The popularity of dairy products in the Asia-Pacific region has traditionally been uneven, with markets such as Australia, New Zealand and India dominating production and demand. However, in recent years, more Asian markets, including China and Vietnam, have increased their interest in the sector.
One of the main drivers is health and nutrition, particularly in China, where the government and industry associations raised consumer awareness regarding daily dairy consumption in 2020 amid the coronavirus disease (COVID-19) pandemic. We have formulated guidelines.
Chinese dairy giant Yili has benefited from the resulting dairy boom, with large-scale operations in China as well as New Zealand and Southeast Asia.
This helped companies understand how the trends driving traditional and new dairy markets differ significantly.
“Of course, New Zealand is a market that has been consuming dairy products for many years, but China is a new market and we have clearly seen how very different consumer preferences are in both of these markets. ”Philip Wescom, Head of Oceania at Yili Innovation Center, said: FoodNavigator-Asia.
“New Zealand consumers are very conservative in their dairy preferences and place great importance on quality and traditional dairy experiences. I take a connoisseur’s approach to this.”
“But in China, consumers are always looking for new experiences when it comes to dairy products. This means we have much more room to work with and more opportunities to combine different ingredients.”
“Traditional Chinese medicine is one example, and Chinese consumers are very open and understand the health benefits that mixing this with dairy products brings. They also appreciate the high nutritional value of dairy products. It also helps sell new innovations like this to the Chinese people. It’s a great product innovation area.”
Watch the video below to learn more.
Fonterra added that there are two main consumption trends driving dairy production in the region, which are more or less diametrically opposed to each other.
“We’re seeing trends at the other end of the spectrum.”Tim Opie, General Manager of Global Consumer and Customer Insights at Fonterra, said:
“On the other hand, there has been a marked increase in health and wellness (H&W) concerns, especially since COVID-19, and consumers are becoming increasingly concerned about their dietary choices, and are increasingly interested in functional foods and their associated benefits. I’m looking for.
“On the contrary, the pandemic has also highlighted the importance of enjoying life to the fullest, with consumers increasingly turning to luxurious and uplifting products as a way to treat themselves and improve their overall health.” This has led to a new trend known as ‘revenge eating’.
“[This has given rise to a] Tension between H&W vs. YOLO (You Only Live Once) trends – but at the same time, we also noted that there is a strong opportunity in APAC for both macro trends to merge along the “natural path” trend. For example, leveraging clean label. , create permission to enjoy natural product stories. ”
While health and wellness trends are driving dairy innovation focused on areas from gut health to energy, the YOLO trend is moving this innovation towards newer areas.
“For H&W, the innovation here is not just in food format, we see the lines between supplements and food delivery blurring. They are actively seeking out functional foods, driven by the belief that they are equivalent to “better health benefits.”Opie added:
“But for YOLO, this leads to consumers engaging in things like rest rituals (such as eating and drinking rituals to combat stress) and edible escapism (a gustatory journey through the world’s cuisines). It elicits an enormous desire to explore, which in turn translates into novel and convenient one-handed consumption formats such as cheese lollipops, sticks, crisps, and bars. ”
Direction of innovation in India
In India, the dairy industry has long been considered a major economic driver and is strongly supported by government support and policies such as the National Dairy Program (NDP) and the Dairy Entrepreneurship Development Scheme (DEDS).
Here, innovation also tends to be driven by consumer demand for higher value products.
“The past three years have seen a significant shift toward value-added dairy products such as cheese, whey protein, and flavored milk as consumers increasingly focus on health, convenience, and variety.”Akshari Shah, executive director of Parag Milk Foods, a stalwart of India’s dairy industry, said:
“Increasing awareness of health benefits, coupled with a growing middle class and changing dietary habits, are driving the growing demand for these value-added products.
“This has also increased the demand for organic dairy products, with many producers actively adopting organic farming methods, developing niche market segments, and restructuring their product offerings to cater to health-conscious consumers. .”
There is also an increasing focus on dairy products with high protein content, driving growth in sectors such as cheese and high-protein milk.
“India’s growing population and rising income levels are playing a pivotal role in driving the expansion of the dairy sector. We are experiencing a huge spike.”Shah added.
