Tetra Pak has pinpointed the dairy industry’s next big growth opportunity – the ever-growing demand for liquid dairy products (LDP) in emerging nations such as India and China.
The company’s Dairy Index, which highlights current challenges and opportunities in the dairy sector, identified an increasing demand for packaged LDP amongst 2.7bn low-income consumers in developing countries as the dairy industry’s next big growth opportunity.
It pinpointed the increasing spending power of these low-income consumers – which the company refer to as Deeper in the Pyramid (DiP) consumers - in emerging economies such as Indonesia, Brazil, Pakistan, Kenya, India and China.
Demand for convenient, ready-to-drink solutions and a greater awareness of food safety is set to see global LDP consumption rise by a compound annual growth rate (CAGR) of 2.9% between 2011 and 2014.
Despite its focus on growth in emerging markets, Switzerland-based Tetra Pak has denied that it is attempting to move away from the stagnated European market.
LDP consumption increase
“It is really emerging markets that are driving dairy market growth at this time,” said Tetra Pak president and CEO Dennis Jönsson.
“LDP consumption in low income countries is set to increase from around 70bn litres in 2011 to around 80bn litres in 2014.”
“The key challenge will be making products affordable, available and attractive to these customers.”
“We have identified a number of ways to make products more affordable,” he said.
Lower cost alternatives to whole milk, such as whey or lactic acid, have been suggested as cost-cutting options for the dairy industry.
The introduction of reduced size, more basic packaging has also been pinpointed as an economising option for companies attempting to enter these markets.
“We believe these consumers will help to spearhead our industry’s rapid growth in emerging markets this decade,” said Jönsson.
“They can afford them, they’re growing in purchasing power and they live in markets driving our industry’s growth. Yet, few dairy processors today are reaching them.”
When pressed on the firm’s new Asia, Africa and Latin America-based focus, Jönsson denied that the strategy is a shift away from the stagnated European market.
“For us the focus is slightly different, but it is equally important to maintain and grow these markets that are already there,” said Jönsson.
“We focus on developing markets because of the tremendous opportunities we see. These developed markets still hold a significant share of the liquid dairy product market,” he added.