Table of Contents
Executive Summary
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- The market
- Growth in market value of plain milk driven by premiumisation and increased share of chilled
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- Figure 1: Forecast of value sales of ambient plain milk (adjusted for COVID-19), China, 2014-24
- Figure 2: Forecast of value sales of chilled plain milk (adjusted for COVID-19), China, 2014-24
- Growth of lactobacillus beverages loses momentum
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- Figure 3: Forecast of value sales of lactobacillus beverages (adjusted for COVID-19), China, 2014-24
- Dairy companies respond to increasing raw milk prices with vertical supply chain integration
- Impact of COVID-19 on milk and dairy beverages
- Short term disruptions do not change long term growth prospects
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- Figure 4: Short, medium and long term impact of COVID-19 on milk and dairy beverages, April 2020
- Companies and brands
- Leading players get stronger
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- Figure 5: Leading companies’ value share of the milk and flavoured milk segment, China, 2018-19
- Figure 6: Leading companies’ value share of the lactobacillus beverage segment, China, 2018-19
- Competition in chilled segment focused on advanced technology
- Dairy beverages to differentiate with additional functional support
- The consumer
- Ambient segments dominate with high accessibility
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- Figure 7: Consumption frequency, January 2020
- Females prefer online channels which provide more convenience
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- Figure 8: Purchase channels, January 2020
- Nutritional and functional benefits are key drivers but subcategories differentiate into specialised purposes
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- Figure 9: Consumption reasons, January 2020
- Highlight how different nutrients in milk work in synergy can help brands with a functional positioning to differentiate
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- Figure 10: Perception of nutrients in plain milk, January 2020
- Opportunities for children’s milk with fortified dietary fibres
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- Figure 11: Attractive features of children’s milk, January 2020
- Flavoured milk with inclusions can target light meal occasions
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- Figure 12: Perception of flavoured milk, January 2020
- What we think
The Impact of COVID-19 on Milk and Dairy Beverages
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- Figure 13: Short, medium and long term impact of COVID-19 on milk and dairy beverages, April 2020
- Opportunities and Threats
- Opportunity in strengthening cooperation with dairy farms
- Leverage increased adoption of online channels to promote chilled products
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- Figure 14: Grocery shopping channel, February to April 2020
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- Figure 15: Select grocery shopping channels – Consumers who bought more milk, by product type, 26 Apr – 2 May 2020
- Expand ambient value-for-money product line
- What we’ve seen so far
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- Figure 16: Changes in purchasing behaviour of milk, 26 Apr – 2 May 2020
- Impact on the market
- Major segments to remain on growth trajectory
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- Figure 17: Forecast of value sales of ambient plain milk (adjusted for COVID-19), China, 2014-24
- Figure 18: Forecast of value sales of chilled plain milk (adjusted for COVID-19), China, 2014-24
- Figure 19: Forecast of value sales of lactobacillus beverages (adjusted for COVID-19), China, 2014-24
- Smaller farms are pushed out of business due to COVID
- Economic uncertainty shadows the future of premium liquid milk
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- Figure 20: Expectation of impact of COVID-19 – “Cost of living”, by household income level, 26 Apr – 2 May 2020
- Shifts in consumer behaviour
- Attention to nutrition drives demand for protein rich diet
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- Figure 21: Impact of COVID-19 on priorities in life, 26 Apr – 2 May 2020
- Increased consumption of ambient milk post-lockdown
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- Figure 22: Changes in purchasing behaviour of milk, 26 Apr – 2 May 2020
- How COVID-19 will reshape the industry
- Stronger alliances between upstream providers and downstream producers
- Product positioning will diverge into premium and value-for-money options
- Impact on the marketing mix
- Mass market products need to provide value for money
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- Figure 23: Changes in purchasing behaviour of dairy beverages – Ambient milk, by household income level, 26 Apr – 2 May 2020
- Emphasize comprehensive nutritional package in marketing
- Take advantage of online shopping habits to grow chilled segment
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- Figure 24: Grocery shopping channel, February to April 2020
- COVID-19: China context
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- Figure 25: Accumulative confirmed cases of COVID-19 in China, January to April 2020
