Analyst outlines emerging market opportunities for dairy firms

By Guy Montague-Jones

- Last updated on GMT

Related tags: Eastern europe, Western europe, Milk

Growth forecasts from Leatherhead Food International for different dairy product sectors suggest that processors have plenty to gain from investment in emerging markets.

Leatherhead analyst Chris Brockman said emerging markets are likely to be a major driver for merger and acquisition activity in the coming years as the European dairy industry seeks to fast track access to high growth regions.

Two of the most talked about emerging markets are India and China but there is also growth potential in Eastern Europe.

Regional growth comparisons

In the cheese market, where Leatherhead predicts annual value growth of 3.7 per cent in Western Europe between 2008 and 2013, Asia is expected to offer 6.5 per cent growth and Eastern Europe 5.5 per cent.

Proportionally, similar differences can be seen in the milk and cream market. Average annual growth up to 2013 is predicted to be 4.2 per cent in Western Europe as opposed to 7.3 per cent in Asia.

Meanwhile, in the yoghurt market, both Eastern Europe and Asia are expected to offer 9.2 per cent value growth up to 2013 in comparison to 7.8 per cent growth in Western Europe.

The value difference here may not be particularly large, but unlike Western Europe, where growth is being driven by high value functional products, Asia and Eastern Europe offer major volume gains and the opportunity to establish market share.

There is also plenty of opportunity for consolidation in the yoghurt market with the top 5 global players taking only a 46 per cent share, according to Leatherhead.

Comparing the growth gap

Brockman told DairyReporter.com that the differences between predicted growth rates in different regions reflect the significant potential of emerging markets. But he said the growth gap between emerging markets and developed markets is not as spectacular as it is in some other food categories.

The analyst explained that consumer awareness of dairy remains quite low in some emerging markets. Added to a lack of familiarity with dairy is a problem with lactose intolerance in certain countries but Brockman does not expect these barriers to block the long-term spread and development of dairy products in emerging markets.

Related topics: Markets, Emerging Markets

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