The drinking yoghurt market is exploding in China due to significant and sustained investment and a new demand for healthier drinks ‘on the go’, according to a report by international food market research company Canadean.
Drinking yoghurt will become the third most consumed dairy drink in China by 2016, as the volume consumption of drinking yoghurt will exceed that of flavoured milk as well as grain, nut, rice and seed milk alternative drinks.
According to Canadean, this is mainly due to significant and sustained investments taking place in the Chinese yoghurt market.
Beverage analyst at Canadean Michael Loubser says: “With insufficient supply of raw milk and rising raw milk prices in 2013, Chinese dairy producers devoted resources to maintaining steady milk supplies by investing more in milk sources and cattle ranches.
“These investments are now bearing fruit, with the drinking yoghurt category expected to experience steady growth well into 2019.”
Since 2013 major dairy production companies have been building up alliances and working together with dairy farmers to boost growth in the Chinese dairy industry.
In May last year, for example, Mengniu and Danone signed a framework agreement to establish a joint venture for the production and supply of chilled yoghurt products.
At the same time Mengniu increased its stake in China Modern Dairy to 28%.
Yili Group also formed an alliance with the Italian dairy firm, Sterilgarda Alimenti, and signed a memorandum of understanding with Dairy Farmers of America regarding strategic purchasing and farming service cooperation.
Significant investment, however, is not the only reason why the Chinese drinking yoghurt market is growing rapidly: with increasing disposable income and exposure to the highly marketed benefits of drinking yoghurt, more consumers demand healthier, nutritious dairy drinks in China.
According to Canadean, the ambient drinking yoghurt segment is doing particularly well: in 2013 ambient drinking yoghurt grew by an impressive 110%, and it is expected to grow further in 2014, to take a 70% of the drinking yoghurt market.
Mr Loubser says: “Consumption habits have shifted, and a significant portion of the market is now ‘on the go’ which makes yoghurt drinks, especially ambient variants, very convenient for busy consumers.”
Bright Dairy has been dominating the ambient yoghurt drinks category for several years.
With the success of its Momchilovtsi ambient drinking yoghurt brand, and the overall popularity of ambient drinking yoghurt in general, Bright Dairy secured a strong lead in the market, both in terms of volume and value share.
“Although companies such as Mengniu and Yili have released several ambient yoghurt brands of their own, Bright Dairy is keeping the pressure on its competitors and managed to increase its volume share against the key players in this category,” Mr Loubser says.