“This change in food preferences has spurred innovation and the adoption of technologically sophisticated dairy farming methods such as automatic milking machines.
“Diverse dairy products tailored to local tastes are also entering the market.” [such as] Cheese consumption increases significantly [which is] It is expected to grow by approximately 21.47% from 2023 to 2032. ”
Modern local dairy company Epigamia agrees with these views, stressing that the same trends are pushing new product formats into the market, such as drinkable yogurt.
“Yogurt is now more or less mainstream in India as part of the consumer diet and we all know that it has good effects on the gut from a dairy perspective. Considering that, I think drinkable yogurt is the best.”It’s going to be huge in India in the next few years. ”Rahul Jain, CEO of Epigamia, said:
“India has a traditional version of this called lassi, but in terms of new innovations, drinkable yogurt is not yet very developed.” [as a packaged product sold in supermarkets].
“We also know that fruity dairy products are very important here. Mango and strawberry are always popular, and more unique fruity flavors like blueberry are also gaining in popularity.”
Asia has opportunities
Looking at population size alone, Asia is a very attractive case for the dairy sector, given both traditional but expanding dairy markets like India and emerging markets like China. Opportunities are not equal across sectors.
“According to Euromonitor data, Oceania boasts a mature dairy market with per capita consumption of USD 318, while Asia is still in its infancy, with per capita consumption of only USD 32.3. This means that the consumption is 10 times the difference between both these markets.Opie added:
“However, it is important to note that the most notable gap here actually exists in dairy products, particularly cheese. In Asia, cheese exists primarily in sliced form, and consumers This is due to limited awareness of and access to the variety of cheese types available.”
“The key difference in Asia is that the cheese opportunity has primarily developed in terms of stand-alone snacking opportunities and applications. [but] It’s not very culinary because dairy isn’t fused with traditional Asian cuisine. In Oceania, on the other hand, it has developed from a sandwich and culinary use perspective, so it is now much more prevalent in snacking occasions.
“Therefore, we are seeing a surge in demand for dairy products in APAC and believe that growth opportunities will come from Asian markets where dairy consumption is relatively low.”
Having said that, another important point for Asian dairy products is that the market is very price sensitive, so affordability must be a strong consideration for the product.
“As consumers face the challenge of rising costs of living, they are demanding greater value and nutritional integrity from the products they purchase.”he added.
“Fonterra has recently developed the new Unleen Total 10 in response to this, which provides a comprehensive solution by delivering 10 benefits in every glass of milk and addresses the issue of simple mobility. It not only addresses, but encompasses many different aspects of healthy aging.”
Plant-based is not a threat
Product pricing is also a major reason why the dairy industry is currently relatively uninterested in allowing new plant-based dairy products, such as oat milk and almond milk, to overtake traditional dairy products.
“The main challenge in Australia and New Zealand is that traditional milk is still quite low priced compared to plant-based milk, so for the average consumer it is difficult to switch to that higher priced beverage. It remains a difficult decision.”Wescom said.
“On the other hand, in Asia, some plant-based milks have a long tradition and are made fresh at home, making it very difficult to match processed products, so bringing plant-based milks to market is difficult. There are further challenges.”
“Yili is also working on plant-based dairy products alongside regular dairy products, and while some of our brands are doing very well, especially in China, in terms of expanding beyond there, we are finding the right time. That is important.”
Mr Fonterra added that there was no “either/or” in the plant-based dairy debate, but instead this should be viewed as a complementary sector.
“We still believe dairy is the most nutritious option and it remains our core strength. But the world is changing rapidly, and We also recognize some consumer preferences and the rise of flexitarians.”Opie said.
“So we believe there are almost complementary opportunities here.” [and] New technologies play an important role alongside dairy products. This means that both dairy products and other sources of nutrition play a role in feeding the world’s growing population.
“Fonterra is also investing in the alternative protein space and in 2019 we Invested in Motif Foodworks, which develops lab-grown alternatives to milk, egg, and meat proteins. And in 2022, we invested in a startup in partnership with DSM that uses precision fermentation to develop non-dairy proteins. ”
