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Dairy in Asia Pacific

October 2017

Asia Pacific is a major region for dairy as the biggest market by value, although with the lowest per capita spending. While sales are primarily stemming from China, markets with large populations, like India and Indonesia, are growing rapidly. Growth is being aided by modern trade development, changing consumer habits and dynamic product development, which makes this region key for potential growth.

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Asia Pacific is the biggest market for dairy but as lowest per capita spend, indicating potential for further expansion

Despite being the largest market globally and registering the fastest growth over 2012-2017, per capita consumption of dairy in Asia Pacific lags behind the rest of the world. This points to opportunities for manufacturers, as there is rising consumer interest in the benefits of dairy products as a natural snack. Manufacturers are also focusing on widening their target consumers to accelerate growth.

Yoghurt and drinking milk products are important growth generators for the region’s dairy market

Shifting preferences towards packaged branded dairy is driving growth in emerging markets, while more mature markets are more affected by product trends. For instance, Chinese consumers’ anti-additives sentiments boosts the popularity of fresh milk, while in South Korea, fresh milk is negatively affected by flavoured milk drinks, as manufacturers compete by introducing new flavours like honey, watermelon and toffee nut, inspired by foodservice menus.

Chinese companies lead dairy regionally, while Japanese and Indian companies are gaining traction as well

Yili and Mengniu lead dairy in Asia Pacific, but their presence is limited to China, whose sheer size is sufficient to outstrip companies that have a larger market count. Yakult’s positioning as beneficial for gut health sustained its performance, while multinationals like Nestlé and FrieslandCampina draw sales from multiple markets. Rising interest in dairy gives opportunity to smaller companies to gain sales from a broader base of consumers.

Supermarkets are key for chilled dairy products, but independent grocery retailers are integral to improving accessibility

Urbanisation and the rise of modern trade benefit dairy due to reliance on chillers and cold chain logistics for categories like yoghurt and fresh milk. Product freshness plays an essential role in the growth of dairy products as more nutritious than shelf stable variants, especially in emerging Asia, where health consciousness is gaining traction. However, consumers in rural areas rely on independent small grocers, which manufacturers are expected to penetrate.

Introduction

Scope
Key findings

Regional Overview

Putting Asia Pacific into context
APAC is expected to recover from the 2015/16 growth slowdown
Drinking milk products the largest contributors regionally bar Japan
Yoghurt and drinking milk products are big stars, cheese emerging
Multiple categories decline in Japan despite positive overall growth
Drinking milk products find success in Indonesia, Vietnam, Thailand
Nutrition benefits, food safety and convenience attract consumers
Independent small grocers still a key channel for most of Asia Pacific
Maintaining the freshness of dairy products essential for retailers

Leading Companies and Brands

Most markets are strongly consolidated, suppressing others’ sales
Domestic sales continue to buoy Yili and Mengniu’s success
Regional companies dominate, focussing sales in a few markets
Strategic presence in certain categories benefits brand rankings

Forecast Projections

Pakistan is forecasted to have the fastest growth, China the largest
Biggest growth set for the largest dairy markets, bar South Korea
Growth potential lies in health awareness, albeit to varying degrees
Soft drivers for forecast growth optimistic for most markets
Soft factors inhibit growth in Philippines, Korea, China and Vietnam

Country Snapshots

China: Market context
China: Competitive and retail landscape
Japan: Market context
Japan: Competitive and retail landscape
South Korea: Market context
South Korea: Competitive and retail landscape
Indonesia: Market context
Indonesia: Competitive and retail landscape
India: Market context
India: Competitive and retail landscape
Taiwan: Market context
Taiwan: Competitive and retail landscape
Philippines: Market context
Philippines: Competitive and retail landscape
Thailand: Market context
Thailand: Competitive and retail landscape
Malaysia: Market context
Malaysia: Competitive and retail landscape
Uzbekistan: Market context
Uzbekistan: Competitive and retail landscape
Hong Kong, China: Market context
Hong Kong, China: Competitive and retail landscape
Vietnam: Market context
Vietnam: Competitive and retail landscape
Kazakhstan: Market context
Kazakhstan: Competitive and retail landscape
Pakistan: Market context
Pakistan: Competitive and retail landscape
Singapore: Market context
Singapore: Competitive and retail landscape
Azerbaijan: Market context
Azerbaijan: Competitive and retail landscape
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