Milk consumption escalates, functional beverages on the rise

Posted by Daniel Palmer on 17th September 2008

Milk splash

Global consumption of milk drinks has risen by 13% from 214 billion litres in 2002 to 242 billion litres in 2007, according to a new report from leading food and drink consultancy Zenith International.

“Asia has seen the most consistent growth, mainly due to booming demand in China,” commented Zenith Dairy Market Intelligence Manager Esther Renfrew. “Consumption in Asia/Australasia has increased from 18.3 litres per person in 2002 to 22.9 litres in 2007.”

Milk sales have also advanced in more developed markets, but at a slower rate.

Australians consume considerably more, on average, than their Asian counterparts, with Dairy manufacturers and Dairy Australia reporting that 2006/07 per capita consumption of milk was 103.6 litres.

Flavoured milk accounted for 4.7% of global milk drink volume in 2007, growing fastest in the Middle East.

The Zenith report identifies a number of economic factors influencing the global milk drinks market, including:

* demand and supply instability creating uncertainty over prices
* industry consolidation, leading to the emergence of stronger international leaders – this has been noticeable in Australia, with the recent sale of Dairy Farmers one example and;
* free trade impediments from subsidies, quotas, price fixing and tariffs, such that only 7% of world milk production is traded internationally.

In order to meet growing competition from other drinks, particularly in developed countries, producers have increasingly focussed on adding functionality – in one year, over 2,300 new functional dairy drinks were launched. Although functional milk drinks are still a niche segment, volumes are growing fast.

The report established Asia/Australasia as the leading worldwide market, with 35% of global milk consumption. Indian consumers, who drank a total of 37,000 million litres, led the way in terms of total consumption, but Americans topped the leaderboard for flavoured milk consumption (1,600 million litres).

Zenith believes that the future is bright for the milk industry, with global milk drinks volumes forecast to rise by 19% in the five years to 2012.