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Milk and Flavoured Milk - China - May 2019

Covered in this report

This report covers white liquid and powdered milks, and flavoured cow’s milk. Flavoured milk products discussed in this Report should have no less than 80% of milk content, and no less than 2.3g of protein content per 100g/ml.

Excluded: Condensed, evaporated, sour and cultured milk; soymilk, milk specifically for babies (infant milk formula), and drinking yogurts/ fermented milks/milk drinks are excluded.

“Globally, fortified/added nutrition milk products have gained rising popularity owing to consumers’ high interest. Meanwhile in China, though consumers also want milk with fortified nutrition, current innovation focuses on ‘minus’ claims to build the ‘simpleness’ image. To keep ahead of the game, manufacturers and brands can pay more attention to ‘fortified’ claims (beyond added protein and added calcium) and provide specific benefits addressing different demographics.”
– Crystal A, Research Analyst, Food and Drink

This report looks at the following areas:

  • Spread knowledge about pasteurisation through easy-to-understand communication
  • Introduce fortification in milk, tailor-made to different demographics
  • Find a balance between health and indulgence for flavoured milk

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this report
        • Excluded
          • Definition
          • Executive Summary

              • The market
                • The market has stabilised but there is a scope to stimulate consumption volume
                  • Figure 1: Best- and worst- case forecast for milk category, by value, China, 2013-23
                  • Figure 2: Best- and worst- case forecast for milk category, by volume, China, 2013-23
                • Pasteurised milk enjoys the highest growth rate
                  • Figure 3: Retail value of each segment within milk category, China, 2014-18
                • Companies and brands
                  • Leading brands grow stronger and the concentrate ratio further increases
                    • Figure 4: Leading companies’ share of milk market, China, 2017 vs 2018
                  • Innovation focuses on “minus” claims, but opportunities in “fortified” products may be lost
                    • Creating more appropriate consumption occasions
                      • The consumer
                        • Ambient plain milk and chilled plain milk see differences in consumption frequency
                          • Figure 5: Consumption frequency of drinking milk, December 2018
                        • Generous spending on plain milk
                          • Figure 6: Spending on plain milk, by family structure, December 2018
                        • Original is the top preferred flavour for milk
                          • Figure 7: Flavour preference, December 2018
                        • Healthy features are wanted
                          • Figure 8: Triggers for innovative flavoured milk, December 2018
                          • Figure 9: Features of milk, December 2018
                        • Perceptions regarding UHT milk reveal confusion
                          • Figure 10: Attitude towards milk, December 2018
                        • Shorter transportation distance means freshness
                          • Figure 11: Attitude towards milk, December 2018
                        • What we think
                        • Issues and Insights

                          • Spread knowledge about pasteurisation through easy-to-understand communication
                            • The facts
                              • The implications
                                • Figure 12: Kedi’s “small white milk” is sold in cold-storage areas, China
                                • Figure 13: New Hope’s “Golden 24 hours” pasteurised milk highlights freshness, China
                                • Figure 14: Product introduction page of Bright’s Ubest on Tmall, China
                              • Introduce fortification in milk, tailor-made to different demographics
                                • The facts
                                  • The implications
                                    • Figure 15: Yili’s Satine high protein milk and Mengniu’s Selected Meadow high calcium milk, China, 2018
                                    • Figure 16: Product examples of fortified milk products carrying “minus” claims, South Korea, Japan and Thailand, 2018
                                    • Figure 17: Product examples of milk products targeting fitness enthusiasts, Ecuador and Brazil, 2018
                                  • Find a balance between health and indulgence for flavoured milk
                                    • The facts
                                      • The implications
                                        • Figure 18: Product examples of flavoured milk products with better-for-you claims, US, 2017
                                        • Figure 19: Product examples of flavoured milk products positioned as both healthy and indulgent, US, 2017
                                        • Figure 20: Binggrae’s product preannouncement on Instagram, South Korea, 2018
                                    • The Market – What You Need to Know

                                      • The market for milk has stabilised
                                        • Consumption classification brings opportunity
                                          • Pasteurised milk enjoys a high growth rate and will gain momentum
                                          • Market Size and Forecast