- Figure 26: Status of returning to work, China, March and April 2020
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Issues and Insights
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- Establish plain milk as part of night-time routine with added benefits
- The facts
- The implications
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- Figure 27: Examples of night time milk
- Expand consumption occasions of flavoured milk
- The facts
- The implications
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- Figure 28: Examples of milk with oats and quinoa
- Fast meal solution for young singles on emerging channels
- The facts
- The implications
The Market – What You Need to Know
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- Premiumisation drives market for plain milk; chilled products increase share
- Growth of lactobacillus beverages loses momentum
- Rising milk prices encourage vertical integration of supply chain
Market Size and Forecast
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- Premiumisation drives value growth in market
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- Figure 29: Market value of milk and dairy beverages, China, 2014-19
- Figure 30: Market volume of milk and dairy beverages, China, 2014-19
- Ambient plain milk continues steady growth
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- Figure 31: Forecast of value sales of ambient plain milk (adjusted for COVID-19), China, 2014-24
- Chilled plain milk maintains high value growth
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- Figure 32: Forecast of value sales of chilled plain milk (adjusted for COVID-19), China, 2014-24
- Lactobacillus beverages growth loses momentum
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- Figure 33: Forecast of value sales of lactobacillus beverages (adjusted for COVID-19), China, 2014-24
Market Factors
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- Supply chain vertical integration
- Reliable milk source is key amidst rising raw milk prices
- Developing alternative milk sources
- Shifting age structure may alter product strategy
- Growth in dairy consumption stagnating
Market Segmentation
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- Ambient plain milk fluctuates while chilled segment shows steady growth
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- Figure 34: Market value of ambient and chilled plain milk, China, 2014-19
- Figure 35: Market volume of ambient and chilled plain milk, China, 2014-19
- Flavoured milk may reverse decline by investing in “adult flavours”
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- Figure 36: Market value of flavoured milk, China, 2014-19
- Figure 37: Market volume of flavoured milk, China, 2014-19
- Milk powder changes course and targets seniors
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- Figure 38: Market value of milk powder, China, 2014-19
- Figure 39: Market volume of milk powder, China, 2014-19
- Lactobacillus growth reaches bottleneck
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- Figure 40: Market value of lactobacillus beverages, China, 2014-19
- Figure 41: Market volume of lactobacillus beverages, China, 2014-19
- Figure 42: Value share of milk and dairy beverages categories, China, 2014-19
Key Players – What You Need to Know
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- Increased concentration in dairy market
- Brands expand in chilled segment with support from big data
- Dairy beverages improve with added functionality and advanced technology
Market Share
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- Increased concentration ratio through acquisitions
- Want Want continues to thrive despite falling demand for flavoured milk
- Wei-Chuan and Pinlive win with premium strategy
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- Figure 43: Leading companies’ value share of the milk and flavoured milk segment, China, 2018-19
- Dairy giants aggressively expand profile in lactobacillus drinks, leaving little room for regional players
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- Figure 44: Leading companies’ value share of the lactobacillus beverage segment, China, 2018-19
Competitive Strategies
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- Brands compete to expand in chilled space with improved sterilisation technology
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- Figure 45: Examples of products sold on Tianxianpei platform
- Figure 46: Junlebao Yue Xian Huo Milk, China, March 2020
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- Figure 47: Bright Dairy’s new products
- Figure 48: Yili pasteurized milk product launch ad
- Promising mergers with big data
- Mengniu and Alibaba improve cold-chain efficiency
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- Figure 49: Tianxianpei app user interface
- Figure 50: Tianxianpei refrigerated locker
- Reverse customisation by Fonterra and MissFresh
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- Figure 51: An Honest Cow’s Honest Fresh Milk, China, 2019
- Bright Dairy to digitalise production, supply, sales, and service with support from Alibaba Cloud
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- Figure 52: Bright Dairy Suixinding platform
Who’s Innovating?
