Tetra Pak identifies low-income consumers in developing countries as big opportunity for Australian dairy industry

Posted by AFN Staff Writers on 10th May 2012

An expected rise in prosperity, purchasing power and desire for packaged liquid dairy products among  low-income consumers in developing countries is the Australian dairy industry’s next big growth opportunity, according to new research from food processing and packaging company Tetra Pak.

According to Tetra Pak’s latest  Dairy Index study, consumption by low-income consumers in developing markets is forecast to increase from about 70 billion litres in 2011 to almost 80 billion litres in 2014.

Many of these consumers are expected to switch in coming years from drinking loose milk to packaged milk.

Tetra Pak’s President and CEO, Dennis Jönsson said these consumers make up almost 40 per cent of the world’s population, live in economies driving the dairy industry’s growth and are growing more affluent.

According to the research, these low-income consumers live on AU$2-AU$8 a day and are “virtually untapped” by today’s dairy processors. Half of these consumers live in India and China.

The Tetra Pak research focused on six countries which account for more than 76 per cent of liquid dairy product consumption by low-income consumers in developing countries:  India, China, Indonesia, Brazil, Pakistan and Kenya.

Mr Jönsson said that by using alternatives to whole milk – such as whey or lactic acid – it is possible to produce nutritious and healthy dairy products at lower cost. Another way is to reduce package sizes or opt for more basic packaging.

“Around 70 per cent of low-income purchases are in the so-called ‘traditional trade’, small-family run shops rather than modern supermarkets or convenience stores. Companies are coming up with innovative ways to reach these consumers,” Mr Jönsson said.

Companies need to generate significant sales to achieve the economies of scale required to provide value for money and quality nutrition to low-income consumers, according to Tetra Pak.

Liquid drink product growth to speed up in 2011-2014

Separately, Tetra Pak announced that liquid drink product demand is set to accelerate in 2011-2014, led by Asia, Africa and Latin America.

Lactic acid drinks, baby and toddler milk, and flavoured milk are forecast to record the fastest growth rates in 2011-2014, Tetra Pak’s analysis shows.