Competitor Strategies in Dairy Products and Alternatives

October 2022

Dairy products and alternatives remains a competitive industry where the top 10 companies face fierce competition from local players leaving the market quite fragmented across the globe. To reinforce their position in the industry, key players shape their growth strategies mostly around increasing demand for functional food and plant-based alternatives. This report provides insight into the business strategies employed by the major players and the outlook of the industry.

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Key Findings

Multinationals dominate the ranking with their wider coverage and well-established brands

The top 10 company list in the dairy products and alternatives industry is mostly occupied by multinationals except for Chinese Yili and Mengniu. While multinationals retain their positions in the ranking thanks to their wider global footprint and well-established brands, domestic players mostly gain through local expertise and agility, making them more resilient to unexpected situations, eg supply chain disruptions seen over the historic period.

Acquisitions and divestments are a means of expansion and of refocusing capabilities for key players in the industry

Acquisitions and strategic divestments are key elements in remaining resilient and securing the healthy expansion of capabilities, enabling manufacturers to be agile and stand out while competition intensifies. In this regard, key players like Nestlé and Kraft Heinz are revamping their product portfolios to focus on strategically identified key growth areas (eg plant-based alternatives) and making acquisitions that serve their future growth while divesting slow-growing businesses.

Developing regions continue to gain ground against developed regions, driven by unmet potential

Key players have intensified their investment to capture the growth opportunities in emerging markets that are relatively limited in developed regions due to market saturation. In terms of attracting investments, powder milk came into prominence due to its long shelf life and being an essential part of daily diets in fast-growing urban areas (eg in Nigeria). In that context, companies have either expanded their production capacities in powder milk (eg Arla) or introduced new products attending to specific nutrition needs (eg Nestlé).

Baby food appears to be one of the most invested categories across the globe

Baby food remains one of the most dynamic categories across the globe for various reasons. In China, the fierce competition from local players, eg Yili, has propelled the multinationals, eg Danone, to partner with local players to gain a better position in the market. The US has also attracted the key players due to the milk formula shortage led by the contamination issue involving leading player Abbott, while Europe has been at the centre of innovations responding to rising demand for plant-based alternatives.

Scope
Key findings
Global overview of the dairy products and alternatives industry
Multinationals deliver strong growth and retain their high rankings
Danone maintains its leading position while Chinese Yili and Mengniu grow fastest
Dairy stands as the major sales generator for most of the key players
Market momentum is the only driver working in favour of all the key players
Emerging markets continue to appeal to major players to seize further growth
The industry remains quite fragmented led by the high number of local players
Companies with a more localised presence show stronger performance
The top three brands remain the major sales generator for all the key players
Top 10 companies in the spotlight
Danone gains from product variety and a wide global footprint
Danone is reinforcing its position in baby food with new investments
Nestlé wins in the US but loses in China
Nestlé focuses on key growth areas in line with its health and wellness strategy
Lactalis: Cheese remains a major company business and France its biggest market
Lactalis innovates in line with the evolving consumer trends
Yili to increase its global footprint with the acquisition of Ausnutria
Mengniu to seize growth opportunities with a specific focus on cheese
Kraft divests its cheese business as part of its “turnaround strategy”
Arla invests in powder milk to respond to fast-growing urban areas in emerging markets
FrieslandCampina remains in its milk formula business after a strategic review
Upfield disrupts the Middle East market by introducing plant-based cheese
Saput o: Cheese remains at the core of its investments, primarily focusing on plant-based
Mapping the growth areas in dairy products and alternatives
Health claims are set to increase their prevalence in dairy
Life-stage nutrition holds big potential for the further growth of drinking milk
Dairy for snacking is gaining traction aligning with the demand for permissible indulgence
Plant-based dairy offers opportunities and challenges ahead
Plant-based dairy: New launches around taste and affordability
Prospects in dairy products and alternatives
Key takeaways
Projected company sales: FAQs (1)
Projected company sales: FAQs (2)
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