                                            • The growth of the market mainly relies on retail price increases
                                              • Figure 21: Retail market value and volume of milk category, China, 2014-18
                                              • Figure 22: Retail value and volume growth rate of milk category, China, 2014-18
                                            • Stable market outlook for the following five years
                                              • Figure 23: Best- and worst- case forecast for milk category, by value, China, 2013-23
                                              • Figure 24: Best- and worst- case forecast for milk category, by volume, China, 2013-23
                                          • Market Factors

                                            • Consumption classification (消费分级) brings trade-up opportunities
                                              • Expanding middle class are switching into more upgraded dairy products
                                                • Lower tier market offers potential for scale growth
                                                  • Raw milk price increase stimulates retail price
                                                    • Government issues guidance on domestic milk sources
                                                    • Market Segmentation

                                                      • White UHT milk still accounts for the largest proportion
                                                        • Figure 25: Milk segment, by value, China, 2018
                                                        • Figure 26: Best- and worst- case forecast for white UHT milk, by value, China, 2013-23
                                                      • Pasteurised milk enjoys the highest growth rate
                                                        • Figure 27: Retail value of each segment within milk category, China, 2014-18
                                                        • Figure 28: Mengniu’s Shiny Meadow (每日鲜语) highlights high-quality farm, high protein and freshness, China, 2018
                                                        • Figure 29: Best- and worst- case forecast for white pasteurised milk, by value, China, 2013-23
                                                      • Manufacturers and brands lack incentive for flavoured milk innovation
                                                        • Figure 30: Best- and worst- case forecast for flavoured milk, by value, China, 2013-23
                                                    • Key Players – What You Need to Know

                                                      • Leading players continue to dominate the market
                                                        • Maintaining the strength of hero products
                                                          • Creating new consumption occasions
                                                          • Market Share

                                                            • Leading brands become even stronger, further increasing the concentration ratio
                                                              • Figure 31: Leading companies’ share of milk market, China, 2017 vs 2018
                                                            • Regional brands face different business situations
                                                              • Bright faces challenges from both national brands and other local brands
                                                                • New Hope, Junlebao consolidate their positions in their own battlefields
                                                                  • Modern Dairy achieves growth of its downstream milk brands (下游牛奶品牌) by virtue of Mengniu’s channel
                                                                    • Figure 32: Product examples of joint milk/yogurt brands, Modern Dairy and Mengniu, China
                                                                • Competitive Strategies

                                                                  • Strengthen management of the industry chain through vertically integration
                                                                    • Maintain the strength of star products
                                                                      • Figure 33: Deluxe’s online-exclusive version highlights the use of a Beijing embroidered design, China, 2018
                                                                    • Sink to lower tier markets to engage more consumers
                                                                      • Regional manufacturers are tapping into the “freshness” trend
                                                                      • Who’s Innovating?

                                                                        • The big picture overview
                                                                          • White milk is more active than flavoured milk, and the gap keeps enlarging
                                                                            • Figure 34: New launches in the whole milk category (include liquid and powdered milk), by subcategory, China, 2014-18
                                                                          • Targeting different consumer groups
                                                                            • Figure 35: Noteworthy claims of new launches of the whole milk category (include liquid and powdered milk), China, 2014-18
                                                                          • In terms of storage formats, ambient is mainstream
                                                                            • Figure 36: New launches of liquid milk category (include white milk and flavoured milk), by storage, China, 2014-18
                                                                          • Offer “simpleness” to white milk drinkers
                                                                            • Figure 37: Yogurt brand Simple Love claims its product only has raw milk, sugar and lactobacillus
                                                                            • Figure 38: Selected claims of new launches of white liquid milk, China, 2014-18
                                                                            • Figure 39: Product examples of Bright Ubest’s fat-free fresh milk
                                                                          • Take inspiration from popular flavours in other categories
                                                                            • Figure 40: Selected flavours of new launches of flavoured liquid milk, China, 2014-18
                                                                            • Figure 41: Product examples of flavoured milk with popular flavours, China, 2018
                                                                            • Figure 42: Terun’s yogurt products with interesting flavours, China, 2018
                                                                          • Expand on consumption occasions
                                                                            • Figure 43: Product examples of dairy drinks with fruits, oats, Brazil, India, and US, 2017-18
                                                                            • Figure 44: Mengniu’s new packaged Deluxe with a bottle cap, China, 2018
                                                                        • The Consumer – What You Need to Know

