Market Overview & Key Trends in Dairy Products

Dairy products with a positioning in terms of gut health, digestion and immune support have experienced significant increases as preventative health and nutrition have been catalysts for their popularity. However, claims on labelling such as high protein, organic and no added sugar are also growing as consumers increasingly view food as medicine.

According to Euromonitor International’s Voice of the Consumer: Health and Nutrition Survey, 60% of consumers from the APAC region responded that having a strong immune system defines what being healthy means for them¹. Health claims become increasingly important to global consumers with 43% of respondents from Euromonitor International’s Lifestyles Survey paying close attention to nutritional information and labelling, highlighting the significance of clear labels and messaging². Australian consumers in particular look for nutritional benefits from their food intake with 55% in the Lifestyles survey responding that they look for healthy ingredients in their purchases³.

‘At home’ and hybrid lifestyle changes eating patterns and habits - dairy products as well

Many consumers globally are staying at home more often and adopting a hybrid lifestyle, with a strong shift towards a flexible pattern of eating at times that are convenient, bringing about a wave of changes in pack sizes and product formats.

As consumers around the world try reducing lifestyle expenses due to the rising cost of living, dairy products are positioned for elevated consumption experiences at home.

Immunity and gut health continue to be hot topics in the industry and the pandemic has further supported demand for immune-boosting yoghurt variants, which is likely to remain a relevant trend in the category as consumers lean towards products that highlight wellness.

Emerging markets are delivering the fastest growth for cheese and in particular Asia is expected to witness a 7% CAGR over the forecast period which has been largely driven by strong growth in China⁴.

^{Figure 1: Euromonitor International4}

What’s next for dairy products?

The overall dairy industry is set to deliver strong value growth globally in 2022 of 3.4%, to reach retail value sales of USD642 billion. On the flip side, volumes are estimated to be down by -0.6%, reflecting inflationary pressures and its impact on dairy prices⁵.

Supply chain bottlenecks, rise in fertiliser prices, the more recent impact of the Russia-Ukraine conflict and the subsequent spike in oil prices are having a knock-on effect on all aspects of the economy, ultimately leading to higher prices for consumers and increasing operating costs for businesses.

2022 is shaping up to be a year of historic increases in retail selling prices for dairy products and this should be reflected in higher prices for consumers as well as changes to the package mix across channels.

Major players globally seem to be investing in a portfolio of brands with different price ranges that allow consumers pressured by inflation to downgrade without changing the parent company they trust.

However, consumer interest in fortified products and foods with functional claims continues to soar, as many people are looking to supplement their diets with immune-boosting nutrients and to improve gut health. At the same time, there is increasing interest around functional products positioned to help aid sleep, relaxation and mood management in order to cope with ongoing stressors.

The views expressed above are the opinion of the author, not those of Fonterra, and Fonterra is not responsible for any decisions taken in reliance on the same.