Sales of dairy products in China are growing stably, according to new research from Mintel, with performance varying by category. Yogurt and cheese are the market’s winning categories in recent years, with yogurt maintaining an annual retail sales growth of over 20% since 2014. Meanwhile, the cheese category has seen a growth rate of 15-25% from 2015-17. Looking ahead, Mintel forecasts the dairy market to grow at a 6.6% CAGR (compound annual growth rate) in value, to reach RMB 349.7 billion in 2022.
Despite consistent sales growth for yogurt and cheese, Mintel Market Sizes data shows that annual per capita volume consumption for major dairy products remains low compared to other countries. For example, per capita volume milk consumption in China is 14.3 litres, compared to 36.8 litres in Japan and 51.7 litres in the US; per person consumption of yogurt in China is 3.43 kg, 4.92 kg in the US, and 9.66 kg in Japan. Finally, the Chinese consume a mere 0.02 kg of cheese per person, while the Japanese take in 1.46 kg per person and, in the US, an impressive 6.89 kg per person.
Yogurt and cheese are the market’s winning categories in recent years, with yogurt maintaining an annual retail sales growth of over 20% since 2014.
Summer Chen, senior food and drink analyst at Mintel, says, “Dairy consumption in China is still low when compared to Japan, where consumers share a similar dietary tradition to China. Mintel research indicates that China’s dairy market growth will be driven by increased consumption, resulting from the expansion of consumption occasion, value increase due to the rising price of raw milk, and consumers trading up to more premium options. When we look specifically at the yogurt market, thanks to the recent craze over ambient yogurt, the category is now leading not only in China’s dairy market, but among all food and drink products.”
When it comes to dairy products, health-related factors are the main areas consumers are willing to pay more for. Among the four surveyed dairy products (including milk, yogurt, butter, and cheese), milk and yogurt are perceived by consumers to be healthier and more nutritious (51% and 48% respectively), helping to improve immunity (49% and 44% respectively), and also good for kids (51% and 49% respectively) and the elderly (46% and 37% respectively).
In addition, milk is more closely related with being high in protein (47%), and yogurt with being easy to digest (60%). Butter is less likely to be associated with the same benefits, rather with issues such as being high in calories (50%), fat (45%), and cholesterol (34%). Cheese is somewhere in between, associated with benefits such as being high in protein (38%) and nutritious (37%), as well as being high in calories (43%) and fat (41%).
Both plus claims, ie with additional nutrients (47%) and other healthy food as ingredients (44%), and minus claims, ie low fat or fat free (47%) and no-additives (45%), are critical improvements consumers are most willing to pay more for. Products designed for a special group of people (38%), such as those who are getting fit, is also among the top features consumers are willing to pay a premium for.
Secondary purchasing factors
By comparison, packaging- and taste-related factors—such as convenient packaging (29%) and limited seasonal flavors (22%)—are secondary factors for consumers considering buying premium options.
When it comes to dairy products, health-related factors are the main areas consumers are willing to pay more for.
“As consumers gradually become more aware of their dairy intake, both in quantity and quality, our research shows that plus and minus health claims are seen as worthy of paying extra for by urban Chinese consumers,” Chen adds.
In general, urban Chinese consumers prefer dairy products from big (65%) and nationwide (59%) dairy brands. While their attitudes toward local milk sources are pretty divided—44% believe they are reliable, while 36% believe local milk sources are not reliable. Nevertheless, more consumers prefer imported dairy products (43%) than domestic ones (34%). Even among those who trust local milk sources, 32% prefer imported dairy products.
“When looking at the battle between domestic and imported dairy products, it seems that while urban Chinese consumers are regaining confidence in domestic milk sources and products, they still prefer imported options. To appeal more to consumers, domestic brands need to strengthen their offering in other areas, like positioning with a premium brand image, showcasing additional health benefits, and spotlighting innovative flavors in order to compete with imported brands,” Chen concludes.