Drinking Milk Products: Developing a Two-tier Growth Strategy for Success

Strategy Briefing

About This Report

Dec 2014

Future growth for drinking milk products (DMP) lies in a two-tier strategy. First, in mature regions such as Western Europe, adding value to DMP in terms of nutrition, lifestyle or traceability, allows for expenditure on DMP to increase while volumes falls. Second, in low consumption regions where DMP demand is booming, different strategies on educating the health benefits of milk, cold chain infrastructure and guaranteed quality are among the key considerations to increase penetration.

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Drinking Milk Products: Developing a Two-tier Growth Strategy for Success

Strongest global growth for drinking milk products in 2014

Global demand for drinking milk products (DMP) is expected to grow by 4% in 2014 which is almost double the CAGR for the review period. This booming demand is fuelled by a number of factors including population growth, urbanisation and rising prosperity. However, demand factors differ dramatically by region.

Increasing drinking milk products in low consumption markets

The shift from loose (unpackaged) milk to packaged fresh drinking milk products will drive growth for raw dairy consumers, already used to milk as part of their diet. Manufacturers are likely to run awareness campaigns to educate consumers about the health benefits associated with fresh packaged milk as opposed to unpackaged products.

Marketing campaigns and product development to drive DMP

Adjusting flavour varieties to suit the different taste palates will be key strategies for driving market growth in markets such as India and Pakistan.

In countries such as China or Vietnam, milk is not part of the consumer diet. Therefore marketing efforts in China are aimed at introducing milk to consumers’ diets and educating these “first generation consumers” on the health benefits of packaged milk products.

Educating children is key here, the aim will be too encourage them to continue to drink milk products throughout their adult lives.

Adding value in dairy mature regions

Emphasising or enhancing the nutritious value of DMP, as well as convenience and indulgence, will allow unit price increases and further value growth, to counteract declining consumption patterns in mature markets.

As consumers are changing traditional consumption patterns of milk in favour of milk alternatives and lifestyle products such as breakfast drinks, product offerings should be adjusted accordingly.

Introduction

Scope
Objectives of global briefing
Key findings

Overview of Drinking Milk Products

Global consumption of drinking milk products (DMP)
Strong global demand for drinking milk products in 2014
Flavoured milk drinks adding to absolute value growth
Flavoured milk to be enjoyed by everyone, anytime!
Rice, oat and almond milk to grow the strongest
Strong demand in Asia Pacific outpaces decline in Western Europe
Traditional milk nations: From unpackaged to packaged milk
Non-traditional milk regions: Getting them to drink more m ilk
Emerging countries will push f uture global demand
Need for value as milk consumption declines in mature markets

Innovating in Mature Markets

The less dairy is commoditised the more space to a dd value
As unit prices slow down, private label share increases
“Buying innovation” through acquiring niche companies
WhiteWave holds first place in global non-dairy milk alternatives
Adding value in dairy through three common themes
Serving a time-poor generation with breakfast drinks
DMP form a great platform to offer foods targeting health problems
Could reformulating infant formula help serve the elderly?
Niche market lactose avoidance: Another acquisition target
Food scandals help add value by selling transparency (1)
Food scandals help add value by selling transparency (2)
Selling natural: From hay milk to grass fed milk

The Global Milk Powder Trade

Why dairy companies sell milk powder
Changing demand for end-product and formulation to impact sales
Demand for dark chocolate hampering milk p owder d emand
Fastest growing demand for milk powder by milk f ormula
Global milk powder demand
Global milk powder demand: A balancing act
Opportunities to access emerging markets through milk powder

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Two-tier strategy for future growth