China Dairy Market Share
The dairy market in China has evolved rapidly over the past few decades, driven by changing consumer preferences, increasing urbanization, and rising income levels. Historically, dairy consumption in China was relatively low, with the country having limited dairy production due to cultural factors. However, as China has undergone significant economic and social transformations, dairy products, particularly milk, have become a vital part of the Chinese diet. Today, China is one of the largest dairy markets in the world, and its demand for dairy products continues to increase, making it an essential player in the global dairy industry.
In 2023, the value of China’s dairy market was estimated at over USD 80 billion, with a projected growth rate of approximately 6-8% annually. This growth is primarily fueled by urbanization, which has led to greater accessibility to dairy products in both urban and rural areas, and the growing awareness of the nutritional benefits of dairy. As a result, dairy products have increasingly become a staple in Chinese households, with consumers embracing not only traditional dairy items like milk and yogurt but also modern dairy-based products such as cheese and ice cream.
The dairy market in China is not only large but also highly competitive, with domestic and international players vying for market share. Domestic companies, such as Mengniu and Yili, dominate the market, but global dairy giants such as Nestlé, Danone, and Fonterra have also established a strong presence in China. These companies face a dynamic and rapidly changing market environment that includes evolving consumer tastes, regulatory policies, and the need to meet high safety and quality standards.
Key Segments of China’s Dairy Market
China’s dairy market can be divided into several key segments based on product types and consumer preferences. These segments include milk, yogurt, cheese, ice cream, and powdered dairy products, each of which is growing at different rates and meeting the demands of a diverse consumer base.
1. Milk
Milk is the cornerstone of China’s dairy industry, and its consumption has grown substantially over the years. The rise in health-consciousness, especially among the middle class, has led to an increasing demand for fresh, pasteurized milk. As of 2023, milk accounted for roughly 45% of the overall dairy market in China, valued at approximately USD 36 billion.
The Chinese dairy market has seen a significant shift from traditional milk-based beverages to packaged, ready-to-drink milk products, which are more convenient for the busy lifestyles of urban consumers. The increasing popularity of flavored milk, including chocolate and strawberry varieties, has also helped boost the consumption of milk in China. Furthermore, the demand for organic and premium milk products has been rising steadily among higher-income consumers.
The rise of e-commerce in China has also contributed to the growth of the milk market, with online platforms offering convenient access to a variety of milk products. The expansion of dairy farms and improvements in dairy farming technology in China have allowed local producers to meet this growing demand and increase their market share.
2. Yogurt
Yogurt is one of the fastest-growing segments in China’s dairy market, driven by rising awareness of the health benefits of probiotics and the popularity of yogurt-based snacks. In 2023, the yogurt market in China was valued at approximately USD 20 billion, representing 25% of the total dairy market. This growth is primarily attributed to the increasing demand for functional foods that promote digestive health and boost immunity.
Yogurt in China is available in a variety of forms, including traditional yogurt, drinkable yogurt, and yogurt with fruit and other additives. The introduction of premium yogurt varieties, including Greek yogurt and plant-based yogurt alternatives, has contributed to the diversification of the market. As consumers become more health-conscious, there is also a growing trend toward low-sugar, low-fat, and high-protein yogurt products.
The rise of yogurt as a snack option, especially among younger consumers, has further fueled market growth. With the increasing availability of yogurt products in supermarkets, convenience stores, and through online channels, the yogurt segment is poised for continued expansion in the coming years.
3. Cheese
Cheese is still a relatively new product category in China, where it has traditionally been less popular compared to other dairy products. However, cheese consumption has been increasing steadily as China’s younger, urban population becomes more exposed to Western food cultures and as the demand for more varied culinary experiences rises. In 2023, the cheese market in China was valued at approximately USD 5 billion, accounting for about 6% of the total dairy market.
The growth in cheese consumption in China can be attributed to several factors, including the growing popularity of Western-style foods such as pizza, pasta, and burgers, all of which typically feature cheese as a key ingredient. Additionally, the rise of international fast-food chains and the expansion of the snack food market in China have contributed to the increased consumption of processed and mozzarella cheeses.
Despite the rapid growth, cheese remains a niche product in China compared to other dairy products, and much of the demand is concentrated in higher-income urban areas. The majority of cheese consumption is still centered around processed and mozzarella varieties, but the increasing availability of premium cheeses and the introduction of diverse cheese types, including soft and hard cheeses, are expected to drive further growth in the market.
4. Ice Cream
The ice cream market in China has experienced rapid growth, driven by rising incomes, urbanization, and a growing demand for frozen desserts. As of 2023, the ice cream market in China was valued at around USD 9 billion, accounting for approximately 11% of the overall dairy market. This segment has benefited from a combination of local and international brands offering a wide variety of ice cream products, including traditional, premium, and innovative frozen desserts.
