China to overtake US as largest dairy market by 2017: Euromonitor


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China to overtake US as largest dairy market by 2017: Euromonitor

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China will overtake the United States to become the world’s largest dairy market by 2017, Euromonitor has predicted.

Driven by the country's growing appetite for milk, cheese, and yogurt, the Chinese dairy market will double in size to US$70bn (€55m) by 2019, fresh Euromonitor data suggests.

At this rate, Euromonitor expects China to leapfrog the US by 2017. 

"Rising average annual incomes, greater availability of supermarkets, and increasing ownership of refrigerators in rural as well as urban areas have all had a positive effect on the development of dairy sales,"​ said Lianne van den Bos, food analyst, Euromonitor.

In the meantime, Euromonitor expects Russia and Brazil to take third and fourth place in the global dairy rankings in 2014 - overtaking France and Germany, which it forecasts will fall to fifth and sixth respectively.

"Affordability of dairy"

The global dairy sector experienced "another year of strong growth"​ in 2014, up 7% on 2013, it said.

“To a great extent, top line value growth is still being generated by emerging markets, underpinned by China and Brazil, whilst developed markets are struggling against maturity,”​ said van den Bos.

Brazil, van den Bos said, has added US$13bn to global dairy sales in the last five years - more than France, Germany and Japan.

"To put that figure in perspective, this is double the additional sales of the whole Western European region combined, a region which has the second highest per capita spending on dairy globally, just behind Australasia,"​ she said.

"Driving this growth,"​ said van den Bos, "is the somewhat recent affordability of dairy products."

The growth of Brazil's social class C, made up of manual and clerical workers and small business owners, has also contributed.

"The rapid growth of this class is creating a number of opportunities for brands, as various food items such as cheese and yogurt, once considered expensive or extravagant, are now within reach of formerly poor consumers,"​ said van den Bos.

"Use of provenance"

Commenting on the rankings negative "shake up in Western Europe"​ van den Bos said: “Maturity of the dairy category is a problem in these markets, where deeper penetration is not very likely."

"Instead, product innovation, the use of provenance and introducing new consumption patterns in dairy products is helping to drive forward value growth whilst per capita consumption in most mature markets, including France and Germany, is in decline.”

In France, for example, manufacturer's efforts to commercialize cheese with European Union (EU) geographical indication (GI) status has "proved to be successful in boosting sales and establishing brand presence,​" said van den Bos.

Likewise in Scandinavia, where traditional dairy products such as Icelandic skyr and quark "is driving double-digit growth for the whole category."

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Source: Euromonitor International

Looking ahead, Euromonitor predicts that half of new sales between 2014 and 2019 will come from eight markets.

In order of influence, China, the US, Brazil, Russia, France, Japan, Germany, and the UK, will drive this growth, Euromonitor said.

Related topics Markets Fresh Milk Emerging Markets

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