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New dairy culture sees explosive drinking yoghurt growth

11-Aug-2014
Last updated on 11-Aug-2014 at 12:19 GMT - By RJ Whitehead
New dairy culture sees explosive drinking yoghurt growth
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For years a laggard in the dairy stakes, China is now seeing massive growth in its yoghurt drinks market largely because of significant investment and new demand for healthier drinks on the go.

According to a report released by Canadean, yoghurt will become the third most consumed dairy drink in China by 2016 as it overtakes grain, nut, rice and seed alternatives to milk drinks. 

According to the analytics agency, this will mainly be due to the investment that has been made in the yoghurt market there. 

Michael Loubser, Canadean’s beverage analyst, explained: “With insufficient supply of raw milk and rising raw milk prices in 2013, Chinese dairy producers devoted resources to maintaining steady milk supplies by investing more in milk sources and cattle ranches

These investments are now bearing fruit, with the drinking yoghurt category expected to experience steady growth well into 2019.” 

 

Collaboration boost

Over the last year, major dairy production companies have been building up alliances and working with dairy farmers to boost growth in the segment. 

In May last year, for example, Mengniu and Danone signed a framework agreement to establish a joint-venture for the production and supply of chilled yoghurt products. At the same time Mengniu increased its stake in China Modern Dairy to 28%. 

Yili Group also formed an alliance with the Italian dairy firm Sterilgarda Alimenti and signed a memorandum of understanding with Dairy Farmers of America regarding strategic purchasing and farming service cooperation.

‘On the go’ on the up

Significant investment, however, is not the only reason why the Chinese drinking yoghurt market is growing rapidly: with increasing disposable income and exposure to the highly marketed benefits of drinking yoghurt, more and more consumers demand healthier, nutritious dairy drinks in China. 

According to Canadean, the ambient drinking yoghurt segment is doing especially well; having more than doubled in 2013, it is expected to grow further in 2014 to take a 70% of the overall drinking yoghurt market. 

Loubser added: “Consumption habits have shifted, and a significant portion of the market is now ‘on the go’ which makes yoghurt drinks, especially ambient variants, very convenient for busy consumers.”  

Bright Dairy has dominated the ambient yoghurt drinks category for several years. With the success of its Momchilovtsi ambient drinking yoghurt brand, and the overall popularity of ambient drinking yoghurt in general, Bright has secured a strong lead in the market, both in terms of volume and value share. 

According to Loubser: “Although companies such as Mengniu and Yili have released several ambient yoghurt brands of their own, Bright Dairy is keeping the pressure on its competitors and managed to increase its volume share against the key players in this category.” 

Related topics: Industry growth, Markets, Beverages, Dairy, China