Campina signs dairy joint-venture in Thailand

The 50/50 joint venture, which began last Thursday and will be managed by Campina, aims to produce both fresh and long-life products for Thailand's THB32.5bn (€686.7m) dairy market.

Both firms will continue to market and sell products on their own, although Justinus Sanders, Campina chief executive, said the move should provide cost savings for both firms.

It will also strengthen Campina's position in the Asia Pacific region, now seen as an important growth area for dairy products. The Dutch group has been active on the Thai market since March 2004, when it bought up Parmalat Thailand, and last year signed a joint venture with Vietnam's largest dairy, Vinamilk.

Campina said its new venture would specifically target Thailand's dairy drinks sector, an area of the market recently forecast to grow rapidly by the Kasikorn Research Center.

It said in a report this month that ready-to-drink yoghurt was expected to drive forward Thailand's yoghurt sector by 15-20 per cent per year.

Ready-to-drink yoghurt makes up THB9.2bn of the country's THB10.5bn (€215.5m) yoghurt market and has benefited from growing health concerns among the younger generation, typically aged between 14 and 25 years, the report said.

Annual consumption of yoghurt products is still fairly low - at one or two litres per person - when compared with Thailand's milk consumption, which stands at around 15.9 litres per person.

Now, however, "producers will be expeditiously expanding their markets primarily to students and older people, as yoghurt can help them to be healthy and fit"​, said the report.

The growing number of health-conscious consumers is also likely to help other areas of Thailand's dairy products market.

The High-calcium milk sector, for example, is expected to continue its 6.7 per cent growth in 2005 to reach THB1.6bn this year.

Rising consumer awareness of calcium's ability to lower the risk of osteoporosis has encouraged more manufacturers to install high-calcium milk production lines to make both UHT and yoghurt products.

Fresh dairy is another strong growth area in Thailand, according to Kasikorn, helped along by packaging innovations that have enabled producers to extend product shelf-life.

The report said the country's pasteurised milk market was growing at 20 per cent per year, compared to a rate of two or three per cent for long-life, UHT products. It added, however, that low-fat UHT products were still rising well on the back of health and wellness trends.