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Milk and Flavoured Milk - China - April 2016

Milk and Flavoured Milk - China - April 2016

"Given the large base of lactose intolerants in China, the lactose-free milk segment is worth investing in. The market will, however, require laborious education programmes due to poor consumer understanding of lactose intolerance. Plant protein drinks are also threatening the milk category, suggesting that milk producers should reinforce their health benefits to proactively prepare for increased competition. Low-fat milk will remain niche, while manufacturers should look into the ‘good-fat’ trend emerging globally.”

- Karen Liu, Senior Research Analyst

This report discusses the following key topics:

The prospects for lactose-free milk
PPDs grab market share from milkParadigm shift to ‘good fat’


OVERVIEW
What you need to know
Products covered in this report
Figure 1: Definition of low/mid/high MHI groups, by city tier
EXECUTIVE SUMMARY
The market
Figure 2: Total China milk and flavoured milk market retail value, 2010-20
Key players
Figure 3: Value share of top 10 companies, 2013-15 (Jan-Jun)
The consumer
Figure 4: Usage frequency of different types of milk, December 2015
Figure 5: Drinking purposes of different types of milk, December 2015
Figure 6: Attitudes towards lactose intolerance, December 2015
Figure 7: Barriers of drinking milk, December 2015
Figure 8: Substitutes of milk, December 2015
Figure 9: Purchase consideration factors (for self), December 2015
Figure 10: Perception and attitudes towards milk, December 2015
What we think
ISSUES & INSIGHTS
The prospects for lactose-free milk
PPDs grab market share from milk
Paradigm shift to ‘good fat’
THE MARKET
What you need to know
Milk market growth is slowing
UHT segment drives volume growth while pasteurised segment touts freshness for premiumisation
Raw milk oversupplies
Adjacent categories and imported milk compete to grab market share
Market size and forecast
Milk market growth is slowing
Figure 11: Retail market size of milk and flavoured milk in China, 2010-15
The market is forecast to grow at a CAGR of 6%
Figure 12: Total China milk and flavoured milk market retail value, 2010-20
Figure 13: Total China milk and flavoured milk market retail volume, 2010-20
Market drivers and challenges
Oversupply of raw milk in 2015
Increasing disposable incomes assist growth
Figure 14: Per capita disposable income, China, 2010-14
Figure 15: Per capital consumption of milk and flavoured milk, China and top 10 counties, 2015
Competition from adjacent categories
Figure 16: Retail market value of plant protein drinks and yogurt, 2010-15
Competition from imported milk
Market segmentation
Plain milk drives category growth
Figure 17: Retail market value of milk and flavoured milk, by segments, 2010-15
Figure 18: Retail value of pasteurised plain milk, 2010-20
Figure 19: Retail value of UHT plain milk, 2010-20
Flavoured milk needs to enhance healthy image to regain interest
Figure 20: Retail value of flavoured milk, 2010-20
Adult milk powder segment is dying
Figure 21: Retail value of white milk powder, 2010-20
KEY PLAYERS
What you need to know
Top 10 companies losing market share
Leading dairy companies add non-dairy products to portfolios
Regional dairy companies strengthen pasteurised products
Market share
A consolidated market structure
Figure 22: Value share of top 10 companies, 2013-15 (Jan-Jun)
Mengniu loses 2% market share in 2015
Yogurt segment drives growth
Figure 23: Annual revenue of Mengniu, by segments, 2014-15
Competitive strategies
Figure 24: Silk plant protein drinks, China, 2014
Mengniu exploits lactose-free market
Regional companies are proactive in innovation
Figure 25: New liquid milk from New Hope, China, 2014-15
Figure 26: New liquid milk from Modern Farming, China, 2015
Regional companies stake chilled milk
Who’s innovating?
Chilled segment increases
Figure 27: Newly launched liquid milk products, China, 2011-15
Selling high protein as premium
Figure 28: Protein content of liquid white milk, China and global, 2011-15
Figure 29: Examples of new launches with ‘high protein’ claim, global, 2014-15
Packaging opportunities in the dairy market
