Over the past few years, the dairy sector managed to stand firm and achieve new heights of growth despite the COVID-19 pandemic and the sudden boom of plant-based dairy alternatives which seemed poised to become a threat.
Today, experts believe that the path forward for dairy is even stronger than before, particularly in Asia.
“Indeed, our data shows that animal protein overall is forecasted for stronger growth rates than vegan protein in Asia,” GlobalData South East Asia and Australasia Key Accounts Director Tim Hill told FoodNavigator-Asia.
“We have already seen plant-based enthusiasm decrease significantly compared to two or three years back, and the number of vegans/vegetarians in APAC drop since 2019, particularly in terms of Gen Z consumers who have moved to the option of being flexitarian.
“A survey on ASEAN consumers showed that the number one reason they still gravitate towards traditional protein products is taste, and the second is expense - this applies to not only animal meat products but also dairy.
“Importantly, it is not only lower-income consumers that are doing this but also those better-off economically – we saw that middle-income consumers were the group that cut their spending on plant-based products the most in the past year.”
Plant-based dairy often try to affiliate their products with the concept of health and wellness, and whilst this may be true for many plant-based milks and effective in western markets, there is an additional hurdle to cross in Asia – the commonality of soy milk.
“Soy milk has been around for a long time in Asia, and it is almost considered a staple beverage,” he added.
“So technically, Asian consumers are familiar with plant-based dairy and have less concerns about this than plant-based meat.
“But this is a double-edged sword as at the same time around 10% of consumers also believe that soy milk is ‘less healthy’ than regular dairy, and this leads back to concerns in areas such as hormone content, sugar content, ultraprocessing and more.”
As such, at this time dairy has a strong hold over the market in terms of both cost and nutrition, especially due to its strong correlation with nutrients such as Vitamin D and calcium.
It also has a particularly strong advantage in markets like China where the industry has strong government backing as well as established domestic companies.
“China is still at a stage where it needs more dairy, not less,” Yili Innovation Centre Oceania Head Dr Philip Wescombe told us.
“There is still enormous scope for growth in this market given that current consumption rates are only around 39g daily whereas recommended consumption rates are 300g to 500g daily.
“In fact, there is a lot of potential in all Asian markets including South East Asia, because apart from the EU and the United States, most other markets are not meeting their recommended daily intake of dairy.”
Functional innovations
Whilst everyday fresh milk, yoghurts and ice creams remain important for general interest and consumption, Yili believes that the greatest potential for the industry lies in functional innovation, in areas from infant nutrition to blood glucose management.
“This means taking dairy beyond its general benefits of providing vitamin D or calcium to consumers – for children, we look at providing precise fortification such as for brain development with DHA-fortified milk that is fortified all the way up in the supply chain at the cow feed stage.
“For adults, we also have milk powder that provides functional sugar control with the use of mulberry leaf extract and other components, which drops blood glucose spikes for better management.
“It is via innovations such as these that can showcase how much more and better the opportunities are for dairy to grow and benefit consumers in Asia moving forward.”