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- Increase in minus claims featuring fat and calories
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- Figure 53: % of top nutritional claims in new launches of milk and flavoured milk, China, 2017-19
- Additional benefits in milk and flavoured milk
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- Figure 54: % of new launches in milk and flavoured milk with plus claim, china, 2015-19
- Added ingredients strengthen digestive claims
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- Figure 55: % of top functional claims in new launches of milk and flavoured milk, China, 2017-19
- Figure 56: Examples of dairy products fortified with dietary fibres
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- Figure 57: Jian Shu Qing Chang Niu Nai (Milk), China, March 2020
- Milk may offer unexpected benefits by blurring traditional boundaries
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- Figure 58: Examples of energy-boosting milk
- Seniors require targeted nutrition
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- Figure 59: Top claims of new launches in milk and flavoured milk targeting “seniors (aged 55+)”, China, 2017-19
- Figure 60: Measures taken to deal with health issues, November 2018
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- Figure 61: Examples of senior milk in China
- Figure 62: Meiji Gold Advance Malt Flavoured Milk, Thailand, March 2018
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- Figure 63: Examples of products with claims targeting issues common in seniors
- Technological advances offer innovative responses to consumer concerns
- Producers earn confidence and trust of consumers by increasing transparency
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- Figure 64: Infant formula milk powder traceability WeChat mini program
- Ultrafiltration improves nutritional profile of milk
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- Figure 65: Average protein content of new plain milk launches, China, 2014-19
- Figure 66: Examples of fairlife products
- “Supercooling” technology makes long-distance travel possible
- Milk flavours disperse away from classic leaders
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- Figure 67: % of flavours of new flavoured milk launches, China, 2017-19
The Consumer – What You Need to Know
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- Females prefer online channels
- Little nutritional knowledge beyond protein and calcium
- Gap in children’s milk market with dietary fibre
Consumption Frequency
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- Ambient plain milk loses attention of young males
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- Figure 68: Consumption frequency, January 2020
- Females aged 40-49 are increasing their milk consumption
- Consumers are aware of live bacteria in chilled lactobacillus drinks but have limited accessibility
- Use “family nutrition” to appeal to parents
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- Figure 69: Consumption frequency, “once a day or more” – Select categories, by family structure, January 2020
- Habits of consumers at school may benefit producers in the long run
Purchase Channels
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- Females choose online channels for convenience
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- Figure 70: Purchase channels, January 2020
- Specialised channels should feature premium products
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- Figure 71: Purchase channels – Select channels, by education, January 2020
- Dairy product specialty stores should keep consumers with loyalty programmes
Consumption Reasons
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- Consumers drink dairy beverages for functional purposes
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- Figure 72: Consumption reasons, January 2020
- Additional benefits specific to each category
- Chilled beverages can combat spicy flavours
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- Figure 73: Consumption reasons – “To nourish stomach”, by region, January 2020
- Ambient plain milk delivers nutrients and aids sleep in heavy users
- Flavoured beverages can feature additional ingredients with high nutritional value
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- Figure 74: Consumption reasons – Select reasons, select categories, by user categorisation, January 2020
Perception of Nutrients in Plain Milk
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- Consumers do not differentiate between different nutrients other than calcium
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- Figure 75: Perception of nutrients in plain milk, January 2020
- Young males may be more susceptible to differentiated marketing
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- Figure 76: Perception of nutrients in plain milk – Active ingredients, by gender, January 2020
- Parents are more knowledgeable about the benefits of different nutrients on bone health
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- Figure 77: Perception of nutrients in plain milk, “I have no idea about this nutrient” – Select nutrients, by family structure, January 2020
- Milk as a daily source of vitamins
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- Figure 78: Perception of nutrients in plain milk – Vitamins, select perceptions, by age group, January 2020
The Ideal Children’s Milk
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- Parents in their 30s are most demanding in additional nutrients
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- Figure 79: Attractive features of children’s milk, January 2020
- Market gap in milk with dietary fibre presents opportunity
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- Figure 80: Select claims carried by new launches in children’s milk category, China, 2017-19
- Specialised needs for different age groups
Perception of Flavoured Milk
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- Food bits may transit flavoured milk into a meal supplement
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- Figure 81: Perception of flavoured milk, January 2020
- Use bold, innovative flavours to engage young males
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- Figure 82: Perception of flavoured milk – Select statements, male, 18-24 years old, January 2020
- Play up indulgence factor to secure heavy users
Meet the Mintropolitans
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- Mintropolitans seek more benefits from dairy beverages
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- Figure 83: Consumption reasons, by consumer classification, January 2020
- Nutrients in plain milk deliver on benefits
- Flavoured digestive milk for MinTs
Appendix – Market Size and Forecast
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- Figure 84: Total market value of ambient plain milk, China, 2014-24
- Figure 85: Total market value of chilled plain milk, China, 2014-24
- Figure 86: Total market value of lactobacillus beverages, China, 2014-2024
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Appendix – Market Segmentation
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- Figure 87: Value share of milk and dairy beverages categories, China, 2014-19
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Appendix – Methodology and Abbreviations
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- Methodology
- Forecast methodology
- Abbreviations
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