Asian melamine fears hits global dairy drink growth - report

By Neil Merrett

- Last updated on GMT

Related tags: Milk, Asia

The impact of last year’s contamination of certain Chinese dairy products with the industrial chemical melamine continues to be felt across the industry with new research suggesting global interest in milk-based drinks has slowed.

Researcher Canadean said that along with the economic downturn, food safety concerns on the Asian market, which accounts for 45.2 per cent of global dairy drink demand, saw growth in the segment slow to 0.5 per cent in 2008.

After increasing by 2.4 per cent in 2007, falling confidence over product safety in the Asia region was attributed by the findings to the most marked fall for dairy-based beverages during the year, with growth at 0.5 per cent. This was down from 5.1 per cent the previous year.

Outlook

Despite a seemingly bleak short-term outlook for dairy drinks through 2009, a growing world population, rising long-term income levels and shifting demands in emerging markets for packaged and functional goods should ensure a more optimistic long-term outcome, claimed Canadean.

The report suggested that declining demand for dairy drinks in Asia comes as the first absolute declines were being recorded for the products in Europe and North America since 2004.

Emerging markets like Africa, Eastern Europe, Central & South America and the Middle East were identified as providing a potential antidote to industry concerns, though even this could be tempered by the possible global spread of recession, said Canadean.

Product interest

‘White milk’ was found by the report to dominate the drinkable dairy product segment, accounting for 79.4 per cent of global demand with consumption in 2008 totalling an estimated 200 billion litres. The findings suggested that even this growth had declined by 0.03 percentage points during the year to 0.3 per cent.

In terms of sharp growth rate declines, added value products such as drinkable yoghurts and flavoured and fermented milks, which have undergone strong increases in popularity since 2002, experienced difficulties during 2008.

The research suggested that flavoured milks in particular had been hit by the melamine scandal as demand fell by 2.9 per cent. Analysts now expect the market could take another five years to recover in Asia as a result of consumer concerns, the report stated.

Resilience

Despite these reported declines, Canadean said that there had been examples on the market of resilient demand for certain drink products in the segment.

“Growth in soy-based drinks has been good for example,”​ stated the analyst. “[Some] consumers have switched or come back to these products and there has also been a strengthening in demand for evaporated and condensed milk and some specific market niches, such as low fat milk, probiotic drinks, ESL milk, organic and fortified milks.”

Canadean said that further predicted declines in the segment during 2009 were expected to lead to intensified competition between dairy drink makers, with an extension of product ranges launched to target more cost-aware consumers.

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