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Dairy Consumption Trends - China - March 2018

“The dairy market as a whole is growing stably while different categories have very different performances. Cheese and yogurt are the winning categories, while milk, ice-cream and butter & yellow fats are performing less well by comparison. On the other hand, consumers have very different perceptions towards different dairy products, with cheese being significantly underrated. Category-blurring innovations within the dairy industry are encouraged as they serve more as reinforcement than substitution.”
– Summer Chen, Research Analyst

This report looks at the following areas:

  • Are plant protein drinks a big threat to dairy products in China?
  • Are consumers regaining confidence in local dairy companies?
  • Cross-category substitution or reinforcement?

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this report
        • Definitions
          • Figure 1: Definition of low/mid/high MHI groups, by city tier
      • Executive Summary

          • The market
            • Figure 2: Best- and worst-case forecast for retail sales value of dairy products, China, 2012-22
            • Figure 3: Market share of major dairy products, by retail sales value, China, 2012-17
            • Figure 4: Value growth rates of major dairy products, China, 2013-17
          • Competition and innovation
            • The consumer
              • Complementary ambient and chilled dairy products
                • Figure 5: Consumption frequency of main dairy products, November 2017
              • Besides spreading, snacking and baking are top ways of eating cheese and butter respectively
                • Figure 6: Consumption of niche dairy products, cheese products, November 2017
                • Figure 7: Consumption of niche dairy products, butter and cream products, November 2017
              • Cheese is underrated
                • Figure 8: Correspondence Analysis – Perception of different types of dairy products, November 2017
              • Misunderstanding of protein exists
                • Figure 9: Perceptions about protein, November 2017
              • Plus and minus health claims are seen as most worth paying extra for
                • Figure 10: Factors related to premiumisation, November 2017
              • Polarised attitudes towards domestic dairy sources
                • What we think
                • Issues and Insights

                  • Are plant protein drinks a big threat to dairy products in China?
                    • The facts
                      • The implications
                        • Figure 11: Value size growth rates of dairy and plant protein drinks market, China, 2013-17
                        • Figure 12: Perception of protein sources, November 2017
                      • Are consumers regaining confidence in local dairy companies?
                        • The facts
                          • The implications
                            • What should local brands do?
                              • Figure 13: New fresh milk brands, Mengniu Dairy, 2018
                              • Figure 14: Day Day Fresh milk products, Hema Fresh, 2018
                            • What should imported brands do?
                              • Cross-category substitution or reinforcement?
                                • What’s the selling point?
                                  • Figure 15: Cross-category innovations in the dairy market
                                • What else can brands do?
                                • The Market – What You Need to Know

                                  • Stable growth in the past five years
                                    • Yogurt and cheese are the wining categories
                                      • Extending consumption occasions and trading up to premium healthy options to fuel future growth
                                      • Market Size, Segment and Forecast

                                        • Market Value: slowing growth in the past five years
                                          • Figure 16: Retail sales value of dairy products, China, 2012-17
                                        • Market volume: low consumption compared with other countries and the government’s goal
                                          • Figure 17: Retail sales volume of dairy products, China, 2012-17
                                        • Dairy intake in China lags behind other countries
                                          • Figure 18: Annual per capita volume consumption of major dairy products, China, Japan and US, 2017
                                        • Government recommends 300g dairy daily
                                          • The winning category – yogurt and cheese
                                            • Figure 19: Market share of major dairy products, by retail sales value, China, 2012-17
                                          • Yogurt
                                            • Cheese
                                              • Figure 20: Growth rates of major dairy products, China, 2013-17
                                            • Looking ahead to the next five years
                                              • Figure 21: Best- and worst-case forecast for retail sales value of dairy products, China, 2012-22
                                          • Market Factors

                                            • Milk price recovery stimulating price increase
                                              • Trading up to premium healthy options
                                                • Extending to the snacking occasion
                                                  • Yogurt
                                                    • Cheese
                                                      • Booming interest in baking drive niche categories
                                                        • Figure 22: Screen shots of bakery recipes, Xia Chu Fang, February 2018
                                                    • Key Players – What You Need to Know

                                                      • Leading brands prioritise their high-end hero products
                                                        • Local/niche brands seek a different way to tell the health story
                                                          • Trends worth knowing
                                                          • Competitive Strategies

                                                            • Leading brands
                                                              • Prioritising high-end hero products
                                                                • Tapping into new territories
                                                                    • Figure 23: Bottled ambient yogurt products, Yili Dairy and Mengniu Dairy, China
                                                                  • Engaging the young generation
                                                                    • Figure 24: Marketing posters of ZUO yogurt and Joy Day
                                                                  • Local/niche brands
                                                                    • Transparent packaging communicating absolute simplicity
                                                                      • Figure 25: transparent packaging, Kedi Dairy, China
                                                                    • Specific technologies and ingredients communicating health functions
                                                                      • Figure 26: Dairy products with added ingredients, China
                                                                  • Who’s Innovating?

