Demand for drinking milk products is expected to further rise in 2021 through retail, driven by the dominant fresh milk, and dynamic performers such as flavoured milk drinks and other milk alternatives, while foodservice, which experienced a significant drop in demand in 2020 as a result of restrictions imposed by the government in response to the pandemic, is set to see a partial recovery over the year in line with a relaxation of measures depending on the threat level of the virus, and driven by pent-up demand. On the other hand, while shelf stable milk enjoyed an upturn in demand during 2020 at the expense of fresh milk which had experienced a more subdued performance, as consumers looked to reduce their visits to grocery retailers for fresh produce, retail volume growth for the smaller category is likely to return to a greater level of normalisation in terms of consumer behaviour.
Rising premiumisation is also helping to drive up the average unit price, with organic dairy products witnessing steady growth as New Zealanders become increasingly aware of the origins of the foods that they consume. They are therefore making ethical and conscious purchasing decisions with an increasing preference for products that are free from chemicals and preservatives.
Drinking milk products is a highly consolidated competitive landscape dominated by Fonterra Brands and Goodman Fielder due to their strength in the largest category of fresh milk, and the smaller dynamic flavoured milk drinks. They are followed at some distance by private label producers Foodstuffs (NZ) Ltd and Woolworths with their respective lines, Value and Countdown.
Drinking milk products is predicted to experience fairly stable demand over the forecast period, supported by the dominant fresh milk which enjoys a naturally healthy positioning in New Zealand. Trends emerging towards the end of the review period and strengthened by the pandemic are likely to persist as consumers are influenced in their purchasing decisions by the concept of provenance with a growing sentiment of supporting locally-made dairy products and New Zealand producers.
While the average unit price of drinking milk products is predicted to remain stable over the forecast period (at constant 2021 prices), demand for premium dairy from some consumers is likely to continue in line with increasing interest in higher quality organic options, more exciting flavours or expansion of the lactose-free niche. This trend will remain evident within flavoured milk drinks which carries a higher than average unit price than the overall category.
Other milk alternatives is predicted to continue to record the highest retail volume growth over the forecast period, although as the category continues to mature, it is likely to lose some momentum, particularly when compared to its dynamic performance over the review period. Nevertheless, in line with the increasing trend amongst New Zealanders to search for non-dairy products in line with health and wellness trends or changes in lifestyle, the category still offers potential for further expansion in terms of attracting smaller brands such as Milk 2.
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Understand the latest market trends and future growth opportunities for the Drinking Milk Products industry in New Zealand with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
Key trends are clearly and succinctly summarised alongside the most current research data available. Understand and assess competitive threats and plan corporate strategy with our qualitative analysis, insight and confident growth projections.
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This report originates from Passport, our Drinking Milk Products research and analysis database.
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