Figure 30: Top 5 unit packaging size of liquid milk, China and global, 2011-15
Figure 31: On-the-go packaging from U-best of Bright, China, 2012
Figure 32: Examples of minimalist packaging, global, 2014-15
Simplifying on-pack nutrition tables
Figure 33: Examples of on-pack nutrition table, global, 2014-15
Figure 34: Milk with ‘good fat’, global, 2014-15
THE CONSUMER
What you need to know
Consumers favour plain milk but are losing interest in flavoured milk
Competition from plant protein drinks increases
Prospects for lactose-free milk
The market calls for on-the-go packaging
Usage frequency
Ambient plain milk is most popular
Figure 35: Usage frequency of different types of milk, December 2015
Consumers drink less flavoured milk due to safety concerns
Lactose-free milk has white space
Different usage patterns by age and region
Figure 36: Usage frequency of different types of milk, By age and gender, December 2015
Drinking purposes
Plain milk’s protein and calcium content appeal to consumers
Figure 37: Drinking purposes of different types of milk, December 2015
Flavoured milk and milk beverages compete as tasty drinks
Dissatisfaction towards milk
Consumers expect to see more flavour options
Figure 38: Barriers to drinking milk, December 2015
Figure 39: Barriers to drinking milk, By age, December 2015
The market calls for more on-the-go packaging
Figure 40: Barriers to drinking milk (continued), December 2015
High prices stop low-income groups from drinking milk
Figure 41: Barriers to drinking milk, By income, December 2015
Only 9% of consumers are aware of discomfort after drinking milk
Figure 42: Barriers to drinking milk (continued), December 2015
Purchase consideration factors
Authentic taste, promotion and rich nutritional content drive self-consumption
Figure 43: Purchase consideration factors, December 2015
High nutritional value and safety are key for children’s milk
Figure 44: Newly launched kids milk, by top 10 claims, 2011-15
Consumers perceive lactose free and low fat milk as suitable for the elderly
Substitutes for milk
Non-dairy drinks gain popularity
Figure 45: Substitutes of milk, December 2015
RTDs can hardly replace milk
Perception and attitudes towards milk
Consumers are sophisticated enough to check product details
Figure 46: Perception and attitudes towards milk, December 2015
Premium milk proves high-quality via taste
Figure 47: Perception and attitudes towards milk, December 2015
Prospects for more functional milk
Figure 48: Perception and attitudes towards milk (continued), December 2015
Consumers lack knowledge about lactose intolerance
Figure 49: Perception and attitudes towards milk (continued), December 2015
Imported milk offers fierce competition
Figure 50: Perception and attitudes towards milk (continued), December 2015
Meet the Mintropolitans
Mintropolitans favour chilled plain milk
Figure 51: Heavy usage (once a day or more) of different types of milk, by consumer classification, December 2015
Mintropolitans demand on-the-go packaging
Figure 52: Barriers of drinking milk, by consumer classification, December 2015
Milk is a functional food for Mintropolitans
Figure 53: Purchase consideration factors (for myself), by consumer classification, December 2015
APPENDIX
Market size and forecast
Figure 54: China milk and flavoured milk market, total volume sales, by retail and non-retail, 2010-20
Figure 55: Volume sales of total milk and flavoured milk market, China, 2010-20
Market segmentation
Figure 56: Retail volume of pasteurised plain milk, 2010-20
Figure 57: Retail volume of UHT plain milk, 2010-20
Figure 58: Retail volume of flavoured milk, 2010-20
Figure 59: Retail volume of white milk powder, 2010-20
Methodology and abbreviations
Methodology
Fan chart forecast
Mintropolitans
Figure 60: Demographic profile of Mintropolitans vs non-Mintropolitans, by gender, age and personal income
Figure 61: Demographic profile of Mintropolitans vs non-Mintropolitans, by marital status, city tier and education level
Abbreviations
RESEARCH METHODOLOGY
China Research Methodology
Confidence levels
Sample sizes by city
Sampling methodology and sampling structure
Our research partner - QQsurvey
QQ’s sampling and Quality control
Further Analysis
Appendix

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