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Milk and Flavoured Milk - China - May 2017

“In spite of the flat growth, China’s milk market is far from saturation. There is scope for further geographic expansion of pasteurised milk as well as premium UHT milk. Brands should also discover appropriate ways to talk to middle-aged consumers aged 40-49 who are currently less engaged with the category. To avoid further decline of flavoured milk, manufacturers should find the balance between flavour, ingredient and nutrition and target the young female consumers.”
– Cheryl Ni, Research Analyst: Food & Drink

This Report discusses the following key topics:

  • Listen to the locals’ heart when expanding battlefield 
  • Communicate “freshness” by presenting details
  • Gain young females’ attention by offering low-fat flavoured options

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
        • Definition
          • Classification by income
            • Figure 1: Mintel’s definition of different income groups, China
          • Classification by usage frequency
          • Executive Summary

              • The market
                • Retail market driven by geographic expansion and premiumisation
                  • Figure 2: Retail market value and volume of milk and flavoured milk, by segment, China, 2011-16
                  • Figure 3: Best- and worst-case forecast of retail milk market value, China, 2011-21
                • Pasteurised milk growing rapidly, while flavoured milk declining
                  • Improved cold chain and rising lower tier market driving category growth
                    • Key players
                      • Strong marketing support on premium UHT milk helping consolidate leading positions
                        • Figure 4: Leading companies value of milk and flavoured milk market, China, 2015-16
                      • Further amplifying the benefits of high protein milk
                        • Connecting with teens and seniors
                          • Indulgent flavours and functional benefits create more consumption occasions
                            • The consumer
                              • Necessary to engage middle aged consumers and young females
                                • Figure 5: Frequency of milk consumption, China, January 2017
                              • Yili and Mengniu holding clear leading edge in terms of penetration
                                • Figure 6: Brand penetration, China, January 2017
                              • Online channels and convenience stores becoming more important
                                • Figure 7: Purchase channels, China, January 2017
                              • Consumers looking for organic and nutritional options when trading up
                                • Figure 8: Opportunities for premiumisation, China, January 2017
                              • Smart combination of flavours and ingredients enhancing texture
                                • Figure 9: Ideal milk – Flavour, China, January 2017
                                • Figure 10: Ideal milk – Nutrition, China, January 2017
                              • What we think
                              • Issues and Insights

                                • Listen to the locals’ heart when expanding battlefield
                                  • The facts
                                    • The implications
                                      • Figure 11: CAGR of some Bright Dairy’s branches between 2013-16, by region
                                      • Figure 12: Shuangfeng has been emphasising its role as the dairy provider of the G20 Summit on the official website, China, (captured) 2017
                                    • Communicate “freshness” by presenting details
                                      • The facts
                                        • The implications
                                          • Figure 13: TVC of You Best, China, 2016
                                          • Figure 14: Products use short life time to indicate freshness, China, 2016
                                          • Figure 15: Home page of “Made by Cow”, Australia, 2016
                                          • Figure 16: Products claiming to use packaging that prevents light exposure, Japan, 2015
                                        • Gain young females’ attention by offering low-fat flavoured options
                                          • The facts
                                            • The implications
                                              • Figure 17: Arla B.O.B Skimmed Milk, UK, 2016
                                              • Figure 18: Milk or other dairy-based beverages that contain slimming ingredients, South Korea, 2015-16
                                              • Figure 19: Flavoured milk products with multiple flavours blended together, Spain and Poland, 2017
                                              • Figure 20: Flavoured milk with cute illustration, Hong Kong, 2016
                                          • The Market – What You Need to Know

                                            • Retail market driven by geographic expansion and premiumisation
                                              • Pasteurised milk growing rapidly, while flavoured milk declining
                                                • The rising lower tier market to drive category growth
                                                • Market Size and Forecast

                                                  • Accelerating stagnant volume growth by stimulating consumption
                                                    • Figure 21: Retail market value and volume of milk and flavoured milk, by segment, China, 2011-16
                                                  • Imported milk taking up more than one tenth of the market
                                                    • Figure 22: Volume of milk and flavoured milk imported from the leading countries, China, 2015-16
                                                    • Figure 23: Brand communication on their official stores on Jingdong, China, 2017
                                                  • Retail market value seeing faster growth in the future due to price rise
                                                    • Figure 24: Price change of cardboard paper, China, April 2016-March 2017
                                                    • Figure 25: Best- and worst-case forecast of retail milk market value, China, 2011-21
                                                    • Figure 26: Best- and worst-case forecast of retail milk market volume, China, 2011-21
                                                • Market Segmentation

