Tetra Pak Forecasts Gains in 2009 Consumption of Ambient Liquid Dairy Products in Developed Markets

According to the new Tetra Pak Dairy Index, total global consumption of milk and other LDP is expected to grow by 1.3% from 2008 to 2009. By the end of 2009, worldwide consumption of LDP is expected to reach 263 billion litres.

4 Dec 2009 --- Figures released in the latest edition of the Tetra Pak Dairy Index – which tracks worldwide facts, figures and trends in the dairy industry - show that consumption of ambient milk and other ambient liquid dairy products (LDP) across developed markets is projected to grow by 0.6% from 2008 to 2009. This growth comes during a period of worldwide economic recession, with total LDP consumption (ambient and chilled) in developed markets expected to dip by 1.2% from 2008 to 2009.

“Although the recession has affected many sectors, it has not affected milk and liquid dairy consumption in the same way,” said Dennis Jönsson, President and CEO, Tetra Pak Group. “Milk is a healthy, nutritious and affordable food staple, which 44% of the world’s population drinks every day. While we have seen some consumers ‘trade down’ to less expensive products in the category, the market remains stable.”

According to the new Tetra Pak Dairy Index, total global consumption of milk and other LDP is expected to grow by 1.3% from 2008 to 2009. By the end of 2009, worldwide consumption of LDP is expected to reach 263 billion litres - up from 259 billion litres in 2008. This figure increases to 284 billion litres when soy milk and other dairy alternatives such as rice, nut and seed-based milks are included.

Tetra Pak is forecasting that total global LDP consumption will grow at a compound annual growth rate (CAGR) of 2.2% from 2009 to 2012 - in line with its projection earlier this year.

Much of this growth will be led by developing markets - which have driven 95.8% of global LDP consumption growth from 2005 to 2008 - due to factors such as population growth, rising incomes and the relative novelty of liquid dairy products.

Developed markets, which represent around one-third (32%) of global LDP consumption, face a tougher situation because many have already high per capita milk consumption rates. For example, Ireland leads the world in per capita consumption of chilled and ambient milk products at 160 litres per person per year compared to per capita consumption of just 19 litres per year in China. However, the Tetra Pak Dairy Index highlights that producers in developed markets are not standing still and are finding new ways to maintain growth.

Said Michael Zacka, vice president, Marketing and Product Management, Tetra Pak:
“In developed markets such as North America, Western Europe and Australia, where milk consumption is already high, dairy producers are driving new growth by developing new products and consumption occasions, promoting milk in appealing new ways, catering to consumer trends and promoting the benefits of long-life products.

“For example in Canada, dairy producers are positioning long-life milk as an attractive product for use at vacation cottages and on camping trips where refrigeration is difficult. And in Spain, dairy producers have driven new growth by establishing a new segment in fortified and functional milk. This includes milk with added calcium for healthy bones and milk with Omega 3 for healthy hearts.”

One of the key areas of growth worldwide - in both developed and developing markets--is ambient (long-life) LDP. In developed markets, the focus of the current issue of the Tetra Pak Dairy Index, ambient LDP consumption is expected to reach a CAGR of 0.7% from 2009 to 2012.

Driving this growth in developed markets are four main factors:
1. A general trend toward health and wellness, which is driving demand for enriched products often sold in ambient packages. For example, in Spain, thanks to health promotion efforts on behalf of dairies, the government and regional health officials, sales of fortified milk account for 20% of the country’s total milk consumption. This includes milk with added calcium, milk with Omega 3, milk designed for infants and lactose free milk.
2. Busy, stretched lifestyles, which is driving convenient, time-saving solutions. For example, in the US, parents are starting to buy large quantities of ambient milk designed specifically for babies and toddlers. They can store this milk at home, thereby avoiding frequent trips to the supermarket.
3. A desire to enjoy life within the current economic downturn with small treats and new consumption occasions that favour ambient products. This is driving consumption of flavoured milk among both adults and children in developed markets. For example, in Germany, children drink flavoured milk at school, while in the US, flavoured milk is a popular accompaniment to adult breakfasts and childrens’ lunches.
4. A growing trend toward economisation, with consumers deploying money-saving strategies. For example, in some countries ambient products are sold at more economical price points than chilled products and in others are offered as part of retailer promotions where consumers can buy large quantities at a favourable price.

Flavoured milk and soy milk: New opportunities for growth in developed markets
While white milk represents the largest segment of the LDP category across developed markets - with 76% market share - producers are also looking to flavoured milk and soy milk as potential opportunities for growth. Over the past 12 months, the UK, Spain, Canada and Australia have all seen growth in consumption of flavoured milk, the second-largest LDP category after white milk in developed markets - although these started from low consumption volumes.

Soy milk, which is often positioned as a healthy natural alternative to cow’s milk, is expected to grow in developed markets by a CAGR of 1.0% from 2006 to 2009. From 2009 to 2012 both flavoured milk and soy milk are expected to continue to grow globally at CAGRs of 3.3% and 3.1% respectively.