Meiji launches fresh milk in China

By Dominique Patton

- Last updated on GMT

Related tags: Milk

Asia's biggest dairy, Japan's Meiji, has started shipping
pasteurized milk directly to Shanghai from Japan, the first time a
foreign dairy has supplied fresh milk to the rapidly growing
market.

The move underscores the rising competition among foreign players for a share of China's dairy market. Meiji has supplied ice-cream to China since 1995 but last month it introduced liquid milk for the first time. It says the ultrapasteurised ESL milk has a shelf-life of 15 days, allowing for five days spent in transport and customs and a further 10 days on sale in Shanghai supermarkets. But at a price of CNY38 per litre, the company is restricting its sales to a tiny niche of consumers. Most Chinese milk costs a sixth of this price, with high-end Chinese milk, such as Mengniu's Telunsu brand or Yili's Jindian brand, still less than half the cost of Meiji's. Jin Xuhua, marketing manager from Meiji (Shanghai), said the milk will mainly be sold in Japanese-owned supermarkets in Shanghai, targeting the city's large Japanese population as well as Taiwanese consumers. "There are about 300,000 Taiwanese here who will prefer Meiji milk, since the taste is much more similar with what they have in Taiwan,"​ Jin told AP-Foodtechnology.com. Meiji will test the product in Shanghai over the next year, adding yoghurt and other dairy products to the range. "Though we are very optimistic about the sales, we are still waiting to see whether this price can work in China,"​ added Jin. The milk costs two to three times more than in Japan. Nevertheless the firm is expecting sales of milk and its other products to reach JPY100 million by the end of next year. Demand for dairy products in China has more than doubled in the past five years, and though domestic milk production is growing rapidly, China is only able to produce 24 million tonnes a year (liquid milk equivalents) of dairy products per year, according to Rabobank. Although production of raw milk has been growing at a faster rate than demand recently, consumption is still expected to increase from an average 20kg per capita now to 30kg in 2015. The market is also becoming more sophisticated with consumers moving from milk powder to UHT milk and Chinese consumers becoming more brand conscious to ensure quality and food safety, according to the bank. Wang Dingmian, deputy chairman of Guangdong Dairy Industry Association, said that Meiji's quality is "a lot better than our own", due to their more advanced techniques in maintaining the freshness of raw milk and controlling temperature. "The most obvious difference is that Meiji's milk has a natural and strong fragrance which Chinese milk lacks,"​ he told AP-Foodtechnology.com. Although the price will limit its appeal to Chinese customers and the market will be further restricted to the coastal area for logistic reasons, Wang said the move could trigger fiercer competition. It may also encourage Chinese companies to pay more attention to new processing techniques and higher quality, trends that will ultimately influence their survival in the market, he said. Interviews by Pan Yan​.

Related topics: Emerging Markets, Ingredients, Fresh Milk

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