Flavoured milk to drive dairy industry growth, says Tetra Pak

Swedish food processing and packaging solutions provider Tetra Pak predicts that demand for flavoured milk will grow at more than double the rate of white milk globally between 2012 and 2015.

According to Tetra Pak’s research, titled Sixth Tetra Pak Dairy Index, demand for flavoured milk, which is the second most widely consumed liquid dairy product (LDP) after white milk, is estimated to increase by a compound annual rate (CAGR) of 4.1%, between 2012 and 2015, from 17.0 billion litres to 19.2 billion litres.

Tetra Pak stated that consumers are increasingly switching to nutritious and packaged flavoured milk as an alternative to other beverages, creating opportunities for dairy manufacturers to improve profitability.

The surge in demand for flavoured milk is expected to be driven by emerging countries amidst an increasing number of new flavours and products focused on health.

The demand for white milk is forecast to increase by 1.7% CAGR to 219.5 billion litres in 2015 compared with 208.5 billion litres in 2012.

The total LDP demand is expected to rise by 2.4% from 280.3 billion litres to 301.3 billion litres during the period.

According to Tetra Pak, though flavoured milk consumption is low compared with other beverages such as carbonated soft drinks, optimistic consumer perceptions about the health benefits of milk is driving flavoured milk consumption.

The growth rate for flavoured milk consumption is expected to be more than triple compared to carbonated soft drinks, during the period, while carbonated soft drinks have been forecast to grow by 1.3% CAGR.

Tetra Pak president and CEO Dennis Jönsson said that with white milk increasingly commoditised, flavoured milk provides dairies with the opportunity to provide value both to consumers and their bottom line.

"With the right flavours, portion sizing and formulation, flavoured milk can meet a huge range of health, nutritional and lifestyle needs," Jönsson added.

Tetra Pak has identified four factors that are driving flavoured milk consumption – the desire for nutritious and healthy food, which is encouraging consumers to switch to nutrient-rich milk products; urbanisation and rising prosperity, which has increased ‘on-the-go’ consumption of ready-to-drink (RTD) flavoured milk in convenient portion packs; consumers’ willingness to try new food and drinks; and consumers seeking ‘indulgent’ eating and drinking experiences.

Even though the demand for flavoured milk is expected to rise globally, demand in developing economies, particularly across Asia and Latin America, is set to exceed that of developed countries in America and Europe, which indicates that emerging countries are the growth engines of the dairy industry.

Tetra Pak research shows that seven of the world’s top ten flavoured milk markets are developing countries, with China being the largest followed by the US and India.

Increased demand for flavoured milk during the 2009 – 2012 period was primarily driven by emerging countries Brazil, China, India and Indonesia, according to Tetra Pak, and the trend is set to continue in the 2012 – 2015 period.

In 2012, developing countries accounted for 66% of flavoured milk consumption, and this is estimated to rise to 69% by 2015.

Tetra Pak noted that cartons have become the established packaging format for flavoured milk and have accounted for 62% of RTD flavoured milk packaging in 2012, compared with 57% in 2009, and are expected to rise to more than 64% in 2015.

Portion packs are expected to reach 81% of RTD flavoured milk consumption.

Tetra Pak is a leading food processing and packaging solutions provider with a presence in more than 85 countries across the world.

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Image: Tetra Pak president and CEO Dennis Jönsson. Photo courtesy of Tetra Pak International SA.