Dairy innovation trends by category
According to the Dairy Industry Insight Report1 released by Dingxiang Doctor (a famous medical portal in China), China’s dairy consumption market can be divided into five major categories: liquid milk, yogurt, milk powder, plant-based milk, and other niche segments. Normal temperature milk occupies a dominant position in the Chinese dairy consumption market, and low-temperature products show promising growth space.
Source: Dairy Industry Insight Report
Specifically speaking, each segment is shaped by different innovation trends:
Normal temperature white milk:
The category is developing towards premiumization.
Nutrition upgrading: high-protein, high-calcium, the addition of vitamins and minerals
Targeting subgroups: 0-lactose, low fat, low sugar
Scenario expansion: outstretch from daily consumption (for nutritional supplement) and the gift (Chinese people traditionally gift milk on important festival occasions like the Chinese New Year) to other consumption scenarios, such as baking and tea drinking.
Milk Deluxe’s CBP milk highlighting high-calcium and better absorption
Low-temperature pasteurized milk:
Technology upgrading: Ultra-pasteurized, ultra-filtered
Meet the needs of subgroups: 0-lactose, low fat
Channel innovation: Fresh e-commerce, new retail
Normal temperature yogurt:
Nutrition upgrading: high-protein
Meet the needs of subgroups: low fat, less sugar
Flavor and packaging innovation
Low-temperature yogurt:
Strain upgrading: Increase the number of live bacteria
Functional yogurt: beautifying, lowering blood sugar and blood pressure, weight management, sleep-aiding, digestion-boosting
Simplified formula: 0 sugar and less addition
Snacking trend: develop yogurt towards pudding, dessert, and other snacks through matching with cereals and dried fruits.
New concept: Iceland yogurt, Greek yogurt, meal replacement yogurt.
Lepur’s skincare yogurt added with sodium hyaluronate
Dairy innovation trends by consumer demand
Health demand:
The 2020 China Milk Quotient Report shows that more than 96% of people believe that dairy products can improve immunity. Dairy has become a trusted healthy food carrier that can be added with functional ingredients featuring nutrition enhancement and health problem alleviation.
According to Dairy Functional Trends Insight Report released by Ipsos, consumers are mainly concerned about sleep, immunity, and gastrointestinal health. Therefore, dairy products have fractionized into different functional segmentation for different age and gender groups.
The young generation: gastrointestinal distress alleviation and energy supplement.
The middle-aged and elderly group: “Three Highs” (hyperlipidemia, hypertension, hyperglycemia) alleviation, bone health improvement, and sleep-aiding.
The male group: stress relief, sleep-aiding and brain health improvement.
The female group: weight loss/management, skin health improvement and beauty improvement.
Functional dairy products fortified with vitamins and minerals, small molecules, and probiotics as the core ingredients are expected to be popular in the future market.
Niumao Heihei’s weight management yogurt
Quality demand
Chinese people, especially the middle-class group, are pursuing high-quality lifestyle comparable to that of western countries.
The consumption upgrading is reflected in the emerging dairy consumer goods, including cheese and butter. In the cheese category alone, several niche sectors have appeared, such as children’s cheese sticks and catering cheese.
In the Chinese market, the application of cheese has become more localized through its combination with Chinese cuisines, such as cheese soup base for hot pot, cheese-filling rice cake, cheese milk cap for the new tea beverage, etc.
In addition to cheese, high-end liquid milk also shows bright prospects. New concepts such as organic, grass-fed, A2, super breed of cattle, and cold chain preservation continue to expand the high-end dairy landscape.
Leisure demand
Besides health and functionality, consumers also pin hope on dairy products to bring them more pleasant experiences during leisure time.
Cheese snack is of great potential. The cheese snack market is developing optimistically, with a compound annual growth rate of about 25%, especially over 200% in the third- and fourth-tier markets2.
In addition, dairy can integrate with other food categories, including baking, confection, fruits, pastry, nuts, and grains, to create more innovative product mix. Milk dates (dates covered with milk powder and stuffed with almond), nori cheese, cheese sausage, and meal replacement yogurt with grain are all popular categories in the recent two years.
Hokkai Pastures’ peach jam yogurt looking and tasting like a dessert
The emergence of dairy-related snacks also reflects consumption upgrades from simple and single product forms like milk tablets to premium cheese products featuring more enriched nutrition.
