This good news for the dairy industry comes from new research by Tetra Pak, the processing and packaging company, which found that consumers are turning to flavoured milk as an alternative to other beverages.
Flavoured milk is the world’s second most popular liquid dairy product after white milk, and its consumption is forecast to increase at a compound rate of 4.1%, rising from 17bn litres last year to 19.2bn litres by 2015. Meanwhile, white milk will see growth of 1.7% from 208.5bn litres to 219.5 litres in 2015.
“With white milk increasingly commoditised, flavoured milk offers dairies the opportunity to provide value not only to consumers but to their bottom line,” said Dennis Jönsson, president and CEO, Tetra Pak Group. “With the right flavours, portion sizing and formulation, flavoured milk can meet a huge range of health, nutritional and lifestyle needs.”
Reasons for rise
Developing countries will drive demand amidst a growing number of new flavours and products focused on health.
“The increase in flavoured milk consumption will be spurred on by economic growth, urbanisation and rising prosperity,” said Kandarp Singh, MD of Tetra Pak South Asia Markets. “On-the-go lifestyles in India’s thriving cities have triggered increased consumption of ready-to-drink ambient milk, including flavoured milk.
“Children and teenagers consume the majority of packed flavoured milk in India, at home or in school, with parents opting to buy flavoured milk because they value its nutritional benefits and its taste appeal to young consumers. While consumption of white milk is prevalent in almost 100% of the households across India, consumption of flavoured milk still has plenty of room to grow.”
Tetra Pak has identified four drivers fuelling the rise in flavoured milk consumption. First, and particularly in developing markets, is the desire for more nutritious and healthy food, which is prompting consumers to turn to nutrient-rich milk products. Secondly, urbanization, rising prosperity and the pace of life has given the product more utility.
Next comes consumers’ eagerness to try new products, with flavoured milk meeting that appeal. And last, increasingly more consumers are seeking products they see as “indulgent” to escape the daily grind.
“People don’t mind spending a bit more for small indulgences when times are tough and they are making bigger sacrifices,” said Libby Costin, global portfolio marketing director.
Though flavoured milk consumption is still low compared to other beverages, such as carbonated soft drinks, positive consumer perceptions about the health benefits of milk are creating opportunities to significantly increase flavoured milk consumption, according to Tetra Pak. Indeed, flavoured milk consumption is expected to more than triple that of carbonated soft drinks between 2012 and 2015.
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,” said Jönsson.
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.
Moreover, seven of the world’s top 10 flavoured milk markets are developing countries, according to the research. China is the world’s largest, followed by the United States and India. Previously, demand for flavoured milk from 2009 to 2012 was mainly driven by four emerging countries: Brazil, China, India and Indonesia.
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.
Cartons have become the established packaging format for flavoured milk. 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.