Dairy Products China News

It’s notable that the internet in various forms is an increasingly important feature of China’s dairy market, as some of this month’s stories highlight. This seems fitting in light of the revenue growth being seen in this channel: earlier this year data showed online food sales grew by 37% between November 2013 to May 2014 compared with the same period in 2012/2013.

A series of notable pieces of data which have emerged over the last 12 months demonstrating the rapid rate of social change in the country which has facilitated this:

• Willingness to shop online – a recent Nielsen survey found that for 18 out of 22 product categories surveyed across 60 countries and regions, China sees the highest percentage of respondents who are willing to buy online.

• Take-up of mobile payment – a PWC survey shows that 55% of online shoppers in China have used mobile payment for their online purchases, compared with only 19% in the US. Facilitating this has been the major step up in the number of 3G and 4G users locally – by August these numbered 480 million and 30 million respectively according to China Ministry of Industry and Information Technology (MIIT), the combined 510 million comparing with 223 million at the end of 2012. (The number of broadband users reached 198 million from a total 641 million internet users).

No wonder e-retailers are confident: apparently Tmall is now targeting a total transaction value on Double 11 (11 Nov 2014) of RMB50 billion (USD8.16 billion) after its record sales for a single day of RMB35 billion ($5.7 billion) on double 11 2013.

These trends have already had a huge impact on dairy market categories, the two prime examples being UHT milk and infant formula, where players failing to adapt their operations rapidly enough risk being left behind in the scramble for market share. There is potential for huge growth in other areas such as protein supplements and also adult nutritional formula, an under-exploited segment: Kantar Worldpanel reports that 26% of China’s older families now shop online – a rise of 49% compared to 2 years ago.