Asia Dairy Innovation

China dairy consumption trending towards cheese, yogurt and added protein, Mintel says

By Mary Ellen Shoup

- Last updated on GMT

China's dairy market will continue to grow as consumers increase their daily dairy intake, according to Mintel. ©GettyImages/06photo
China's dairy market will continue to grow as consumers increase their daily dairy intake, according to Mintel. ©GettyImages/06photo
The rising demand for dairy in China, growing at 6% to 7% rate annually, is teetering on outpacing volume growth of the category (increasing by 3% to 4% every year) as the country shows great interest in dairy products, according to Mintel.

The Chinese Nutrition Society issued updated dietary guidelines for Chinese consumers in 2016, recommending that each adult should consume 300 grams (10.6 ounces) of dairy products per day – current consumption is 100 grams (3.5 ounces).

“There is still opportunity for growth of dairy consumption in China, especially from lower tier markets, as a result of consumers’ growing awareness of nutrition intake, increasing household income levels, and the accelerated urbanization process,”​ Loris Li, food and drink analyst at Mintel, told DairyReporter.

Cheese, yogurt, protein lead consumer interest

Mintel predicts that cheese, yogurt, and protein-fortified dairy products will be the next big trends to hit the subcontinent of 1.4bn people offering export opportunities for other international markets.

In fact, a record amount of US cheese was sold to China last year representing a volume increase of 44% between 2016 and 2017, according to USDEC.

“The next potential dairy subcategory in China could be cheese as cheese consumption per capita in China is very low,”​ Li said.

Amrbosial yogurt drink
Yili's ambient drinkable yogurt brand, Ambrosial

“In other regions, brands are making cheese more snack-like to encourage consumption. The awareness of cheese for children’s and toddlers’ consumption has been rising because parents believe the nutritional benefits of cheese, such as protein and calcium, are good for their children.”

Yogurt has also been on an upward trend lately, particularly Greek and drinkable varieties such as Bright Dairy’s recently-launched yoGreek and with Inner Mongolia Yili expanding its ambient drinking yogurt operations to accommodate for the growth of its Ambrosial brand.

Lastly, dairy manufacturers are seeing an increasing consumer demand for products with higher-protein content, Li added.

“For China's market, both the white milk and yogurt categories are focusing on increasing protein levels as a high level of protein has become a feature of premium products. Brands like Mengniu Deluxe communicate with consumers about the protein levels of its products in TV commercials and state the protein level clearly on the packaging.” 

A dairy innovation unique to China is the development of goat infant formula by brands such as Oli6 and Bubs, Li says. "Some parents believe that goat infant milk formula is easier for babies to absorb nutrients and does not cause allergies,"​ she said. However, the product remains controversial in China because it is unknown whether consuming too much would cause digestive issues for babies, Li added.  

Preference for imported dairy products

Imported dairy products are still in high demand due to the some food safety concerns surrounding China’s domestic dairy products leading to a consumer perception that international dairy products are of higher quality, according to Mintel.

“Companies have begun including the source of their milk, such as that it is imported from Australia or New Zealand, to prove that the milk is of high quality,”​ Li said.

However, this perception of Chinese dairy manufacturers shows signs of changing as the Chinese Food and Drug Administration recently conducted a monthly inspection dairy products, of which 99.5% of the samples passed the screening, according to Hong Kong data and business intelligence firm CCM.

In addition, a survey of Chinese consumers conducted by CCM found that confidence in domestic milk products increased from 50% in 2008 to 75% last year.

Australia and New Zealand will continue to be the largest exporters of milk to China as the preference for foreign milk products is still strong among Chinese consumers, CCM added.

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