Chinese dairy companies have also been sourcing from overseas, Shanghai-based Mintel analyst Laurel Gu told DairyReporter.
DAC said Chinese milk quality has reached its “historical peak,” and more recently, domestic dairy brand, New Hope (新希望乳业) was officially designated by the G20 International Summit in Hangzhou City.
Raw milk price continues to decline as Lucerne imports increase
The total amount of Lucerne imports has increased by 9.4% to 136,2809 tons in July compared to the same period last year, the DAC report shows, but its price has declined by 19.2%.
Lucerne is the main feed used for raising the cattle as local production is insufficient, Gu said.
The increasingly cheaper Lucerne is causing the price of raw milk to decline, she added.
The report also shows that the average price of imported liquid milk has decreased by 2% to $1,061 per ton compared to the previous year.
However, Gu pointed out that the price of liquid milk is still much higher than overseas markets, for example, 40% higher than the US.
“This explains why Chinese [dairy] companies continue to increase imported dairy products, especially liquid milk and baby formula (both have a large consumer base): the imported products are not only cheaper but also perceived by consumers to be of better quality and safer to use,” Gu explained.
Yogurt and cheese gain momentum
Within the dairy category, yogurt is the most prosperous segment in China right now, Gu said. It has been growing much faster than liquid milk and milk powder given its better taste and higher perceived health and nutritional values.
A recent Mintel research indicates that retail volume sales of yogurt and yogurt drinks saw a CAGR of 23% between 2013 and 2016, and they are expected to reach RMB 118.4bn ($18bn) by the end of 2021.
In the meantime, cheese is also growing fast but is still “very small,” compared to other dairy segments, she added.
DAC’s report does not include any statistics regarding China’s cheese market.
The cheese segment “will have strong potential to win a growing affluent consumer group who are more actively trying and adapting themselves to premium and exotic food,” Gu said.