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Milk and Flavoured Milk - China - April 2015

With more than 50% of adult consumers drinking milk every day and about 80% of parents reporting their children drinking milk every day, it will become more and more difficult for brands to further enlarge the consumer base or increase the consumption frequencies to drive sales. Instead, brands need to dig out the specific needs of different demographic groups and make customised trade tactics and product innovations to better attract their consumers.

International brands need to go further than exploiting their foreign identity and pay more attention to the needs of Chinese consumers – localise their product packaging and deliver more relevant information in marketing to win consumers. Besides, milk for teenagers is also a white space awaiting brands to tap into.
 
You can find out the following key points in the report:
 
  • How can international milk brands localise in China?

  • How to enhance the natural and fresh perceptions to win consumers?

  • A white space: Liquid milk designed for teenagers

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Table of contents

  1. Introduction

      • Definition
          • Figure 1: Definition of low/mid/high MHI groups, by city tier
        • Methodology
          • Abbreviations
          • Executive Summary

              • The market
                • Market size and forecast
                  • Figure 2: Retail volume sales of milk and flavoured milk, China, 2009-19
                  • Figure 3: Retail value sales of milk and flavoured milk, China, 2009-19
                • Market segmentation
                  • Companies and brands
                    • Figure 4: Value share of China’s milk and flavoured milk retail market, by company, 2013 and 2014
                  • The consumer
                    • How often do consumers drink milk?
                      • Figure 5: Frequency of drinking milk, November 2014
                    • What types of milk are most popular?
                      • Figure 6: Type of milk and flavoured milk drunk in the last three months, November 2014
                    • How much do consumers spend on buying milk?
                      • Figure 7: Average monthly spending on milk, November 2014
                    • What types of packaging do consumers buy most often?
                      • Figure 8: Type of milk packaging bought most often, November 2014
                    • What international milk brands are most popular?
                      • Figure 9: International milk brands purchased in the last three months, November 2014
                    • Consumption and purchase behaviour of milk
                      • Figure 10: Consumption behaviour of milk, November 2014
                      • Figure 11: Purchase behaviour of milk, November 2014
                    • Key issues
                      • How can international milk brands localise in China?
                        • How to enhance the natural and fresh perceptions to win consumers?
                          • A white space: liquid milk designed for teenagers
                            • What we think
                            • Issues and Insights

                                • How can international milk brands localise in China?
                                  • The facts
                                    • The implications
                                      • How to enhance the natural and fresh perceptions to win consumers?
                                        • The facts
                                          • The implications
                                            • A white space: Liquid milk designed for teenagers
                                              • The facts
                                                • The implications
                                                • Trend Application

                                                    • Retired for Hire
                                                      • Play Ethic
                                                        • Figure 12: Adult white milk with fun packaging, China, 2015
                                                      • Futures: Brand Intervention
                                                      • Market Size and Forecast

                                                        • Key points
                                                          • Milk market growth slowed down in 2014
                                                            • Figure 13: Volume sales of China’s milk and flavoured milk market, by retail and non-retail, 2009-14
                                                          • Increasing milk usage on less common occasions takes a longer term to happen with changing lifestyles
                                                            • Non-retail sector grew faster than retail sector
                                                              • Figure 14: Retail volume CAGR of selected categories that use milk as an ingredient, China, 2009-14
                                                            • Price hikes drive the milk retail market value
                                                              • Figure 15: Retail value sales of China’s milk and flavoured milk market, 2009-14
                                                              • Figure 16: Average retail prices of liquid milk and milk powder, China, 2009-14
                                                            • Imported liquid milk grew explosively in the past four years
                                                              • Figure 17: Volume of imported liquid milk, China, 2011-14
                                                            • Milk market still sees slower but robust growth in the next five years
                                                              • Figure 18: Retail volume sales of milk and flavoured milk, China, 2009-19
                                                              • Figure 19: Retail value sales of milk and flavoured milk, China, 2009-19
                                                            • Forecast methodology
                                                              • Market drivers
                                                                • Ageing society brings opportunities to target the senior consumer group with premium variants
                                                                  • More premium products flood in the market
                                                                    • Growing affinity towards Western lifestyles presents opportunities to increase usage on less common consumption occasions
                                                                      • Figure 20: Total and retail volume consumption per capita of milk, China, Japan, UK and US, 2014
                                                                    • Market barriers
                                                                      • High retail price of milk poses a big barrier to increase consumption among low-income population
                                                                        • Figure 21: Average retailing price of milk, China, Japan, UK and US, 2014
                                                                      • Consumer perception of milk as a drink for the elderly in Northern and Western regions also poses a market barrier
                                                                        • Figure 22: Proportion of consumers aged 20-49 and their senior family members who drink milk once a day or more, by region, November 2014
                                                                    • Market Segmentation

