The new study by Global Industry Analysts (GIA) suggests that the cheese market accounted for more than 50 per cent of dairy sales in the region during 2007.
GIA also anticipates that in the relatively mature market of Western Europe, growth in the cheese market is mainly anticipated from enhanced demand for exotic cheeses and products with innovative tastes and flavours.
The report analyses the worldwide markets for dairy products by country and product and predicts that by 2010 the worldwide dairy products market will have exceeded $305bn.
Growth attributed to value-added products This growth is attributed to the growing significance of value-added products, innovations in packaging, marketing in niche areas, development of strong brands, desire for premium products and trade liberalisation.
Other factors contributing to the growth are seen to be strict regulations relating to processing and packaging, changing eating habits with an emphasis on nutrition and a rising demand for organic products.
According to the study, Europe, the US and the Asia-Pacific region account for over 70 per cent of the global dairy products market.
Asia-Pacific will be the fastest growing regional market 2001 - 2010.
Meanwhile, the key drivers for processed dairy products are seen to be the growing middle classes with expanding incomes and changing dietary patterns.
Yoghurts are flavour of the month in Asia-Pacific In Asian-Pacific markets, yogurt products are expected to show the highest compound annual growth rate of 5.6 per cent between 2001 and 2010.
The study says that yogurt is emerging as the new profitable sector for dairy companies in China in particular.
The study predicts there will also be a big growth in demand for dairy products from Latin America and the Caribbean.
While developed regions such as Western Europe will continue to lead dairy consumption, declining populations and per capita consumption has brought down the pace of growth.
However, those regions with higher incomes will drive the demand for premium-priced, value added products, GIA claims.
Studay reveals a divided daily market Fragmentation of the dairy industry is cited as one of the most striking aspects of current trends.
The leading ten players account for only a one quarter share of total sales.
The also study notes that the " intensely competitive worldwide dairy products market " is at present seeing acquisitions and mergers as players try to consolidate their positions through takeovers and alliances.
An earlier report by analysts 3A on the growth of the Eastern European dairy industry noted that there was an increased presence of multinational companies in the region alongside national processors.
It also noted that there were thirty foreign firms operating thoughout the nine markets studied for the report, many of which are working with local processors.
These multinationals have helped develop the dairy sector through the use of new technologies, product developments and marketing capabilities, 3A added.
The report profiles over 500 companies including Danone SA, Arla Foods UK and Nestlé SA.