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Drinking Milk in Asia Pacific

February 2019

Asia Pacific is a major region for drinking milk and represents the biggest market by value. While sales are primarily stemming from China, markets with large populations such as India and Indonesia are growing rapidly. Growth is being aided by expansion in cold chain logistics, premiumisation towards natural and additive free drinking milk, entrance of private equity players, innovation towards lactose-free milk types and rising importance of hygienic packaged milk as a daily staple.

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Key Findings

China and India are the key drivers of drinking milk volumes in Asia Pacific

Being the two most populous countries in the world, China and India account for some 52% and 19% of drinking milk sales, respectively, in the region. In China, natural and free from shelf stable milk brands are becoming popular, as they are natural and free from additives. In India, an increasing shift from unpackaged to more hygienic packaged drinking milks is the main driver for the large volume of sales.

Innovation, branding, and quality assurance are key to drinking milk’s future success

Negative perceptions of drinking milk still need to be overcome. Lactose intolerance, scandals involving chemicals such as melamine in China, and unhealthy additives are hampering growth. Manufacturing processes are also not fully audited by independent international certification bodies for quality assurance, which hampers brand’s efforts in building consumer trust. Lactose free variants of cow’s milk are still being trialled across Asia Pacific countries, with much room for improvement towards addressing lactose intolerance as a stumbling block for drinking milk originating from cows.

Vietnam and India are forecast to show the strongest growth over the forecast period

In India, large drinking milk cooperatives are expanding further through franchising and private equity players are making inroads, injecting more capital and expanding their reach in a lucrative market. Vietnam is benefiting from rising disposable incomes, heavy investments in drinking milk innovation, and the entrance of dairy multinationals which can leverage their extensive overseas experience to gain traction quickly in a new market.

Drinking milk products are increasingly addressing specific functional needs

Innovation efforts are strong in Asia Pacific. Lactose free variants are employing enzymes to digest the lactose or A2 Beta Casein proteins instead of the common A1 Beta Caesin which causes lactose intolerance. Drinking milk products are also increasing innovated to target specific health needs, age groups and lifestyles. These innovations have the common thread of convenient packaging, natural and free from labelling.

Introduction

Scope
Key findings

Regional Overview

Asia Pacific is the largest market by value sales
Investments in innovation and premiumisation to drive future growth
Fresh milk is a value driver in India, China, Japan and South Korea
However, each country has its own specific preferences for drinking milk
Declining flavoured milk drinks in China did not impede overall growth
Vietnam, Indonesia, and Thailand are driving growth for Drinking Milk
Fresh and shelf stable milk drive growth in the region
Strong absolute gains in China and India make fresh milk the key driver
Supermarkets are generally gaining share across Asia Pacific
Supermarkets and hypermarkets decline, while internet retailing thrives

Leading Companies and Brands

Market power is strongly consolidated across the region
Indian companies thrive with foreign investment inflows
Multinationals diversify; domestic companies focus on local markets
Chinese brands continue their dominance in Asia Pacific

Forecast Projections

India set to grow the fastest; China and South Korea to decline in future
Excluding China, India, and Japan, Vietnam has the best growth potential
Low per capita consumption of milk in India is a boon to investors
Hard and soft drivers are largely positive across Asia Pacific countries
Innovation and distribution are key drivers for developing markets

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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