China will overtake the US as the largest dairy market by 2022

20-Aug-2017 - Last updated on 22-Aug-2017 at 09:37 GMT

Yili Ambrosial yogurt brand. Picture: Yili.

China will overtake the US as the largest dairy market by 2022 whilst India takes fourth place from 2021, according to research by Euromonitor International.

It claims in the next five years countries will shift in importance due to a change in consumer demand in dairy.

High sugar content

Americans are drinking less milk and have become wary of flavored milk drinks, which they perceive to be unhealthy due to their high sugar content.

However, China’s growing appetite for yogurt will result in it overtaking the US as the largest dairy market by 2022.

In India, the growing health and hygiene awareness combined with urban consumers shifting from unpackaged milk to packaged milk will see the country switch places with Japan by 2021.

“The dairy’s heavyweights, which combined make up two thirds of global sales in 2017, remain stable over 2012- 2022,” said Pinar Hosafci, senior food analyst at Euromonitor International.

“Yet in the next five years countries will shift in importance due to a change in consumer demand in dairy.”

Yili growth plans

For overall yogurt sales in China, drinking yogurt is a key growth driver. This is largely due to major players expanding their reach with ambient drinking yogurt, notably Inner Mongolia Yili with the Ambrosial brand.

Ambient drinking yogurt benefits include added convenience for consumers and retailers, achieving a wider distribution than chilled yogurts.

Manufacturers also focus on probiotic variants of drinking yogurts, which contributes to boosting the health credentials of the category. However, rising sales of drinking yogurts led to a parallel decline for flavored milk drinks, which is perceived as less healthy.

Yili has announced an ambitious plan to become the one of the world’s top five dairy firms and transform itself into a 10 billion yuan health food giant by 2020.

It announced plans to acquire Guiyang Sanny Dairy in 2015, the largest dairy firm in Guizhou province, to expand its presence in the southwest and it has ventured into plant protein beverages and lactic acid bacteria beverages to enhance growth.

In other growth plans the company has set up a baby milk powder plant in New Zealand and cooperated on imported milk with Italy’s Sterilgarda Alimenti and signed a deal with US milk cooperative Dairy Farmers of America to build an 80,000-tonne milk powder plant in Kansas.