Drinking yoghurt accounts for 65% of the yoghurt and sour milk category in Asia Pacific. What are the key drivers of its growth and how will these evolve?
Convenience is the key reason for purchases
In the Asia Pacific, drinking yoghurt is widely available through modern and traditional trade outlets, or from door-to-door salespersons. Shelf stable portions are increasingly available, reducing the hassle of keeping the drink chilled to preserve its functional value. The rising convenience of internet retailing has also benefitted shelf stable drinking yoghurt, allowing major quantities of it to be delivered to the doorstep. Storage is also made easier, as shelf stable variants do not take up valuable refrigerator space. One can also opt to chill small batches of shelf-stable drinking yoghurt if desired, rivalling traditional chilled variants. Amidst increasingly hectic lifestyles, convenience is greatly appreciated.
Functional/Fortified caters well to the rising healthiness
Drinking yoghurt is suitable for all ages. Consumers are familiar with the benefits of probiotics, which improve digestive health and can remedy indigestion and heartburn. According to Euromonitor International, digestive health is the third largest health trend within the USD248 million health and wellness industry in Asia Pacific. Within digestive health, functional/fortified probiotic yoghurt made up almost 70% of Asia Pacific’s value sales in 2018.
Future growth drivers remain strong
Retail value sales of drinking yoghurt in Asia Pacific hit USD24.9 billion in 2018. Over the 2018-2023 forecast period, they are expected to record a CAGR of 10% to reach USD40.5 billion. Growth is expected to come from expansion in product distribution and innovations to specifically target new consumer segments.
In Asia Pacific, drinking yoghurt is expected to expand its distribution reach from first-tier cities into second-tier cities. Direct selling will be used to assimilate its marketing message within unique local cultures, generating brand loyalty through salespeople hired from the same local communities. The lower capital expenditure and marketing spend in penetrating new markets will also make it an attractive expansion strategy into previously untapped markets.
Additional fortification of drinking yoghurt can also help manufacturers target new consumer segments. For example, adding iron and folic acid to it could make it beneficial for female health. As women increasingly marry at a later age, it can be marketed as beneficial for preserving their fertility for pregnancy later on in life.
The wide availability of substitutes and sugar taxes could threaten future growth
Ready-to-drink tea, juices, smoothies and probiotic supplements are close competitors of drinking yoghurt. Drinking yoghurt is also being incorporated into other drinks categories, intensifying the competition. Drinking yoghurt is also vulnerable to sugar taxes, which will raise retail prices in the Philippines and Malaysia, making reformulation even more critical. Downsizing pack sizes and innovating towards other healthy drinks categories can also help mitigate the negative effects of the sugar tax.
Drinking yoghurt’s convenience and healthiness will continue to resonate with consumers in the future. Manufacturers will also need to pre-empt future headwinds and continue adding value to their assortments.