Around 2.7 billion low-income consumers in developing countries has been identified as the dairy industry's next big growth opportunity due to an expected rise in prosperity, purchasing power and desire for packaged liquid dairy products (LDP), according to a research by Tetra Pak, a global food processing and packaging company.
Consumption by low-income consumers
in developing markets is forecast to increase from about 70 billion liters in
2011 to almost 80 billion liters in 2014, according to the Dairy Index, which
tracks worldwide facts, figures and trends in the global dairy industry. Many of these consumers are
expected to switch in coming years from drinking loose milk to packaged milk.
"Low-income consumers represent
one of the biggest growth opportunities for the dairy industry. The key to
tomorrow's success is reaching these consumers today," says Tetra Pak President and CEO Dennis Jonsson.
"They make up almost 40% of the world's population and live in economies
driving our industry's growth and they are growing more affluent."
These low-income consumers live on
$2-$8 a day and are virtually untapped by today's dairy processors. Called
Deeper in the Pyramid (DiP) consumers by Tetra Pak, they make up about 50% of
developing countries' population and consume 38% of LDP
in developing countries. Half of these DiP consumers live in India and China.
The Tetra Pak research focused on
six countries which account for more than 76% of LDP consumption by DiP
consumers in developing countries - India, China, Indonesia, Brazil, Pakistan
and Kenya. "India offers a tremendous growth opportunity with over 220
million DiP consumer households," says Tetra Pak South Asia Markets
Managing Director Kandarp Singh.
"Contrary to what we have known
for some time, this consumer segment is not only looking for affordability but
has also become increasingly demanding on quality. We have been developing
packaging solutions to address this segment and are very pleased to note that
during the past years, our customers have launched several products across
geographies in the dairy category at single coin-price points. The market
response has been very positive and we continue to see double-digit growth rates
in this segment," he adds.
Many DiP consumers are expected to
grow in affluence, shifting from low to middle incomes by the end of the
decade, boosting their purchasing power and the range of products they buy. The
increase in spending power along with greater awareness of food safety and a
need for convenient, ready-to- drink solutions is expected to increase the
demand for packaged products.
Tetra Pak has identified three key
challenges for dairy processors seeking to reach consumers in this growth
market. They need to make products which are affordable, available and
attractive to consumers on limited incomes. That means dairy processors must
produce healthy, safe and nutritious packaged dairy products without adding
They must also make them available
in small traditional stores in remote rural areas or congested cities where DiP
consumers shop. Innovation and efficiency will be vital in helping the industry
to develop products, packaging and processing to meet the needs of these
low-income consumers, according to the report."
Study: 2.7 billion low-income consumers to drive dairy industry
May 8, 2012