China’s dairy sector has witnessed growth from US$83bn in 2018 to US$87bn in 2019 and is forecast to grow at a compound annual growth rate (CAGR) of 6.1% between 2019 and 2024. As the sector continues to evolve, GlobalData, a leading data and analytics company, highlights the top five innovation trends that are set to impact the marketing and sales of dairy products in the country.

Premium focus

Chinese firms have been investing in dairy farms and processing capacity. For instance, Yili acquired New Zealand’s second largest dairy co-operative Westland in 2019 to deliver premium-priced imported dairy products in line with 16% of the Chinese consumers, who are willing to spend on the premium end of the price range for high-quality and innovative dairy products, according to a recent survey by GlobalData.

Sumit Chopra, Consumer Research Director at GlobalData, comments: “Premium product market will continue to thrive under the selling points like organic, health, and nutrition, sufficing the increased demand of health-conscious consumers.”

Plant-based new product development

With *27% of Chinese shoppers buying alternative plant-based dairy products consumers are re-assessing their dependence on animal products and exploring sustainable sources of protein. As this number grows dairy manufacturers are becoming more ‘plant-curious’ and developing new products to cater for this need. For instance, in May 2020, Nestle announced a series of investments to enhance its plant-based offerings and further strengthen its footprint in China.

Alternative animal-based milks

Alternative animal-based products like goat milk and camel milk are finding more appeal as alternatives to cow’s milk with **68% of Chinese consumers finding them ‘somewhat / very appealing’ as they offer a different choice whilst providing the nutritional benefits of animal-based dairy. Resonating with the huge demand for alternative milk in China, Kazakhstan’s Eurasia Investment established a dairy factory for camel milk in China with plans to launch horse milk powder.

On-the-go Nourishment

The healthiest snacking behavior tends to occur between breakfast and lunch with China’s dairy sector targeting this consumption occasion with healthier, nourishing and satisfying on-the-go choices in portable packaging formats. In line with busy millennial’s on-the-go consumption, Swedish brand The Original Oatly! launched an oat milk-based ‘recovery drink’ in a teardrop-shaped drinking aperture to top, aiding hard-pressed individuals to consume it wherever and wherever needed.

Trendy Flavors

The desire for novelty and surprise is evident among Chinese consumers, with ***37% of shoppers looking for unusual, new and ’trendy’ dairy product flavours. Recently in China, Mengniu Dairy Co., Ltd. launched Mengniu ‘BIO-V2’, a flavored fermented milk that brings a white peach flavor to fermented milk for an uncommon flavor experience.

Mr Chopra concludes: “The innovation trends we are seeing in China’s dairy market this year are challenging the country’s traditional manufacturers to satisfy a range of consumer demands by offering them products with unique functional and sensory experiences.”