the market was mainly controlled by domestic players
like Mengniu and Yili, both from the Inner Mongolia autonomous
region, the report said.
Yili Industrial Group Co Ltd was unable to defend its No 1
position against Mengniu, but nevertheless saw sales growth of 27
percent in 2006, accounting for 18 percent of value sales. Although
the bulk of the company's value sales stem from long-life/UHT milk,
Yili has paid more attention recently to milk beverages, which
offer higher profit margins.
In 2006, the company launched a milk product for children: Yili
QQ Star Milk. Yili is expected to launch more new products, enlarge
its production base and broaden its distribution channels to
compete with Mengniu.
Mengniu's Deluxe, which retails at around 20 yuan per liter, has
established a premium segment in the milk market. In 2007, Yili
also launched its high-end Classic Organic Milk at 28 yuan per
liter.
Well-off consumers in the larger cities tend to choose products
based on quality and nutritional content, the report said. In most
areas of China, however, consumers can only afford low-priced UHT
products, at around 7 yuan per liter.
High calcium and low fat content are the major features
emphasized by manufacturers, especially when targeting women and
children.
Manufacturers are expected to increasingly offer added
ingredients like vitamins and fiber to attract consumers.
Flavor is another key area for manufacturers. More improvements
in milk flavor are expected so that products appeal to the local
palate.
The report said fruit-flavored milk drinks are expected to post
the strongest growth over the next five years, of 18 percent.
Consumption is expected to increase, as milk drinks flavored
with fruit juice are still an underdeveloped segment in China. The
mixture of milk and fruit juice is believed to offer health
benefits due to the combination of high calcium and vitamin C
content.
More international players are expected to enter the local dairy
market as it develops. Asahi is planning to set up a plant in
Shandong province, the second Japanese company to enter the milk
products sector in China after Meiji. These Japanese dairy
companies are expected to bring premium products to the Chinese
market, the report said.
(China Daily January 18, 2008)
