Coffee whiteners and condensed milk suffered sluggish current value growth in 2018, mainly dampened by the boom in specialist coffee shops. With rising personal incomes, more consumers, particularly younger consumers, preferred to enjoy freshly brewed coffee instead of instant coffee, leading to the contraction of sales of instant coffee in China towards the end of the review period, and only slow growth in coffee whiteners.
Cream showed dynamic growth in China in 2018, but only in the foodservice channel, thanks to the development of cream-topped freshly brewed tea, also called cheese tea or milk cap tea, and dubbed as the Asian Cappuccino, represented by Hey Tea. Targeting mainly younger people, born in the 1980s, 1990s or even 2000s, cream-topped freshly brewed tea enables consumers to enjoy two different tastes in a single tea product – creamy on the top and refreshing on the bottom.
Supermarkets dominated the distribution of other dairy products in 2018. Supermarkets and hypermarkets accounted for the overwhelming majority of retail value sales, further squeezing distribution in independent small grocers and other grocery retailers.
Nestlé (China) continued to dominate other dairy in 2018, and even increased its lead, mainly thanks to the withdrawal of its largest competitor, Maxwell House (Mondelez China) from the market in 2017. Nestlé (China) also bundles coffee whiteners with its instant coffee products, in addition to benefiting from established brand awareness and a good reputation amongst local consumers.
Multinational brands, represented by Coffee-mate, Eagle and Carnation, all under Nestlé (China), dominate the retail market for other dairy, owing to their dominance in instant coffee in China, taking into consideration the fact that coffee whiteners and condensed milk are used in instant coffee. On the other hand, domestic manufacturers were late-comers in these saturated categories, with little room for further development.
Although facing an unfavourable situation in the retail market for other dairy, domestic players are making efforts in the foodservice channel, jumping on the bandwagon of the cream-topped tea craze in China. Zhejiang Panda Dairy Products takes the lead amongst domestic players, benefiting from its successful marketing and development in stores offering cream-topped tea and desserts.
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This industry report originates from Passport, our Packaged Food market research database.