China’s milk production declines as consumer tastes shift

CHINA – According to Yicai Global, China’s milk production has taken a downturn, reflecting a shift in consumer preferences that the dairy industry is struggling to keep pace with.

Once a steadily growing sector, liquid milk production in China fell by 2.8% last year, totalling 27.4 million tons. This decline marks a contrast to previous years, where output had been increasing by more than 2% annually.

The impact of the decline is being felt across the industry. Major dairy producers, including Yili Group, Mengniu Dairy, and Bright Dairy, reported revenue drops of between 8% and 10% last year.

 A complex economic environment, both domestic and international, has led to a slowdown in consumer spending. Additionally, there is a noticeable decline in demand for regular milk, while premium imported dairy products are gaining traction.

China’s dairy industry has long been dominated by liquid milk, but consumption patterns are evolving. The average Chinese citizen consumed 41.5 kilograms of dairy last year, a 5.6% drop from the previous year.

As traditional milk consumption declines, the industry faces a critical juncture: adapt or risk further losses. Research states that the future of China’s dairy sector will depend on its ability to align with evolving consumer preferences and embrace innovation in health-focused dairy products.

While imports of liquid and fermented milk are declining, demand for higher-end dairy products such as cream, condensed milk, and whey protein is on the rise. For instance, cream imports surged by 9% last year, reaching 290,000 tons.

The shift in consumer habits is reshaping the dairy sector. Snacking culture is driving demand for ready-to-eat cheese, while the fitness boom is fueling interest in protein supplements and weight management products.

In response, leading dairy companies are pivoting towards health and nutrition-focused products. Bright Dairy, Yili, and Mengniu have all announced plans to invest more in functional dairy products and advanced processing techniques.

To cater for the growing demand, industry experts believe that innovation must focus on three key areas: developing probiotics for specific health needs, deepening research into dairy nutrition, and creating functional dairy products for healthy ageing.

With China’s ageing population growing, the demand for nutritional products tailored to older consumers presents a significant opportunity for the dairy industry.

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