                                                                      • Key points
                                                                        • Pasteurised milk’s growth accelerated while other segments slowed down
                                                                          • Figure 23: Retail volume sales of Chinese milk and flavoured milk market, by segment, 2011-14
                                                                        • Flavoured liquid showed greatest tendency of premiumisation
                                                                          • Figure 24: Retail value sales and growth of Chinese milk and flavoured milk market, by segment, 2014
                                                                        • White pasteurised milk will lead the volume growth in next five years
                                                                          • Figure 25: Retail volume sales of Chinese milk and flavoured milk market, by segment, 2014-19
                                                                      • Market Share

                                                                        • Key points
                                                                          • Mengniu took over first place in 2014
                                                                            • Figure 26: Value and volume share of Chinese milk and flavoured milk retail market, by company, 2013 and 2014
                                                                          • Bright benefits from strong growth in pasteurised milk
                                                                            • The market has a long tail of small players
                                                                            • Who’s Innovating?

                                                                              • Key points
                                                                                • The market lacks adult liquid milk with functional benefits
                                                                                  • Figure 27: Share of white liquid milk NPD with functional claims, China, April 2012-March 2015
                                                                                  • Figure 28: Examples of liquid milk products with new functional claims, Ireland and Spain, 2014
                                                                                • Banana and mango greatly increased their share in NPD flavours
                                                                                  • Figure 29: Share of most popular flavours in flavoured liquid milk NPD, China, April 2012-March 2015
                                                                                • New Hope Dairy launched UHT milk with only three-month shelf life
                                                                                  • Weichuan released series of adverts featuring Shanghai dialect to promote its fresh milk
                                                                                    • Bright’s UBEST launched a special spring season edition
                                                                                      • Figure 30: Bright UBEST Special Spring Edition, China, 2015
                                                                                    • Inspirations from international market
                                                                                      • Coca-Cola entered US milk market with a new brand Fairlife
                                                                                        • Figure 31: Coca-Cola’s Fairlife Milk Advert, US, 2014
                                                                                    • Companies and Brands

                                                                                      • Mengniu Dairy
                                                                                        • Latest development
                                                                                          • Yili Group
                                                                                            • Latest development
                                                                                              • Bright Dairy
                                                                                                • Latest development
                                                                                                  • New Hope Group
                                                                                                    • Latest development
                                                                                                      • Figure 32: Why not pure milk by New Hope Dairy, China, 2015
                                                                                                    • Junlebao Dairy
                                                                                                      • Latest development
                                                                                                        • Meiji Dairy
                                                                                                        • The Consumer – How Often do Consumers Drink Milk?

                                                                                                          • Key points
                                                                                                            • Drinking milk daily has been adopted by more young consumers in their twenties
                                                                                                              • Figure 33: Frequency of drinking milk, November 2014
                                                                                                              • Figure 34: Proportion of consumers who drink milk once a day or more, by demographics, 2013 and 2014
                                                                                                            • Greater growth potential comes from encouraging usage in tier two and three cities
                                                                                                              • Add more fun elements to encourage 20-24-year-olds to drink more milk
                                                                                                                • Figure 35: Frequency of drinking milk, by age, November 2014
                                                                                                              • Innovate product mix to appeal to family buyers
                                                                                                                • Figure 36: Frequency of drinking milk, by family status, November 2014
                                                                                                              • Regional difference analysis
                                                                                                                • Renovate the elderly image of milk drinking to engage with those aged 20-49 in Northern and Western China
                                                                                                                  • Figure 37: Proportion of consumers aged 20-49 and their senior family members who drink milk once a day or more, by region, November 2014
                                                                                                                  • Figure 38: Example of milk life advert, US, 2014
                                                                                                                • Daily milk drinking doesn’t appear higher among senior family members in Eastern and Southern China
                                                                                                                • The Consumer – What Types of Milk are Most Popular?

                                                                                                                  • Key points
                                                                                                                    • Surprisingly, less wealthy twenties drink more premium milk
                                                                                                                      • Figure 39: Type of milk and flavoured milk drunk in the last three months, November 2014
                                                                                                                      • Figure 40: Usage rate of premium milk in the last three months, by age, November 2014
                                                                                                                    • Young consumers in their twenties are more keen on flavoured variants
                                                                                                                      • Figure 41: Usage rate of selected milk types for self-consumption, by age, November 2014
                                                                                                                    • Milk designed for kids mainly competes with premium milk for the children segment
                                                                                                                      • Extend lactose-free milk’s appeal beyond elderly consumers
                                                                                                                        • Women aged 30-49 show higher loyalty towards milk types while half of consumers switch
                                                                                                                          • Figure 42: Repertoire of types of milk and flavoured milk drunk in the last three months, by gender and age, November 2014
                                                                                                                      • The Consumer – How Much do Consumers Spend on Buying Milk?