                                                                          • Ambient plain milk has more heavy users
                                                                            • Generous spending on plain milk
                                                                              • Fortified nutrition is wanted
                                                                                • Shorter transportation distance means freshness
                                                                                • Frequency of Drinking Milk

                                                                                  • Ambient plain milk has more heavy users
                                                                                    • Figure 45: Consumption frequency of drinking milk, December 2018
                                                                                  • Acceptance of chilled plain milk varies by city
                                                                                    • Figure 46: Consumption frequency of chilled plain milk – selected frequency, by city, December 2018
                                                                                  • Consumers with kids have highest frequency across all types of milk and milk beverage
                                                                                    • Figure 47: Percentages of heavy users for drinking milk, by family structure, December 2018
                                                                                • Spending on Plain Milk

                                                                                  • Generous spending on plain milk
                                                                                    • Figure 48: Spending on plain milk, December 2018
                                                                                    • Figure 49: Spending on plain milk, by family structure, December 2018
                                                                                  • More education needed on pasteurised milk to lure more general drinkers
                                                                                    • Figure 50: Frequency of drinking chilled plain milk, by spending on plain milk – RMB201 or above, December 2018
                                                                                • Features of Milk

                                                                                  • Fortified nutrition is the most popular feature
                                                                                    • Figure 51: Features of milk, December 2018
                                                                                  • Nut/soy-based milk products appeal to females more, but at different ages
                                                                                    • Figure 52: Features of milk – nut-based and soy-based milk, by gender and age, December 2018
                                                                                • Flavour Preference

                                                                                  • Original flavour most preferred
                                                                                    • Figure 53: Flavour preference, December 2018
                                                                                  • Rising popular flavours in other categories are also wanted in milk
                                                                                    • Figure 54: Flavour preference – selected flavours, by age, December 2018
                                                                                  • Exotic flavours hold potential among high earners
                                                                                    • Figure 55: Flavour preference – selected flavours, by monthly personal income, December 2018
                                                                                • Triggers for Innovative Flavoured Milk

                                                                                  • Healthy benefits are favoured by all
                                                                                    • Figure 56: Triggers for innovative flavoured milk, December 2018
                                                                                  • Use creative ideas to make flavoured milk unusual to appeal to high earners
                                                                                    • Figure 57: Triggers for innovative flavoured milk – selected features, by monthly personal income, December 2018
                                                                                  • Opportunity for fizzy milk
                                                                                    • Figure 58: Triggers for innovative flavoured milk – fizzy texture, by age, December 2018
                                                                                • Attitudes towards Milk

                                                                                  • Perceptions regarding UHT milk reveal confusion
                                                                                    • Figure 59: Attitude towards milk, December 2018
                                                                                  • Plant-based protein is not valued as much as animal-based protein
                                                                                    • Figure 60: Attitude towards milk, December 2018
                                                                                  • Shorter transportation distance means freshness
                                                                                    • Figure 61: Attitude towards milk, December 2018
                                                                                    • Figure 62: Attitude towards milk, December 2018
                                                                                • Appendix – Market Size and Forecast

                                                                                    • Figure 63: Total market value of milk, China, 2013-23
                                                                                    • Figure 64: Total market volume of milk, China, 2013-23
                                                                                • Appendix – Market Segmentation

                                                                                    • Figure 65: Total market value of white liquid – UHT milk, China, 2013-23
                                                                                    • Figure 66: Total market volume of white liquid – UHT milk, China, 2013-23
                                                                                    • Figure 67: Total market value of white liquid – pasteurised milk, China, 2013-23
                                                                                    • Figure 68: Total market volume of white liquid – pasteurised milk, China, 2013-23
                                                                                    • Figure 69: Total market value of flavoured liquid milk, China, 2013-23
                                                                                    • Figure 70: Total market volume of flavoured liquid milk, China, 2013-23
                                                                                    • Figure 71: Total market value of white powdered milk, China, 2013-23
                                                                                    • Figure 72: Total market volume of white powdered milk, China, 2013-23
                                                                                • Appendix – Methodology and Abbreviations

                                                                                  • Methodology
                                                                                    • Fan chart forecast
                                                                                      • Abbreviations

                                                                                      Milk and Flavoured Milk - China - May 2019

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