Research firm finds slowdown in dairy drinks market

Recent research from U.K.-based beverage market research firm, Canadean Limited, has found that overall growth in the global dairy drinks market has slowed to just 0.5 per cent in 2008, from 2.4 per cent in 2007.

Canadean says economic conditions coupled with the impact and after effects of the melamine scandal in Asia (which now accounts for 45.2 per cent of entire global demand) have been the primary reasons for the slowdown in growth.

The Asian market witnessed the most marked deterioration, with total volumes expanding at just 0.5 per cent in 2008 compared with 5.1 per cent in 2007.

The overall situation was also compounded however by the first absolute declines in demand in both North America and West Europe since 2004.

Africa, East Europe, Central and South America and the Middle East all maintained positive growth in 2008 but even these regions are thought unlikely to escape the impact of the global downturn entirely in 2009.

White milk remains by far the most important category overall accounting for 79.4 per cent of total global dairy drinks demand in 2008 or just under 200 billion litres. Growth in this category halved from 0.6 per cent to 0.3 per cent in 2008.

The fastest expanding sectors since 2002 have been value-added products such as drinking yogurts, flavoured milk and fermented milk.

However these products also experienced the sharpest slowdown in 2008, with flavoured milk particularly being hard hit by the Asian melamine issue and falling back 2.9 per cent over the year.

Brighter outlook

While the short-term outlook for 2009 looks fairly bleak, some of the fundamental drivers for longer-term growth remain in place.

These include growing world population and per capita consumption, rising long-term disposable income levels, a steady shift to packaged from unpackaged consumption (the latter still represents nearly one-third of the entire world market) and greater consumer interest in more sophisticated value-added, functional and healthier products.