Tetra Pak, the world’s leading food processing and packaging company, has identified 2.7 billion low-income consumers in developing countries as the dairy industry’s next big growth opportunity due to an expected rise in prosperity, purchasing power and desire for packaged liquid dairy products (LDP).
Consumption by low-income consumers in developing markets is forecast to increase from about 70 billion liters in 2011 to almost 80 billion liters in 2014, according to the Dairy Index, which tracks worldwide facts, figures and trends in the global dairy industry. Many of these consumers are expected to switch in coming years from drinking loose milk to packaged milk.
«Low-income consumers represent one of the biggest growth opportunities for the dairy industry. The key to tomorrow’s success is reaching these consumers today. They make up almost 40% of the world’s population and live in economies driving our industry’s growth and they are growing more affluent,» said Dennis Jí¶nsson, president and CEO, Tetra Pak.
These low-income consumers live on $2-$8 a day and are virtually untapped by today’s dairy processors. Called Deeper in the Pyramid (DiP) consumers by Tetra Pak, they make up about 50% of developing countries’ population and consume 38% of LDP in developing countries. Half of these DiP consumers live in India and China. The Tetra Pak research focused on six countries which account for more than 76% of LDP consumption by DiP consumers in developing countries: India, China, Indonesia, Brazil, Pakistan and Kenya.
«India offers a tremendous growth opportunity with over 220 million DiP consumer households,» said Kandarp Singh, managing director, Tetra Pak South Asia Markets.
«Contrary to what we have known for some time, this consumer segment is not only looking for affordability but has also become increasingly demanding on quality. We have been developing packaging solutions to address this segment and are very pleased to note that during the past years, our customers have launched several products across geographies in the dairy category at single coin-price points. The market response has been very positive and we continue to see double-digit growth rates in this segment,» he added.
Many DiP consumers are expected to grow in affluence, shifting from low to middle incomes by the end of the decade, boosting their purchasing power and the range of products they buy. The increase in spending power along with greater awareness of food safety and a need for convenient, ready-to- drink solutions is expected to increase the demand for packaged products.
The global DiP population is forecast to fall by a compound annual growth rate (CAGR) of 3% a year from 2009-2020. The population living on more than $8 a day is set to rise by 4% (CAGR) annually, according to Boston Consulting Group, which helped Tetra Pak to develop the DiP classification.
Tapping into this market is not without its challenges, according to the report. Tetra Pak has identified three key challenges for dairy processors seeking to reach consumers in this growth market. They need to make products which are affordable, available and attractive to consumers on limited incomes.
Innovation and efficiency will be vital in helping the industry to develop products, packaging and processing to meet the needs of these low-income consumers, according to the report.
Tetra Pak has identified ways to make products more affordable. Among them is changing the way both milk products and packages are developed. Another way is to reduce package sizes or opt for more basic packaging.
Source: Food and Beverage News
http://www.fnbnews.com/article/detnews.asp?articleid=31846&SectionId=1&utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+FnBNews+%28FnBNews.com+Today%27s+Top+News%29
http://www.adpi.org/NewsStatistics/News/tabid/74/newsid419/1583/mid/419/Emerging-Markets-Forecast-to-Drive-Dairy-Industry-Boom/Default.aspx
Posted on Wednesday, May 09, 2012 (Archive on Wednesday, May 16, 2012)
Posted by bsutton@adpi.org Contributed by bsutton@adpi.org