                                                                    • The big picture
                                                                      • Figure 27: New product launches by category in the dairy market, China 2015-17
                                                                      • Figure 28: New product launches in milk and yogurt, by subcategory, China 2015-17
                                                                    • Noteworthy trends in claims
                                                                      • Figure 29: Top growing claims in new product launches in the dairy market, China 2015-17
                                                                    • Flavour innovations
                                                                      • Floral flavours
                                                                        • Figure 30: Dairy products in floral flavours, China
                                                                      • Niche and fun flavours
                                                                        • Figure 31: Dairy products in niche and fun flavours, China
                                                                      • Global trends/innovations that can inspire innovation in China
                                                                        • Premium chocolate milk
                                                                          • Figure 32: Premium chocolate milk, Korea
                                                                        • Cheese+ snacks
                                                                          • Figure 33: Examples of cheese+ snacks
                                                                        • Golden Milk
                                                                          • Figure 34: Golden milk
                                                                      • The Consumer – What You Need to Know

                                                                        • Cheese is underrated
                                                                          • Plus and minus health claims are most worth paying extra for
                                                                            • Polarised attitudes towards domestic dairy sources
                                                                            • Consumption Frequency – Main Dairy Products

                                                                              • Complementary ambient and chilled dairy products
                                                                                • Figure 35: Consumption frequency of main dairy products, November 2017
                                                                                • Figure 36: Consumption frequency of chilled plain milk, by user category, November 2017
                                                                                • Figure 37: Consumption frequency of chilled drinking yogurt, by user category, November 2017
                                                                                • Figure 38: Consumption frequency of chilled spoonable yogurt, by user category, November 2017
                                                                              • Chilled plain milk popular in Shanghai but not Beijing
                                                                                • Figure 39: Consumption of chilled plain milk, once a day or more and once every 2-3 days, by major city, November 2017
                                                                              • Ambient yogurt appeals less to young consumers in their early 20s
                                                                                • Figure 40: Consumption of ambient yogurt, once a day or more and once every 2-3 days, by age group, November 2017
                                                                            • Consumption – Niche Dairy Products

                                                                              • Powdered cheese and spray/aerosol cream are most niche
                                                                                • Figure 41: Types of dairy products not bought in the last 6 months, November 2017
                                                                              • Snacking and spreading are top ways of eating cheese
                                                                                • Figure 42: Consumption of cheese products, by type, November 2017
                                                                              • Spreading and baking are top occasions for consuming butter and cream
                                                                                • Figure 43: Consumption of butter and cream products, by type, November 2017
                                                                            • Perception of Different Dairy Products

                                                                              • Unhealthy image of butter
                                                                                • Figure 44: Correspondence Analysis – Perception of different types of dairy products, November 2017
                                                                              • Underrated nutritional value of cheese
                                                                                • Figure 45: Selected perceptions of milk and cheese, November 2017
                                                                              • Young consumers concerned about health problems cheese may cause
                                                                                • Figure 46: Selected perceptions of cheese, by age, November 2017
                                                                            • Perception of Protein

                                                                              • Immunity fortification supersedes source of energy as the top benefit
                                                                                • Figure 47: Perception of protein, November 2017
                                                                              • Scope to drive awareness of sustained satiety
                                                                                • Opportunity in gender-specific claims
                                                                                  • Figure 48: Agreement with “Protein is good for skin”, by age and gender, November 2017
                                                                                  • Figure 49: Agreement with “Protein is good for building muscles”, by age and gender, November 2017
                                                                                • Room in lower tier cities to promote the benefits of protein
                                                                                  • Figure 50: Selected perceptions about protein, by city tier, November 2017
                                                                              • Factors Related to Premiumisation

                                                                                • Both plus and minus claims are valued
                                                                                  • Figure 51: Factors related to premiumisation, November 2017
                                                                                • Low willingness to pay more for imported and lactose-free products
                                                                                  • Reaching maximum consumers with minimal investment
                                                                                    • Figure 52: TURF analysis of factors related to premiumisation, November 2017
                                                                                  • Special flavour and packaging to engage young consumers
                                                                                    • Figure 53: Selected factors related to premiumisation, by age, November 2017
                                                                                  • No-additive claim most critical in tier one cities
                                                                                    • Figure 54: Selected factors related to premiumisation, by city tier, November 2017
                                                                                • Attitudes towards Dairy Products

                                                                                  • Polarised attitudes towards domestic products
                                                                                    • Figure 55: Selected attitudes towards dairy products, November 2017
                                                                                    • Figure 56: Selected attitudes towards dairy products, by age, income and city tier, November 2017
                                                                                  • A sizeable portion of consumers do not trust organic claims
                                                                                    • Figure 57: Selected attitudes towards dairy products, November 2017
                                                                                  • Big and national brands preferred to niche and local brands
                                                                                    • Figure 58: Selected attitudes towards dairy products, November 2017
                                                                                    • Figure 59: Selected attitudes towards dairy products, by age and gender, November 2017
                                                                                • Meet the Mintropolitans

                                                                                  • Adding healthy ingredients rings out loud among MinTs
                                                                                    • Figure 60: Factors related to premiumisation, by consumer classification, November 2017
                                                                                  • Bigger fans of snacking cheese
                                                                                    • Figure 61: Consumption of different dairy products, cheese in snack packs – as a snack, by consumer classification, November 2017
                                                                                    • Figure 62: Selected perception of different dairy products, cheese, by consumer classification, November 2017
                                                                                • Appendix – Market Size, Segment and Forecast

                                                                                    • Figure 63: Retail value sales of major dairy categories and consumer total in-home food spending, China, 2013-17
                                                                                    • Figure 64: Growth rates of major dairy categories, by retail sales value, China, 2013-17
                                                                                    • Figure 65: Retail value sales of dairy products, China, 2012-22
                                                                                    • Figure 66: Retail volume sales of dairy products, China, 2012-22
                                                                                    • Figure 67: Best- and worst-case forecast for retail value sales of dairy products, China, 2012-22
                                                                                    • Figure 68: Best- and worst-case forecast for retail volume sales of dairy products, China, 2012-22
                                                                                • Appendix – Methodology and Abbreviations

                                                                                  • Methodology
                                                                                    • Fan chart forecast
                                                                                      • Abbreviations

                                                                                      Dairy Consumption Trends - China - March 2018

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