As milk prices continue to fall in Europe, the Western European, dairy Industry continues to foster strategic alliances, acquisitions and consolidations in order to improve performance and gain economies of scale. For example, Lactalis, through its acquisition, in March 2010, of Ebro Puleva, has now become the second largest dairy company in Spain.
However, the real growth of the dairy market, is shifting towards developing markets, here, Lactalis’s, investments in Central and Eastern Europe reportedly bring the company a major percentage of its retail value, and Danone’s merger with Russia’s Unimilk, giving them 7.8% of the market, underlines this trend. These moves are hardly surprising when, in general, the Eastern European dairy market is growing and according to Euromonitor, 2009/10 figures show the dairy market in Russia is also growing by 9.5%. Other dairy industry leaders, like Nestlé and Friesland Campina, can be seen to be also looking further afield towards Asia, an area seen as offering major future growth opportunities.
This new perspective in the market has also led to non-dairy companies entering the scene, like for instance, PepsiCo with it’s $3.8 Billion acquisition of the Russian dairy and juice giant – Wimm-Bill-Dann making them the biggest player in Russia with a12.5% share. Another new entry is Coca-Cola and its recent launch in India, of their innovative Maaza Milky Delite, a blend of mango and milk developed by their India research and development laboratory in Gurgaon. Clearly, all these changes show that the industry is undergoing a major change and is therefore re-positioning itself for the future.
Meanwhile, consumers across Europe and America, with their aging populations, continue to have concerns about health and wellness, and it’s not just the aging population that is concerned, as we become increasingly an urban society, with limited access to nature, we have all developed a real craving for a more healthy and balanced lifestyle. So, it’s no surprise that Mintels’ ‘Top CPG Trends for 2011’, predict that consumers will continue to substitute what they miss-out on, ensuring a continuing demand for more natural and healthy products, containing reduced sugars and additives, as we enter the second decade of this new millennium.
We would be wrong, of course, to think of this as totally new phenomena within the dairy industry. We have witnessed a steady growth in such consumer demands over the past 60 years for such products, from the original Yakult pro-biotic fermented milk drink in the 1950’s, to the plethora of products on the market today. More and more, over the past decades, we have seen the dairy industry creating products that respond to consumer’s health and wellness concerns, in an attempt to answer the need to get back to all things authentic and natural.
So, whilst not new, the launching of many functional and preventative offers that address health and wellbeing within the category is clearly on the increase as producers try to address consumer’s demands (see: http://www.activiapromise.com/). Dairy products continue to inspire trust, after-all what could be more natural than a cow? Dairy products can also offer benefits like Omega 3, Anti-oxidants, added calcium, Vitamin D, protein enrichment, low fat, organics, probiotics, prebiotics, plant sterols, digestive aid, etc…although the definition of many of these terms and specifically the term ‘natural’, will become increasingly under scrutiny in the coming years.
With this concern for their own health also comes a continuing consumer consciousness of the effects of packaging on the environment. This is clearly exposed by a recent survey made by UBI in France, which highlights the European consumer’s concerns and their preference for sustainable packaging solutions such as, ‘light-weighting’, bio-degradability and recycling.
With most milk packaging today in HDPE bottles (High Density Polyethylene), or in Tetra type, cartons, which due to their multiple laminates are rarely recyclable or need special facilities, there is now a growing consumer preference for environmentally friendly solutions, which is, in turn, fuelling the growth of many new and exciting packaging developments. Some examples include; The ‘Ecolean’ plastic formed pack, who announce on their website, that: “By using a minimal amount of raw material we create a lightweight package which combines low environmental impact with consumer convenience http://www.ecolean.com, The ‘Green Bottle’ introduced by Marybelle in the UK, which consists of a cardboard pulp outer bottle and an inner plastic bag, said by PIRA to have reduced the carbon footprint, compared to a standard HDPE bottle, by 48%! http://greenbottle.com. and finally, Dairy Crest’s ‘Jugit’, which by offering a re-usable jug, allows milk to be delivered in minimal simple plastic bags http://www.jugit.co.uk/.
Another important movement in the dairy industry comes from the evolution of our changing lifestyles, today with the growth of single households, or households where both partners are working, the time of the ‘sit-down’ family meal has almost become a thing of the past. With most meals now eaten on the go, starting the day often comes down to perhaps a dairy drink and a few biscuits in the car or eaten on public transport – This is certainly bourn out by Tetra Pak’s Dairy Index, which says the demand for LDP (Liquid Dairy Products) is increasing, once again, TetraPak put this down to growing urbanisation, aging populations and a growing middle class.
This fast pace lifestyle is driving a need for convenience and practicality. With snacking replacing other meals, there is now a need for more convenient portion sizes, and smaller and more accessible packaging. Dannon’s February 2011 launch of Activia Parfait Crunch in the USA, a blend of low-fat yogurt with granola packed separately on the top of the pot, is whilst not entirely a new concept, once again underlines this trend, as does Yoplait-Dairy Crest’s yogurt and fruit juice drinks packed in single portion tubes called ‘Frubes’ designed to bring nutrition to children’s lunch boxes in the UK. (See: http://www.yoplait.co.uk/preview/files/pressrelease1.pdf).
With so many changes happening in the dairy industry today and the growing need to address new markets, changing consumer lifestyles and their health and welfare concerns. The dairy shelf in the retail sector has never been more crowded or more active, with so many offers and sometimes confusing claims, there is a clear need to bring clarity of information and innovative approaches to packaging and product solutions. As consumers become more cash rich, but time poor, their needs remain at the heart of dairy industry change.
Rowland Heming© 2011
See also: http://rhpkg.wordpress.com