                                                                                                                        • Key points
                                                                                                                          • Spending on milk doesn’t go up much once personal income reaches RMB4,000 threshold
                                                                                                                            • Figure 43: Average monthly spending on milk, November 2014
                                                                                                                            • Figure 44: Average monthly spending on milk, by monthly personal income, November 2014
                                                                                                                          • Consumers in Chengdu and Zhuhai tend to spend more on milk
                                                                                                                            • Figure 45: Average monthly spending on milk, by region, November 2014
                                                                                                                        • The Consumer – What Types of Packaging do Consumers Buy Most Often?

                                                                                                                          • Key points
                                                                                                                            • Small-sized box with a straw prevails, responding well to consumers’ needs for freshness and convenience
                                                                                                                              • Figure 46: Type of milk packaging bought most often, November 2014
                                                                                                                            • Medium-sized pack to target young male consumers in their twenties
                                                                                                                              • Figure 47: Type of milk packaging bought most often, by gender and age, November 2014
                                                                                                                              • Figure 48: Percentage of liquid milk purchased most often by consumers vs share of NPD in China, by pack size, 2014-15
                                                                                                                            • Consumers’ preference over pack size varies by city
                                                                                                                              • Figure 49: Type of milk packaging bought most often, by city, November 2014
                                                                                                                            • Consumers in Northern China have a preference over pouch package
                                                                                                                              • Figure 50: Type of milk packaging bought most often, by region, November 2014
                                                                                                                          • The Consumer – What International Milk Brands are Most Popular?

                                                                                                                            • Key points
                                                                                                                              • The majority have tried at least one international brand
                                                                                                                                • Figure 51: International milk brands purchased in the last three months, November 2014
                                                                                                                              • Females and consumers aged 25-39 are more likely to buy from international brands
                                                                                                                                • Figure 52: International milk brands purchased in the last three months, by gender and age, November 2014
                                                                                                                              • International brands need to launch more small-sized packs to engage with consumers, particularly 20-24-year-olds
                                                                                                                                • European and Japanese brands have greater potential to sustain higher price points
                                                                                                                                  • Figure 53: International milk brands purchased in the last three months, by monthly household income, November 2014
                                                                                                                                • International brands should talk more about themselves in marketing
                                                                                                                                  • Figure 54: Consumption and purchase behaviour of milk, by international brand buyer vs non-buyer, November 2014
                                                                                                                              • The Consumer – Consumption and Purchase Behaviour of Milk

                                                                                                                                • Key points
                                                                                                                                  • Still a sizeable group of consumers prefer hot milk
                                                                                                                                    • Figure 55: Consumption behaviour of milk, November 2014
                                                                                                                                    • Figure 56: Example of milk with microwaveable packaging, China, 2012
                                                                                                                                  • International food safety certification could work as good quality endorsement, particularly among males and parents
                                                                                                                                    • Figure 57: Purchase behaviour of milk, November 2014
                                                                                                                                    • Figure 58: Agreement with the statement “I am willing to pay more for milk products with international food safety certifications (eg BRC certification)”, by gender and presence of own children, November 2014
                                                                                                                                  • Play around with nostalgia to appeal to consumers in their forties
                                                                                                                                    • Figure 59: Agreement with the statement “I prefer buying milk from regional brands rather than national/international brands”, by age, November 2014
                                                                                                                                  • Online purchase rate is still low, but increased greatly from 2013
                                                                                                                                    • Figure 60: Proportion of consumers who have bought milk products online in the last three months, by city and tier, November 2014
                                                                                                                                • Appendix – Market Size and Forecast

                                                                                                                                    • Figure 61: Volume sales of China’s milk and flavoured milk market, by retail and non-retail, 2009-19
                                                                                                                                    • Figure 62: Retail volume sales of China’s milk and flavoured milk market, 2009-19
                                                                                                                                    • Figure 63: Retail value sales of China’s milk and flavoured milk market, 2009-19
                                                                                                                                    • Figure 64: Retail volume sales of China’s milk and flavoured milk market, by segment, 2009-19
                                                                                                                                    • Figure 65: Retail value sales of China’s milk and flavoured milk market, by segment, 2009-19

                                                                                                                                Companies Covered

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                                                                                                                                Milk and Flavoured Milk - China - April 2015

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