Added value driving global dairy growth

Related tags Uht milk Milk Euromonitor

Milk and cheese remain staples of diet in most parts of the world,
but yoghurt continues to be the main engine for growth in the
global market, not least because of its versatility as a functional
product, according a recent report by market analysts

Consumers are increasingly demanding food that promises both health and extra functional benefits, and this has led to the development of products such as probiotic drinking yoghurts, which have the added advantage of being portable and easy to consume.

The report suggests that the further development of such health-orientated and functional products will be a key driver for dairy in the coming years. Reduced-fat and enriched milks, pre- and probiotic yoghurts and organic cheese are all examples of this trend.

Perhaps the greatest growth potential, however, lies in soy milk. Soy isoflavones, found in soy milk, are claimed to be able to reduce the risk of breast and prostate cancer, colon disorders, Alzheimer's disease and heart disease, and the success of Dean Foods' Silk brand in the US is a testament to the product's increasing popularity, the report suggests.

In yoghurt, this trend towards healthier products is stimulating demand for 'natural' ingredients such as fruit juices. The launch in the US last year of Dannon Frusion Smoothies Fruit 'n Yogurt Drink, a blend of drinking yoghurt and fruit juice, is a typical example of hybrid dairy products offering health, flavour and convenience that Euromonitor predicts will drive growth in coming years.

Dairy sales have also been driven by rapid expansion in developing markets in Asia-Pacific, Africa and the Middle East, the report suggests. Public health programmes have boosted per capita consumption in many countries, and manufacturers have been quick to adapt products to meet specific local needs - such as UHT milk with extended shelf-life or milk packaged in smaller sizes to suit the higher frequency of food shopping in developing economies.

China again realised the fastest growth in 2003, with a double-digit improvement in value sales due mainly to increased demand for UHT milk. This in turn was driven by increased consumer awareness of the nutritional benefits of dairy products - traditionally overlooked in many Asian markets. Demand for milk also rose in response to school milk programmes designed to address widespread calcium deficiency in the Chinese population, Euromonitor said.

The global reach of the world's leading dairy companies also means that sales have developed rapidly even in markets where dairy product consumption has traditionally been low. Nestlé, Kraft and Danone, the three biggest players, all have global businesses, and Nestlé in particular has benefited from a major presence in the rapid-growth flavoured milk drinks sector and its penetration of emerging markets in Latin America and Africa and the Middle East.

In more developed markets, the continued expansion of the retail sector has been another major factor in the development of dairy product sales, with convenience stores in particular benefiting from changes in lifestyles such as longer working hours, smaller household sizes, and more frequent, shorter-term shopping habits. The added value of sales through these outlets also provided a welcome fillip to mature markets where ongoing private label development has undermined value, Euromonitor said.

Multiple grocery dairy sales were also spurred by the increased availability of organic dairy variants and higher quality private label packaging, the report suggested.

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