Kantar Worldpanel - www.kantarworldpanel.com

Market After Food Safety Scandals–“Less is More” in Dairy

26/06/2015

Consumers nowadays keep a closer eye on healthy diet. Due to the impact of Food safety scandals in recent years, consumers now incorporate “Less is More” concept in eating habits—less sugar, low fats, and minimization of additives. Presentation is no longer the key point. What matters are basic requirements i.e. health and safety. As “safety” becomes the basic criteria, manufacturers need innovation under the new requirement. As one of nutrition food markets, liquid dairy* is also a no exception to face the fierce competitions.

Liquid dairy is believed as one of the primary sources of nutrition. Fresh Milk, the biggest segment, grows every year, often with shortage during the summer. Kantar Worldpanel points out that under the influence of food safety, health concern and weather, growth of fresh milk remains strong. Not only did market penetration increase from 63% to 66% (560,000 more consumers of 15-65 y.o) over past 6 years, its value also accounted for nearly half (46%) of the total liquid dairy. Fresh Milk is becoming a category of necessity in Taiwan.

Volume % by liquid dairy segment, 2014

 

The Short-lasting Success of Cereal Drinks and Functional Milk

Increasing demand of fresh milk inflicted shortage during the summer, causing immense pressure on the supply. Even with several price increase, purchase still grew. With rising demands, manufacturers looked for alternatives to turn shortage into opportunity, for example, drinking yogurt and flavored milk in the early years as well as cereal drinks and functional milk in the recent years. Manufacturers strive to create new demands, in hope to seize opportunity of sustainable growth.

Though considerable effort was put forth, these new dairy products encountered challenges still.  Take the relatively more successful one - cereal drinks as an example, benefits of lowering hyperlipidemia and cholesterol are right on, in addition to convenience of ready-to-drink. Ever since AGV introduced Pure Oat Milk in October 2008, followed by Quaker and Uni-president soon ensuing steps, penetration of cereal drinks peaked to 37% (about 5,310,000 consumers in age of 15-65 in less than one year). However, when consumers failed to “feel” the claimed benefits, the sparkle slowly recessed. In addition, since the price of cereal drinks is high, some consumers shifted to soy milk, which also provides health benefits yet better price. Sales volume of cereal drinks started to slow down. Penetration of MAT 15Q1* dropped to 60% of the prime in 2010. Functional milk, likewise focus on health, was zealously supported during shortage in attempt to fill the supply gap. Although at first, NPD of Fresh Delight and Kuang-Chuan functional milk injected a new force through innovation and advertising, the taste (of functional milk) could not compete with fresh milk. Therefore, it lost the attention after the milk shortage, leading to sales volume decreased gradually.

 

“Less” in; Sugar out

Manufacturers have been advocating benefits of yogurt drinks and flavor innovation of flavored milk.   With higher sugar level, both are considered more as “beverage” than “nutrition”. Under the “Less is More” tendency, both suffer bigger impact than other. Compared to the peak of 2013, the sales value of both dropped by nearly 20%. It’s no surprise to see non-dairy RTD beverage as well affected by “Less is More”. Recent Stars like Sokenbicha and Realleaf are reflections of this demand.

Drinking yogurt is the 2nd largest dairy product.  Sugar free performs rather impressive while total market remains stagnant. It’s a sign for manufactures to ponder as how to spark new growth under the “Less” trend.

 

Back to Tradition. Soy Milk Grows Steadily

While decline occurred in most liquid dairy markets, Kantar Worldpanel spotted soy milk grow steadily under adversity. Over the past 2 years, the market achieved double digit volume growth. According to latest data (MAT15Q1 vs year ago), regular flavor made 19% growth while sugar-free jump 55%. Sugar free now accounts for 32% market volume. From increasing sugar-free demand to non-genetically modification claim, all indicates strong health consciousness by consumers,

 

What’s next? Perceived Value is the Key

According to Kantar Worldpanel, the key to future growth lies in product value perceived by consumers such as healthy, nutritious, safe, and free of burden. For instance, walnut milk is a recent sky-rocket hit in China. It catches recognition of old Chinese perception “shape for shape” (shape of walnut looks like brain, so walnut is good for brain therefore). Soon it becomes a prominent nutrient supplement drinks. The leading brand, “Six Walnuts” leaped by 34% CRP (consumer reach point)* according to Kantar Worldpanel’s Brand Footprint.

 

In the age of rising health consciousness, innovation for being healthy, nutritious, natural, and yet simple and tasty to consumers is a big challenge. Latest new launches like Adzuki bean water, Sparkle vinegar reflected the efforts manufactures made to meet consumers’ need.  It’s definitely also true for the liquid dairy for success to sustainable growth.

 

 

 

Note 1. Liquid dairy market includes fresh milk, functional milk, flavored milk, soy milk, rice milk, cereal drink, UHT milk, drinking yogurt, yogurt, fermented drinks

Note 2. 15Q1: past 52 weeks from 2015 March.  Comparison against same period year ago

Note 3. Integrated indicator of “Penetration” x “Frequency”

Market After Food Safety Scandals–“Less is More” in Dairy

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