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A new report highlights Chinese dairy market opportunities

While the Chinese dairy market is dominated by three companies – Mengniu, Yili and Bright – there are big opportunities for foreign companies.

This is according to a new report by Kantar Worldpanel involving 40,000 urban families in 373 cities. The report gives an overview of the Chinese dairy sector, which is still growing, and says there are good opportunities for foreign businesses.

Jason Yu, general manager of Kantar Worldpanel, has affirmed that the growth of the sector is growing at two or three times the rate of the overall domestic market.

The market is pretty much dominated by the big local giants that take up about 90%, but – and this comes out of the report – inquiries from brands that have not yet entered China are frequent.

Partnerships represent an interesting way of breaking into this immense market. Arla, for example, is collaborating with Mengniu to achieve market success by using its distribution channel and marketing infrastructure. According to Jason Yu, this is the most profitable way to penetrate the market as it would be extremely costly for any foreign company to go it alone.

Over half of the industry’s categories (58% to be precise) have shown growth. The best performing are the milk and yogurt categories which have registered a sales increase of 7.5%, far beyond overall market growth. The forecast is also rosy, given that last year the average consumption of dairy products for China’s urban households was 59.7 litres, less than 20% of that in EU countries. However, with the implementation of the two-child policy, there is considerable room for growth.

Finally, imported dairy products are growing faster than domestic products despite continuous promotion of the quality of local milk by national producers.