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The long read: China's leaders have championed milk as the emblem of a modern, affluent society – but their radical plan to triple the nation's.
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Against the slow-down in the growth of the overall FMCG, the import dairy market in China still maintained rapid growth.

Feeding 1.4 Billion: Inside China's largest dairy farm

The official import figures of dairy products for the first quarter of has shown an increase by Chinese dairy imports exceeded , tonnes between January and March Common consumption occasions include between-meal snacks, at breakfast, as a dessert or beverage. The research also found that different age groups of consumers have their preference. For example, young white-collar workers prefer one-time consumption and bottles each time and are willing to choose a slightly more expensive product. Family members have a fixed habit of dairy consumption, a dozen or more each time, favoring fruit-flavored or calcium-rich products for children and paying more attention to promotions.

The acceptance of dairy products in China also varies from region to region. Northwest China is the main raw milk production area in China, so the per capita consumption is higher. In addition, the per capita consumption of Beijing, Tianjin, the Yangtze River Delta region and the Pearl River Delta Region is also higher due to the prosperous economy.

But in Northeast China, Southern China, central China, and southwest China, the consumption of dairy products per capita still has room for improvement.

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Also, it is evident in China that UHT milk is way more popular than pasteurized milk. The market performance of the latter is fairly limited to coastal cities because of its relatively short storage period and costly logistic fees.

Dairy industry in China

Likewise, more and more urban residents are willing to purchase premium products and therefore generating a lucrative niche market for certain high-end products for instance, organic, low fat, low calorie, since health concern remains the key determinant in consumer purchasing behavior.

Whereas, in rural areas, a large proportion of people used to drink soy milk, but now more are inclined to consume milk since the penetration of dairy advertising as well as sales channels. Distribution is also facing great evolution. First-tier city consumers are more inclined to shop online, and the penetration rate is over 90 percent while the lower-tier city or rural area only got 20 percent as the penetration rate for dairy products in China. Such kind of unequal distribution implies that dairy manufacturers have to extend their sales channels, both offline and online, which is a great challenge for retailers.

Compared with western countries, China possesses a large amount of fresh milk and milk powder but a lower amount of butter and cheese. These young brands took share from the largest players and therefore lowered the concentration of the top brands. It is true that low loyalty is a macro trend in FMCG as consumers are provided with even more options. As a result, dairy players need to identify and cater to the diversified yet changing needs of consumers and apply the corresponding marketing strategy. Pan Gang, chairman of the Yili Group, once said that there are only two kinds of people in his eyes.

With the booming economy, accelerated globalization and rising health concern, future product transformation will be mainly focused on the flavors, quality, and variety of the products. Premium product market will thrive under the selling points like organic, health, and nutrition. Our market research team has already carried out research for the cheese industry and various food and beverage industries in China.

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Follow daxueconsulting on twitter. File Attachment Optional, 1MB max. Contact us for any question on the Chinese market How the market overcomes the obstacle of lactose intolerance in China? The Chinese government is playing an important role in increasing dairy consumption in China The current party in China has included the consumption of dairy products in its 13th five-year plan.

The expanding middle class are consuming more dairy products in China The national economic strength undoubtedly plays a significant role in the rapid development of the dairy industry in China. Share this Post.

China: Dairy product quality as the new industry driver

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    Dairy production in Chinese farm households

    Since the initial tariffs went into effect last July, sales of U. For the first quarter of , the value of U. To alleviate the strain on American farmers and companies, the administration is planning more trade mitigation purchases of agricultural products. Forgot your password? Subject Matter Experts. Member Services. Related Articles.

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