                                                  • Continuous growth of pasteurised white milk
                                                    • Figure 27: Value share of liquid milk market, China and USA, 2015-16
                                                    • Figure 28: New launches of white milk, shelf stable vs chilled, China, 2015-16
                                                    • Figure 29: Best- and worst-case forecast of retail white liquid milk market value, China, 2011-21
                                                  • More excitement in flavoured milk segment to tackle white space
                                                    • Figure 30: Proportion of white milk and flavoured milk among new product launches, China, 2014-16
                                                    • Figure 31: New launches of flavoured milk without children-related cues on packaging, China, 2016
                                                    • Figure 32: Flavoured milk targeting children with L/N/R sugar claim and using real milk, China, Norway and UK, 2017
                                                    • Figure 33: Best- and worst-case forecast of retail flavoured milk market value, China, 2011-21
                                                  • Decline of powdered milk signifying abundant milk product choices
                                                    • Figure 34: Products in powder form cater for women with convenient packaging, South Korea and Japan, 2015-17
                                                    • Figure 35: Best- and worst-case forecast of retail powdered milk market value, China, 2011-21
                                                • Market Factors

                                                  • National Dietary Guideline promoting daily consumption of milk
                                                    • Figure 36: Anchor’s Live Up milk including recommendation from National Dietary Guideline on packaging, China, 2017
                                                  • Winning the lower tier market to bring up the market volume
                                                    • Improved cold chain encouraging the popularisation of pasteurised milk
                                                      • Figure 37: Imported pasteurised white milk, China, 2017
                                                    • Looking for the right way to grab teens’ attention on milk’s value
                                                      • Low-fat and organic products gaining more attention
                                                        • Figure 38: Proportion of new launches with selected claims, China, 2014-16
                                                        • Figure 39: Products with organic or L/N/R fat claim, China, 2016-17
                                                    • Key Players – What You Need to Know

                                                      • Strong marketing support on premium UHT milk helping consolidate leading positions
                                                        • Further amplifying the benefits of high protein milk
                                                          • Indulgent flavours and functional benefits triggering more occasions
                                                          • Market Share

                                                            • Premium UHT milk helping consolidate leading positions
                                                              • Figure 40: Leading companies’ value share of milk and flavoured milk market, China, 2015-16
                                                            • “Picky” parents turning away from Want Want’s flavoured milk
                                                              • Yili and Mengniu gaining share with ever-growing selling expenses
                                                                • Figure 41: The selling expenses ratio and net profit margin of the top three dairy companies in China, 2012-16
                                                              • Rise of vertically integrated dairy companies
                                                              • Competitive Strategies

                                                                • Interactive campaigns to engage consumers
                                                                  • Figure 42: Yili’s LBS+AR interactive activity on Baidu Map, China, 2017
                                                                • Playing up the “high protein” concept
                                                                  • Figure 43: Average content of protein of milk or flavoured milk launches, China, 2010-17
                                                                  • Figure 44: Yili’s organic version of Satine, China, 2016-17
                                                                  • Figure 45: Satine and Mengniu’s TVCs, China, 2016-17
                                                                  • Figure 46: Proportion of new launches containing milk as an ingredient within the sports and energy drinks category, by country, 2016
                                                                  • Figure 47: M-Up’s TVC, China, 2016
                                                                  • Figure 48: Sanyuan Jizhi’s poster for NBA games, China, 2016
                                                                • Engaging seniors through online platforms
                                                                  • Figure 49: Yiyang 50+ Channel, China, 2017
                                                                  • Figure 50: Yiyang milk powder, China, 2017
                                                              • Who’s Innovating?

