Study: 2.7 billion low-income consumers to drive dairy industry
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 unsustainable costs.
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."