Dairy companies are paying increasing attention to this segment, mainly because
consumers have recognised the health potential of these products, which offer
greater profits than chilled LAB beverages.
Marketing of ambient LAB beverages relies on the "fresh product
pitch"
The Lactic Acid Bacteria Beverage in the Light Industry Standard (QB1554-1992)
includes both active and inactive (sterilised) products. In other words, even
without active LAB, a product can be called a LAB beverage according to the
national standard.
“The production of fresh LAB beverage is very complicated, incurring high
costs. In general, there are >=1 million active LAB/ml. On the contrary,
ambient LAB beverages, after fermentation and sterilisation, have no active
LAB.
This is a simple process, able to extend the shelf life,” said dairy commentator Wang Dingmian, “Differences in process and quality guarantee period also indicate differences in functions: LAB beverages are of very low nutritive value. They exists only due to the concept of ‘intestinal and stomach healthcare’; however, without active LAB, they are only sweet water.”
“Thanks to the pioneers of fresh LAB beverages, such as Yakult and Weiquan, an
understanding that ‘LAB is beneficial to health’ has been built,” commented Li
Zhiqi, praised as one of the "Top 10 Figures Impacting China's
Marketing"; "Ambient LAB beverages are also marketed for ‘digestion
promotion and intestinal healthcare’, with packaging similar to their fresh
counterparts.
It is hard for consumers to discover the differences, especially
the old and children in remote areas - who are targets for ambient LAB beverages."
Profit drives new ambient LAB beverage launches
Nielsen data shows that over the period 2006-2014, the LAB beverage segment
witnessed a CAGR of 37.1% in sales – a significant success as these products
enjoy average gross profit margins of around 30%. These factors have attracted
new entrants to the segment,which is now worth an estimated USD1.6 billion.
Market leader is Yakult at about 37%, followed by Mengniu at 22%, Weiquan, Junlebao and Yili all at around 10%. (Note: Yakult sells only a fresh variant in China, whereas the other main brands sell in fresh and ambient/long-life versions).
“The sales prices (for fresh and ambient versions) are the same, but the costs
for ambient LAB beverages are lower,” said Zhu Danpeng, a researcher from the
China Food Commercial Research Institute, “The production and transportation
conditions make the cost of the ambient versions 25% lower than for fresh ones,
making them much more profitable. This is why more and more small- and
medium-sized enterprises are launching ambient LAB beverage.”
It is true that, despite different processes, the fresh and ambient products
are priced similarly. For instance, Youyi C (fresh, Mengniu) sells at
USD0.99/340 g (RMB6.5), whilst Xiaoyang (ambient, Fujian Haocaitou Food Co., Ltd.)
is at USD1.1/100g * 4 (RMB7).
New entrants into ambient LAB beverages have included:
Yili, with Changyi 100%
Tingyi (Cayman Islands) Holding Corp. partnering Weiquan Corp. to launch the Weiquan product
Mengniu with Go Chang
In total, there are 80+ brands in the market.
Bright Dairy's "Qingxin Huoli" Ambient LAB Beverage
Source: Bright Dairy & Food Co., Ltd.
Yili's Changyi 100% Ambient LAB Beverage
Source: Baidu.com
This article comes from Dairy Products China News 1603, CCM
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