Asia’s middle classes to drive dairy growth 30%

RISING purchasing power among Asia’s middle classes will help drive 30% growth in global demand for milk by 2020, according to a new report by food packaging group Tetra Pak.

With global interests, Tetra Pak’s annual dairy index makes for very positive reading for Irish milk producers and processors, who have a collective target of increasing Irish dairy output by 50% in the same timeframe.

Demand in the core area of liquid milk is to rise 30%. Other liquid products such as flavoured milk and drinking yoghurt will see a 60% growth in demand.

Tetra Pak president and chief executive, Dennis Jonsson, said: “The report indicates that Asia’s emerging economies will — with growing and increasingly prosperous urban populations — consume an ever increasing share of the world’s liquid dairy products. Here, as in Africa and in Latin America, a new generation of educated, upwardly mobile consumers will unlock exciting possibilities for our industry to provide distinctive, convenient and diversified new products.”

Mr Jonsson also predicts a gradually increasing focus on food safety and long-term health in new dairy markets. He also highlights convenience, mobility and awareness of sustainability issues will become increasingly important as factors driving consumer choices between now and 2020.

He said: “In ‘mature’ markets, such as North America and western Europe, ageing populations and smaller families will be looking for more value-added products, individualised to suit their increasingly diverse health and lifestyle needs.

“The ability to create this added value for consumers will, in turn, bring value to dairy producers’ bottom line. This is a significant opportunity in markets where volume growth is limited because dairy consumption is already high and birth rates are declining in several countries,” added Mr Jonsson.

Tetra Pak forecasts that by 2014 packaged milk will outsell “loose” milk in the developing world for the first time, as economic growth and city-living spur demand for healthy and convenient products.

Global demand for all forms of liquid dairy products will grow from some 270 billion litres in 2010 to around 350 billion litres by 2020.

Bord Bia market manager for Italy and Greece, John Keane, said the projections are very encouraging for those in the Irish dairy sector.

Mr Keane said: “Africa, in particular, will open up exciting possibilities for the dairy industry to provide distinctive, convenient and diversified new products for an emerging generation of educated, upwardly mobile consumers.

“Emerging and developing markets are projected to absorb more than 60% of world output by 2020 compared with a 40% contribution by advanced economies. This growth will be driven by economic growth, urbanisation, and the rising purchasing power of Asia’s middle classes,” he added.

The Tetra Pak index predicts that Asia-Pacific consumption will climb by almost 45% from 140 billion litres to 200 billion litres by 2020.

Tetra Pak defines other liquid dairy products as flavoured milk, drinking yoghurt, sweetened condensed milk, lactic acid drinks and baby and toddler milk.

During the current decade, global consumption of these products is set to rise by close to 60%, topping 100 billion litres by 2020.

The research indicates that demand for liquid dairy products will climb in every region of the world between 2010 and 2020, with the exception of western Europe.

It also forecasts that the dairy boom will be most pronounced in Asia — led by India and China — where increased prosperity and the rapid growth of the middle class will spur a significant rise in consumption.

Broken down into individual country highlights, the Tetra Pak index also predicts the following:

* Africa will see significant growth in consumption, growing by more than 50% from 15 billion litres today to almost 25 billion litres by 2020;

* Latin America consumption will increase more than 25% to reach 30 billion in north America, consumption will grow to 40 billion litres by 2020 against 35 billion today;

* In western Europe, consumption will fall slightly from 12.5% of global consumption to less than 10% by 2020. But the region will remain the biggest consumer of liquid dairy products per capita.

* The Tetra Pak dairy index is an annual report designed to help dairy producers identify new opportunities for growth.