                                                                • Functional claims staying at the top, while natural claims fading
                                                                  • Figure 51: Top claims of new launches within the milk category, China, 2013-16
                                                                  • Figure 52: Select claims of new launches within the milk category, China, 2013-16
                                                                  • Figure 53: Deluxe’s limited edition featuring QR code which directs to social media page, China, 2016
                                                                • Non-fruit flavours to target adults
                                                                  • Figure 54: Top flavour component sub-categories among new launches of flavoured milk, China, 2014-16
                                                                  • Figure 55: Premium chocolate-flavoured milk or milk beverage specifying the provenance of cacao, South Korea, 2016-17
                                                                  • Figure 56: Proportion of chocolate and coffee flavoured milk new launches, China, South Korea and Japan, 2013-16
                                                                • Expanded fruit flavour spectrum
                                                                  • Figure 57: Top fruit flavours among new launches of flavoured milk, China, 2014-16
                                                                  • Figure 58: Products with less-seen fruit flavours, China, 2015-16
                                                                • Future opportunities: dessert flavour to add indulgence
                                                                  • Figure 59: New launches of flavoured milk with dessert flavour, by country, 2014-16
                                                                  • Figure 60: Flavoured milk products with dessert flavours, South Korea, Russia and USA, 2016-17
                                                                • Creating new occasions to fit urban life
                                                                  • Figure 61: New Hope’s “black and white” milk, China, 2016
                                                                  • Figure 62: Milk claiming to optimise mood, Brazil and South Korea, 2016
                                                                  • Figure 63: Milk featuring “before drinking” occasion, China, 2017
                                                                  • Figure 64: Product with memory-developing and stress-reducing claim, India, 2017
                                                                • Enhancing the texture of flavoured milk
                                                                  • Figure 65: Products with special texture, Japan, 2016
                                                              • The Consumer – What You Need to Know

                                                                • Necessary to engage middle aged consumers and young females
                                                                  • Yili and Mengniu seeing clear advantage in terms of penetration
                                                                    • Online channels and convenience stores becoming more important
                                                                      • Consumers looking for organic and nutritional options when trading up
                                                                        • Flavours and nutrients as essential elements of ideal milk
                                                                        • Change of Dairy Consumption

                                                                          • More yogurt drinkers not necessarily posing threat to milk
                                                                            • Figure 66: Change of dairy consumption, China, January 2017
                                                                            • Figure 67: Change of dairy consumption, by segment fans, China, January 2017
                                                                          • Low dairy penetration amongst females aged 40-49
                                                                            • Figure 68: Change of dairy consumption, by gender and age, January 2017
                                                                          • More kids in family encouraging higher milk consumption
                                                                            • Figure 69: Change of dairy consumption, by family structure, China, January 2017
                                                                          • Different levels of acceptance towards pasteurised milk
                                                                            • Figure 70: Change of dairy consumption, by city, January 2017
                                                                        • Frequency of Milk Consumption

                                                                          • Increasing frequent drinkers of flavoured milk in tier one to three cities
                                                                            • Figure 71: Frequency of milk consumption, China, January 2017
                                                                          • Pasteurised milk attracting a more solid high income consumer group
                                                                            • Scope for milk product to further engage with young women
                                                                              • Figure 72: Frequency of milk consumption, by gender and age, January 2017
                                                                              • Figure 73: Milk products with beauty benefits, Hong Kong and South Korea, 2016
                                                                          • Brand Penetration

                                                                            • Deluxe still winning in the UHT battlefield
                                                                              • Figure 74: Brand penetration, China, January 2017
                                                                            • Mengniu to bring more excitement to young women
                                                                              • Figure 75: Brand penetration, by gender and age, China, January, 2017
                                                                              • Figure 76: Introduction of Nuan Hong Hong, China, 2016
                                                                            • More Bright’s users among high earners
                                                                              • Regional players seeing scope for geographic expansion
                                                                                • Figure 77: Brand penetration, by city, China, January, 2017
                                                                            • Purchase Channels

                                                                              • Online channels gaining momentum amongst high earners
                                                                                • Figure 78: Purchase channels, China, January 2017
                                                                                • Figure 79: Change of tier one consumers’ milk purchasing channels, China, 2013 & 2017
                                                                                • Figure 80: Hi Milk, China, 2016
                                                                              • Different types of milk having advantage in certain channels
                                                                                • Figure 81: Avocado milk shake from a juice bar, China, 2016
                                                                              • Convenience stores becoming important among young consumers
                                                                                • Figure 82: Purchase channels, by age and gender, China, January 2017
                                                                            • Opportunities for Premiumisation

