Taste for dairy on the rise

This is part of the sixth Dairy Index released by Tetra Pak, the food processing and packaging company.

Flavoured milk, the second most widely consumed liquid dairy product (LDP) after white milk, is forecast to increase by a compound annual rate (CAGR) of 4.1% between 2012 and 2015, rising from 17 billion litres to 19.2 billion litres. Developing countries will drive demand amidst a growing number of new flavours and products focused on health. White milk is forecast to grow by 1.7% CAGR during the same period - from 208.5 billion litres in 2012 to 219.5 billion litres in 2015. Total LDP demand is set to grow by 2.4% from 280.3 billion litres to 301.3 billion litres during this period, according to Tetra Pak research.

"With white milk increasingly commoditised, flavoured milk offers dairies the opportunity to provide value not only to consumers but to their bottom line," says Dennis Jönsson, president and CEO of Tetra Pak Group. "With the right flavours, portion sizing and formulation, flavoured milk can meet a huge range of health, nutritional and lifestyle needs."

Four market drivers

The company has identified four drivers fuelling the rise in flavoured milk consumption:

• First, the desire for nutritious and healthy food, which is prompting consumers, particularly in developing countries, to turn to nutrient-rich milk products.
  
• Second, urbanisation, rising prosperity and the pace of modern life, which has increased on-the-go consumption of ready-to-drink (RTD) flavoured milk in convenient portion packs.
  
• Third, consumers' eagerness to try new food and drinks, with flavoured milk well poised to meet that need.
  
• Fourth, consumers seeking indulgent eating and drinking experiences as a way of escaping the daily grind during times of economic uncertainty.

"People don't mind spending a bit more for small indulgences when times are tough and they are making bigger sacrifices," says Libby Costin, global portfolio marketing director.

Triple carbonated drinks

"Consumption of flavoured milk is still low compared with other beverages, such as carbonated soft drinks, yet positive consumer perceptions about the health benefits of milk are creating opportunities to significantly increase flavoured milk consumption," says Uros Kepic, MD of Tetra Pak South Africa and cluster VP sub-Sahara Africa. The growth rate for flavoured milk consumption is expected to be more than triple that of carbonated soft drinks from 2012 to 2015. During that period carbonated soft drinks are forecast to grow by 1.3% (CAGR) compared with an estimated of 4.1% (CAGR) for flavoured milk.

Traditionally consumed by kids who enjoy its taste, Tetra Pak sees scope for growth beyond kids to teens and adults and beyond taste to reach the sweet spot where taste and health meet.

"For consumers unwilling to compromise on taste, health or convenience, flavoured milk is proving an increasingly popular alternative to other beverages," says Jönsson.

Demand in developing countries

While demand for flavoured milk is forecast to rise globally, demand in developing countries, particularly across Asia and Latin America, is set to outpace that of developed countries in North America and Europe, highlighting emerging economies as the growth engines of the dairy industry.

In fact, seven of the world's top 10 flavoured milk markets are developing countries, the research shows. China is the world's largest, followed by the US and India. Increased demand for flavoured milk from 2009 to 2012 was mainly driven by four emerging countries: Brazil, China, India and Indonesia.

The trend is set to continue from 2012 to 2015. While developing countries accounted for 66% of flavoured milk consumption in 2012, this is forecast to rise to 69% by 2015. China, South Asia and Southeast Asia drink more than half the world's flavoured milk. In fact, just six Asian countries - China, India, Indonesia, Malaysia, the Philippines and Thailand - consume 47% of the world's flavoured milk, the research shows.

Cartons have become the established packaging format for flavoured milk, according to the company. They accounted for 62% of RTD flavoured milk packaging in 2012, up from 57% in 2009, and are expected to rise to above 64% in 2015, with portion packs expected to reach 81% of RTD flavoured milk consumption.

For more information, go to www.tetrapak.com.