Chinese consumers get a taste for premium milk with added benefits

April 20, 2015
4 min read

Premium milk has gained momentum in China, with the Chinese market appearing more open to more functional milk products. In the six months to January 2014 36% of urban Chinese consumers spent more on premium milk and another 25% bought more pasturised milk that must be refrigerated; suggesting an opportunity for functional milk in China.

In terms of factors consumers would be willing to pay more for, freshness of milk is rated very highly, with almost half of urban Chinese consumers agreeing they would pay more for fresh liquid milk. Similarly, just over a quarter would pay more for milk with additional health benefits, such as extra fibre for weight controls or vitamin-fortified. This is followed by a quarter who would pay more for milk that is customised for different demographics, for example, calcium-fortified milk for women.

Coca-Cola’s Fairlife: A new type of milk?

Coca-Cola’s Fairlife milk in the US is a recent example of a functional milk launch. It contains an impressive portfolio of attributes, containing 50% more natural protein, 30% more natural calcium, is lactose free and has 50% less sugar than regular milk. It is commendable that the product contains extra natural protein and calcium, instead of fortifying it with non-fat dry milk and calcium carbonate respectively.

57% of Chinese users think that imported milk is safer to drink than domestic milk

Fairlife, which Coca-Cola formed in partnership with dairy co-operative Select Milk Producers in 2012, says its milk encompasses a series of membrane filtration phases to first separate the milk components and then recombine them to the desired specifications.

In the case of Fairlife, 50% lactose would be filtered out and an enzyme lactase added to break down the remaining lactose into galactose and glucose, achieving milk that is both lactose free and that contains 50% less sugar than most milks.

Opportunities for Asia and Latin America to explore functional milk

According to Mintel, the Asia Pacific region leads new product development in the fortification of liquid and flavoured milk globally. There are significant opportunities for manufacturers to develop functional milks for Asian countries, witnessing an improving standard of living and looking to prevent nutritional deficiencies. Latin America is another region where consumers may be interested in functional milk and increasingly have the spending power to afford it.

In China, the majority of consumers consider milk to be overpriced. From low-end milk all the way up to premium milk products are generally perceived as overpriced across income brackets. This may limit putting a substantially higher price tag to premium liquid milk, so more moderate prices to reflect the added value may need to be considered. It may be a risky strategy, for example if manufacturers follow in the footsteps of Fairlife milk and double the price tag, resulting in a very noticeable difference compared to most milk.

Overcoming the price tag

One route to achieving higher prices is via the gifting occasion. Premium milk products are identified by nearly four in five milk users in China as suitable for gifting. This offers opportunities for manufacturers to consider expanding the existing premium milk range to make specifically designed gift boxes for different gifting occasions.

There are also opportunities for manufacturers to consider exporting their milk to China, based on Mintel’s research. It is worth noting that 57% of urban Chinese users think that imported milk is safer to drink than domestic milk because they assume there are fewer additives and expect the imported milk is of a higher quality. As well as this, nearly two in five agree that imported milk tastes better than domestic varieties, indicating a great opportunity for manufacturers outside of China to consider exporting their milk to the Chinese.

There is therefore opportunity for manufacturers to explore membrane filtration processes to develop functional milks that contain all natural components without altering the original taste and flavour of the milk. Particularly in Asia, where consumers value the functionality that premium milk carries, however, they may not be prepared to pay too high a premium for them. Manufacturers therefore need to look for different methods to target consumers, such as packaging premium milk products, suitable for gifting.

Mintel’s Global Food Scient Analyst, Gwen joined Mintel in 2014. She brings with her a wealth of food science and food industry knowledge after holding positions ranging from Research and Development to Technical Support and subsequently Key Account Management. Gwen has worked at many renowned companies namely, Nestle R&D Centre, Fraser & Neave Pte. Ltd., FMC Biopolymer and DSM Nutritional Products.

Gwen Crothers
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