                                                                              • Premium milk – Organic and nutritional
                                                                                • Figure 83: Opportunities for premiumisation, China, January 2017
                                                                              • Rising importance of unique flavours
                                                                                • Figure 84: Flavoured milk for gifting, China, 2017
                                                                                • Figure 85: Change of select features as premium points among consumers from tier one cities, China, 2014 & 2017
                                                                              • Young females holding different opinions from the mainstream
                                                                                • Figure 86: Opportunities for premiumisation, by gender and age, China, January 2017
                                                                            • Ideal Milk

                                                                              • The majority favouring ambient milk
                                                                                • Figure 87: Ideal milk –Temperature when serving, China, January 2017
                                                                                • Figure 88: Tianrun’s new product that claims to be microwavable, China, 2017
                                                                                • Figure 89: Ideal milk –Temperature when serving, by gender and age, China, January 2017
                                                                              • Fruit flavours dominating, while plant protein ingredients growing
                                                                                • Figure 90: Ideal milk – Flavour, China, January 2017
                                                                                • Figure 91: Flavoured milk claiming to satisfy hunger, China, 2016-17
                                                                                • Figure 92: Compound protein drink with misleading information on the package, China, 2017
                                                                                • Figure 93: Ideal milk – Flavour, by gender and age, China, January 2017
                                                                                • Figure 94: Dark/bitter chocolate flavoured milk products, China, Thailand and Japan, 2016
                                                                              • More education needed to explain milk’s nutrition value
                                                                                • Figure 95: Ideal milk – Nutrition, China, January 2017
                                                                                • Figure 96: White milk featuring probiotics/lactobacillus, South Korea, Egypt and USA, 2014-16
                                                                                • Figure 97: Consumers’ perception of select nutrients, China, 2016-17
                                                                                • Figure 98: Ideal milk – nutrition, by age, China, January 2017
                                                                                • Figure 99: Milk product targeting seniors’ children, China, 2016
                                                                              • Combination of certain ingredients and flavours triggering curiosity
                                                                                • Figure 100: Ideal milk – Added ingredients, by consumers who prefer specific milk flavour, China, January 2017
                                                                              • Connection between milk type and packaging preference
                                                                                • Figure 101: Ideal milk – Package type, China, January 2017
                                                                                • Figure 102: Ideal milk – Package type, by heavy users of different milk types, China, January 2017
                                                                                • Figure 103: Glass bottle design featuring black and white illustration of Huckleberry Finn, Germany, 2016
                                                                            • Meet the Mintropolitans

                                                                              • Higher requirements for milk from MinTs
                                                                                • Figure 104: Frequency of milk consumption, by consumer classification, China, January 2017
                                                                                • Figure 105: Opportunity for premiumisation, by consumer classification, China, January 2017
                                                                              • Unique flavours as MinT’s purchase trigger
                                                                                • Figure 106: Ideal milk – Flavour, by consumer classification, China, January 2017
                                                                              • MinTs looking for multi-texture experience
                                                                                • Figure 107: Ideal milk – Added ingredients, by consumer classification, China, January 2017
                                                                            • Appendix – Market Size and Forecast

                                                                                • Figure 108: Value sales of China’s milk and flavoured milk retail market, 2011-21
                                                                                • Figure 109: Volume sales of China’s milk and flavoured milk retail market, 2011-21
                                                                            • Appendix – Market Segmentation

                                                                                • Figure 110: Value sales of China’s milk and flavoured milk retail market, by segment, 2011-21
                                                                                • Figure 111: Best- and worst-case forecast of retail white liquid milk segment value, China, 2011-21
                                                                                • Figure 112: Best- and worst-case forecast of retail white powdered milk segment value, China, 2011-21
                                                                                • Figure 113: Best- and worst-case forecast of retail flavoured liquid milk segment value, China, 2011-21
                                                                                • Figure 114: Volume sales of China’s milk and flavoured milk retail market, by segment, 2011-21
                                                                                • Figure 115: Best- and worst-case forecast of retail white liquid milk segment volume, China, 2011-21
                                                                                • Figure 116: Best- and worst-case forecast of retail white powdered milk segment volume, China, 2011-21
                                                                                • Figure 117: Best- and worst-case forecast of retail flavoured liquid milk segment volume, China, 2011-21
                                                                            • Appendix – Methodology, Definition, and Abbreviations

                                                                              • Methodology
                                                                                • Fan chart forecast
                                                                                  • Abbreviations

                                                                                  Companies Covered

                                                                                  To learn more about the companies covered in this report please contact us.

                                                                                  Milk and Flavoured Milk - China - May 2017

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