9 April 2009

2 minute read

Deteriorating 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 & 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 being particularly hard hit by the Asian melamine issue and falling back 2.9 per cent over the year. Local analysts expect it will take at least 5 years for this category to fully recover in the region.

In spite of these negative trends, some categories and subcategories have remained resilient; growth in soy-based drinks has been good for example as some consumers have switched or switched back to these products and there has also been a strengthening in demand for evaporated and condensed milk and some specific market niches, such as low fat milk, probiotic drinks, ESL milk, organic and fortified milks.

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