According to the Euromonitor report ‘New Dairy Frontiers in Asia Pacific’, the overall dairy products category saw generally weaker growth during the period 2018 to 2023 when compared to other segments like cooking ingredients, snacks and staple foods.
Growth was particularly affected during the pandemic but it rebounded at a slower growth rate. The Asia Pacific region witnessed slower growth for its dairy segment when compared to other regions. (see Chart 1.0).
Euromonitor attributed the lacklustre growth to slowing demand in top dairy markets in APAC like Japan and South Korea, while in China, unfavourable economic conditions have led to consumer switching from premium yoghurt and milk to more affordable products. Not only that, the negative population growth has slowed demand for nutritional milk products for infants and children.
Nevertheless, the southern region – Southeast Asian countries like Malaysia, Indonesia, Philippines, Vietnam and Thailand – saw rising demand for dairy products. India, on the other hand, has a strong tradition for milk consumption, making it one of the top dairy markets in APAC especially for milk (see Chart 2.0).
As such, there is a need for constant innovations within the dairy segment to support higher growth as dairy faces competition from alternatives as well as competing products within the nutritional food segment. One good example is the baby food sector where milk formula used to be the dominant growth category but is now overtaken in terms of growth rate by other products like dried and prepared baby food. (see Chart 3.0)
There is also a high probability that milk alternatives like oat, soy and almond milk will take a bigger share of the retail shelf space in the near future as companies are rapidly introducing ‘better quality’ milk alternatives as a better source of nutrition in addition to them being lactose-free and environmentally friendly. Dairy alternatives have expanded beyond the scope of just milk into other dairy products like cheese, yoghurt, and ice cream. Growing number of flexitarians as well as environmentally- conscious consumers coupled with prices of alternatives getting cheaper and cheaper every year, will eventually eat into the profits of the dairy industry.
