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Chinese Dairy Industry Innovates Amid Market Shifts and Declining Sales

China 11.07.2024
Source: The DairyNews
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The Chinese dairy sector is undergoing significant changes as it navigates challenges like a declining birthrate, an aging population, and a historic preference for shelf-stable milk products.
Chinese Dairy Industry Innovates Amid Market Shifts and Declining Sales
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According to the China Shopper Report 2024 by Bain & Co. and Kantar Worldpanel, sales of packaged milk products fell by 2.9% in the first quarter of this year. This decline reflects broader post-COVID shifts in consumer spending and increased outdoor activities.

At the Food and Beverage Innovation Forum 2024 in Shanghai, industry experts discussed the need for innovation in the dairy sector. Yan Wei from Roland Berger stressed the importance for Chinese dairy brands to explore new product categories to stay competitive.

One company leading the way is Haihe Dairy from Tianjin, which has tailored its product offerings to appeal specifically to Gen Z consumers. Known for integrating local humor and the laid-back culture of Tianjin, Haihe Dairy has introduced unique flavors such as coriander and avocado-flavored milk. Zou Yang, Chairman of Haihe Dairy, highlighted the brand’s strategy of embedding Tianjin’s cultural elements and humor into its products, making "playfulness" a key feature of its innovation.

Haihe Dairy has also engaged in various collaborations to reinforce its brand identity, including partnerships with Tianjin’s traditional bakery Xianghe Bobo Shop and the Tianjin Museum. These collaborations have not only enhanced the brand's visibility but have also aligned its products with the city’s cultural heritage.

Looking forward, Haihe Dairy is planning further innovative partnerships, such as with grilled fish brands, to develop iced products and specialty milk beverages.

Other dairy producers are focusing on taste innovations rather than just new flavors. Bai Xuedong, Vice President and Co-founder of Blue Sea Dairy, explained their strategy of surprising consumers with novel taste experiences. Their product "Haomanzu" yogurt includes whole strawberries and grapes, offering a richer taste profile compared to typical freeze-dried fruit yogurts.

Furthermore, companies like New Raspberry Co Ltd are repositioning yogurt as a meal replacement, tapping into the popular fruit oatmeal trend. This has allowed them to cater to the dual needs of convenience and nutrition.

The French dairy giant Lactalis is also adapting its strategy in China, focusing on increasing natural cheese consumption among Chinese consumers. Alexandre Pasquet, General Manager of Lactalis North Asia, noted the growing preference for functional and natural products. Lactalis is responding by expanding its local production capabilities and tailoring products like Camembert cheese with local flavors to suit Chinese tastes.

As the Chinese dairy market continues to evolve, these innovations reflect a broader trend of adapting to consumer preferences and environmental challenges. With these strategic moves, the industry aims to rejuvenate its connection with consumers and carve out new opportunities in a rapidly changing marketplace.
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