Publications - Desktop study into demand
Report
Summary
Consumer Drivers
Per capita consumption of dairy products in developed countries has been driven by quality and other food attributes (preference, consumer attitude etc.) rather than affordability and availability. In developing countries demand is fuelled by population, income growth, fast food, lifestyle and expansion of cold storage. Rapid GDP growth of 8% in China and 5% in Asian 4 (Thailand, Indonesia, Malaysia and Philippines) is helping fuel current demand.
In low income countries dairy prices are highly elastic. A 1% change in income leads to 0.93% change in demand for dairy products in lower income countries and 0.35% in higher income countries. Cheese demand is more elastic in the UK in comparison to other European countries which means changes in prices have a greater effect on volume sold than in Europe.
Other factors affecting demand are the complementary effect (milk on cereal, cheese on pizza etc.), age (older people like butter and fresh cheese, young people like block cheese) and urbanisation (growth in convenience food, a particular driver in the East Asian market). At present, food service sales growth is 2.5-5% in Western Europe, twice retail food sales growth. In 2002 UK food service sales were 23% of overall food sales and this is set to rise to 30% by 2015 and retail is predicted to drop from 60% to 45% over the same period. In Eastern Europe food service sales currently only account for 10% of food sales.
Statistical information on current consumption and future consumption
Liquid Milk: Current largest growth in liquid milk is in Asia at 11% per annum (p.a.) replacing reconstituted milk products of the past, This growth is from a low base of 9.3kg/capita compared with 78.4 kg/capita for the EU (UK = 112.3 kg/capita).Cheese: EU cheese consumption is predominantly in hard and semi hard cheese. Average EU
cheese consumption is 18.9 kg/capita (UK =10.2) with the fastest growth in
Portugal at 7.6% p.a. The fastest increase in consumption is in the former
Soviet Union (17.6% p.a. to 3.2kg/capita) and also EU-10 (9.1% p.a. to
9.7kg/capita). This is due to growing affluence and substitution of cheese for
meat. Growth (3.1% p.a.) in Asian cheese sales is predominantly down to the
fast food sector. In South America cheese sales are falling by 2.8% p.a. (no
explanation).
Butter: Current butter consumption per
capita (including SMP used as an ingredient) is highest in the EU at
4.7kg/capita (UK has seen 6% growth to 3.6 kg/capita due to market segmentation
and product development). The highest growth has been in the Soviet Union
(4.7%) to 2.8 kg/capita, largely due to recovery from the financial crash of
the late 1990's, and Eastern Europe (4.4 - 5%) to 3 kg/capita.
SMP: The highest consumption of SMP (including in
manufacturing and animal feed) is in the EU-15 at 2.5 kg/capita. SMP has seen
growth of 8.7% p.a. in North America and 11.3% to 1.2 kg/capita in North
Africa. North Africa also has the highest consumption of WMP at 3.6 kg/capita,
although the fastest growth is in Asia at 7%p.a. to 0.3 kg/capita.
Yoghurts: In yoghurts the world market is growing at 5.2%
to 14.5 million tonnes (natural and fruit yoghurts account for 4.93 million
tonnes each, drinking yoghurt 2.38 million tonnes, flavoured yoghurts 1.54
million tonnes and probiotic accounting for 0.71 million tonnes). Other growth
areas are 4.3 - 8% growth in North and Latin America, Africa and the Middle
East.
Fermented Dairy Drinks: In the fermented dairy drinks there is a growth of around 7% p.a. and accounts for 1.2 billion litres. On the world market 68% of consumption is in Asia and Pacific region with South Korea and Japan accounting for 70% of consumption in this area. Germany and France are the largest markets in the EU at 47.6 million and 35 million litres respectively, with a growth rate of 31% p.a. in France. The UK's market is currently growing at 46% p.a. and accounts for 16.6 million litres. The greatest growth appears in Eastern Europe at 300% p.a. from very low levels of consumption.
Future Growth
World demand growth of dairy
products up to 2010 is expected to grow at 2.5% p.a. with the EU accounting for
13% of growth, compared to 52% in Asia and 18% in Latin America and the
Caribbean. At the world level butter, cheese and WMP product consumption is
forecast to grow between 2 and 2.7% p.a., while SMP is expected to only grow by
0.9%p.a.
In the liquid milk market: up to 2013 Eastern Europe is
expected to be the largest consumer at 116.3kg/capita (0.5%p.a.), with the
largest growth in North Africa at 2.1% p.a. to 18.5kg/capita.
In
the butter market consumption is expected to increase in South East Asia
and China with imports meeting demand. The largest growth will be in Russia at
1.9% p.a. However, there will be a drop in consumption in Oceania, Europe and
the USA.
In the cheese market: there has been a switch in
consumption from meat to dairy in Japan and the EU because of BSE. The fastest
growing regions are Soviet Union and Asia where growth is expected to be 2.4%
p.a. to 3.8kg/capita and 0.8kg/capita respectively. Japan is expected to remain
an important importer of cheese.
In the SMP market: consumption expected to be stable in EU with fastest growth in North Africa at
6.3% to 1.3kg/capita. There will be a fall in consumption in both Oceania and
North America. India will increase production by 74% by 2013 with exports
expected to grow by 12% p.a.
In the WMP market: the largest
consumption is expected in South America at 2.8kg/capita, with the fastest
growth in Eastern Europe at 5.2% p.a.
In the UK market: Consumption
of value added products is likely to continue to displace traditional products
(i.e. high-fat cheese). There is likely to be growth in differentiated products
especially those for food service and in industrial uses (e.g. dairy products
aimed at children such as Dairylea).
Opportunities
The
primary opportunities will be:
Butter: South East Asia,
China, Soviet Union and India are expected to see increased consumption, with
imports having to meet demand apart from India where growth in production
should equal the growth in demand.
Cheese: High
income countries will account for 3 quarters of any growth with EU to grow by
0.8%p.a. to 2011 with the largest absolute growth expected in Argentina at 2.25
kg/capita, and the fastest annual growth in Asia and Russia. The report does
not state how this extra demand will be met.
Powders: Fastest growth in SMP will be in North
Africa. Eastern Europe will see the fastest growth in WMP
consumption.
Yoghurts: The EU is the largest market and has been growing at over 4% p.a. in recent years. Demand for yoghurt continues to increase in all regions of the world with growth of up to 8% p.a. in Latin America, Africa and the Middle East.
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Page last modified: 23 August 2007