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Research Report on Supply & Demand of Milk Powder and Market Competition in China
Beijing Orient Agribusiness Consultant Ltd, Aug 2011, Pages: 100
The report makes panoramic analysis on Chinese milk powder market, including the supply of raw milk, production and consumption of dairy products and milk powder, import and export trade, supply and demand environment of world milk powder market, policy environment of China’s milk powder market, marketing environment and competition environment, and forecast of the development trend of the market. The data cited in the report is full and accurate, involving the historical data of many years.
Background
Before the mid-1990s, milk powder was the main dairy products in China, at that time formula were mainly foreign brands, while domestic products were mainly whole milk powder and whole sweet milk powder. However, with the infiltration of aseptic filling products of TetraPack,UHT milk got a fast development in China after the mid-1990s, promoting the consumption structure of dairy products in China shifted from milk powder as major dairy products to liquid milk as major. Currently, liquid milk accounts for the vast majority of dairy product consumption of Chinese inhabitants, while milk powder consumption also sees great changes from all the people to special class such as infants, pregnant women and quinquagenarians, from ordinary whole milk powder and whole sweet milk powder to formula. Infant formula accounts for larger proportion in the milk powder in terminal market, has been a focus that domestic and foreign milk powder enterprises pursues.
In China, according to applications, milk powder is classified to two types; the one is small packing milk powder, facing terminal market directly and accounting for 65-70% of total milk powder. As milk powder processing includes dry blend and wet process, certain part of small packing milk powder is transformed from big packing ones; the other one is industrial milk powder, including whole milk powder and skim milk powder. According to BOABC, industrial milk powder accounts for 30-35% of the total milk powder, if take the part used in small packing milk powder processing into consideration, that output of industrial milk powder in China occupies more than 80% of the total quantity of milk powder. In recent years, the cost performance of domestic skim milk powder is obviously lower than the foreign ones, so domestic products were gradually replaced by imported skim milk powder. Now the proportion of domestic skim milk powder in milk powder is less than 3%. Generally, industrial milk powder is one important ingredient of dairy products (such as formula, raw milk, yogurt and ice cream) and milk foods (such as bread, cake, biscuit, milk chocolate and milk beverage).
Now, as quality and safety scandals of milk powder in Chinese market happen occasionally, especially after the exposure of melamine event in September, 2008, dairy products (including milk powder) enterprises become the key supervised entities of government. According to the statistics of AQSIQ from local quality supervision departments, by March, 31, 2011, in 1176 dairy products enterprises (include 145 infant formula companies) in China, 643 enterprises of them have passed the re-examination of Production Permission (include 114 infant formula companies and 170 whole milk powder enterprises), 107 companies have been suspend operation pending consolidation, 426 enterprises haven’t passed the examination. Compared with liquid milk, the concentration of milk powder market in China is much lower. According to BOABC, now the production of the top ten milk powder enterprises in China accounts for 60% of the total output of our country.
Now, the international characteristics of Chinese milk powder market are increasingly prominent. With the reduction of tariff, the relationship between China and major world trade economies is growing closer, for example China has become the second largest market after US for New Zealand exports and the largest export market of milk powder. China is one of the most important export markets of American whey products, at the same time EU is one of the most important suppliers of skim milk powder and whey products for China. In recent years, relevant policies and productions of dairy products went through some significant changes in the Oceanic countries, EU and United State. Droughts in Oceanic countries led to the reduction of raw-milk output, so the production and exports of milk powder also decreased. EU canceled production subsidy and export subsidy of milk powder and butter, resulting in the decrease of milk powder production profit, which has impacts on the production and export of milk powder in EU. In addition, EU and United State preferred cheese/whey to milk powder/ butter, all these factors resulted in the shoring price of milk powder in recent years, especially the price of whole milk powder. Milk powder, particularly whole milk powder is the ingredient of many dairy products and milk foods, and wildly used in food processing industry, the shortage of milk powder supply arouses the wild concern of the industry in domestic. According to the tracking investigation of BOABC, quite a few listed dairy product companies in China in recent years are milk powder enterprises such as Feihe, Beingmate, ASHLY, Ausnutria and Global Dairy, China added 1 billion yuan investment on milk powder industry with a capacity of 100,000MT. In export, since 2010, milk powder export in China has seen recovery increase and signed free trade agreement with “ASEAN” who applied zero tariff treatment to milk powder exported to Southeast Asian Nations.
China has reached free trade agreement with Chile, and milk powder exported to Chile also enjoyed preferential policy. In addition, affected by weather, the supply ability of raw-milk of Oceanic countries decreased, which influenced the production and supply of these two nations, leading to the insufficiency in traditional market. Chinese milk powder export is expected to keep recovery growth. Of course, the sustained strong RMB exchange rate against USD also had some adverse impacts on China’s milk powder trade. In short, the market environment of domestic milk powder industry saw great changes, had or will have far-reaching influence on the development of the industry.
BOABC and dairy products analysts have been engaged in domestic and international research on dairy industry for many years, and provided consultation services for related departments of the government, foreign institutions in China, multinational companies and domestic large-medium enterprises, enjoyed a higher popularity in the industry. So far, system special research on Chinese milk powder market is a black in China. The report makes panoramic analysis on Chinese milk powder market, including the supply of raw milk, production and consumption of dairy products and milk powder, import and export trade, supply and demand environment of world milk powder market, policy environment of China’s milk powder market, marketing environment and competition environment, and forecast of the development trend of the market. The data cited in the report is full and accurate, involving the historical data of many years. The report makes particular analysis on the data since the melamine event. The data of the report is authoritative, including the first hand information from our interview on milk powder processing enterprises and dealers and second hand data from China Customs, China dairy industry association, Dairy Association of China, State Statistics Bureau, the Ministry of Agriculture, CNCIC, United States Department of Agriculture and FAO. We hold that the research report is a valuable reference for the enterprises and institutions which pay close attention to China’s milk powder market.
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