Chinese consumers’ increasing preference for indulgent treats, coupled with the rise of online grocery shopping and home delivery services, has driven demand for ice cream products. Additionally, ice cream consumption is expected to continue growing as younger consumers increasingly view ice cream as a snack or a treat, rather than just a seasonal dessert.
The market for ice cream in China is also evolving as new flavors, ingredients, and formats are introduced to cater to the diverse tastes of consumers. The demand for healthier, lower-sugar, and plant-based ice cream options is also increasing as part of the broader trend toward healthier eating.
5. Powdered Dairy Products
Powdered dairy products, including infant formula, powdered milk, and other milk-based powders, are an essential part of the dairy market in China. The demand for powdered dairy products has been particularly strong in the context of infant nutrition, as Chinese parents continue to seek high-quality nutrition for their children. In 2023, the powdered dairy product market in China was valued at around USD 10 billion, representing 12% of the total dairy market.
The growing middle class, higher disposable incomes, and increased awareness of the importance of infant nutrition have contributed to the sustained growth of the powdered dairy market. China is one of the largest importers of infant formula in the world, with a large portion of this demand met by international brands such as Nestlé, Mead Johnson, and Danone.
The market for powdered milk and other milk-based powders is also expected to grow as more Chinese consumers adopt powdered milk as a substitute for fresh milk, particularly in regions with limited access to fresh dairy products.
Major Players in China’s Dairy Market
China’s dairy market is characterized by intense competition, with both domestic and international companies playing a significant role in shaping the market’s dynamics. The major players in this market include both homegrown giants such as Yili and Mengniu, and global dairy companies like Nestlé, Danone, and Fonterra. These companies are involved in the production, marketing, and distribution of dairy products across various segments, from fresh milk to yogurt, cheese, and powdered dairy products.
1. Yili Group
Company Overview
Yili Group is one of China’s largest dairy companies and a dominant player in the dairy market. Founded in 1999 and headquartered in Hohhot, Inner Mongolia, Yili is the leading supplier of dairy products in China, including milk, yogurt, cheese, and ice cream. The company is also one of the largest dairy producers in the world by revenue.
Market Position
In 2023, Yili controlled approximately 21% of the Chinese dairy market, making it the largest dairy company in the country. The company’s extensive product range includes both mass-market and premium dairy products, which cater to a wide variety of consumer preferences. Yili has also expanded internationally, with a strong presence in countries such as New Zealand and Australia.
Challenges and Opportunities
Yili faces significant competition from other domestic giants like Mengniu and international players like Nestlé. However, its continued focus on innovation, health-conscious products, and international expansion provides a strong foundation for future growth. The increasing demand for functional foods and dairy-based snacks presents additional opportunities for Yili.
2. Mengniu Dairy
Company Overview
Mengniu Dairy, founded in 1999 and headquartered in Hohhot, Inner Mongolia, is one of China’s largest dairy producers and a major competitor to Yili. The company produces a wide range of dairy products, including milk, yogurt, ice cream, and cheese, and is a well-known brand in the Chinese market.
Market Position
Mengniu holds a significant share of the Chinese dairy market, with an estimated market share of around 19% in 2023. The company is particularly strong in the yogurt and milk segments and is known for its wide distribution network across China. Mengniu has also made strategic acquisitions in recent years, including the purchase of Australian dairy company Bellamy’s, which has helped expand its product offerings.
Challenges and Opportunities
Mengniu faces strong competition from Yili and other international dairy brands in China. However, the company’s ability to offer a diverse product range and its strong position in both premium and mass-market dairy products give it opportunities for continued market leadership. The growing trend of premiumization in the dairy market is an area where Mengniu can capitalize.
3. Nestlé
Company Overview
Nestlé, a global leader in food and beverages, is also a significant player in China’s dairy market. The Swiss multinational company produces a wide range of dairy products, including milk, yogurt, infant formula, and powdered milk, and has a substantial presence in the Chinese market.
Market Position
In 2023, Nestlé held a market share of approximately 10% in China’s dairy market, primarily driven by its strong portfolio of powdered dairy products and infant formula. Nestlé’s brand recognition and reputation for high-quality products have made it a trusted choice among Chinese consumers, particularly for infant nutrition.
Challenges and Opportunities
Nestlé faces growing competition from local companies like Yili and Mengniu, as well as other international players. However, its long-standing presence in China and strong emphasis on nutrition and innovation offer significant opportunities for continued growth, particularly in the powdered dairy and infant formula segments.
4. Danone
Company Overview
Danone is a French multinational food-products company that has a prominent presence in China’s dairy market. Known for its yogurt products, Danone also produces milk, bottled water, and baby food. The company’s dairy products are particularly popular in China’s yogurt segment, where it offers both traditional and premium yogurt options.
Market Position
Danone holds a market share of approximately 5% in China’s dairy market as of 2023. The company’s Danone and Activia yogurt brands are highly recognized, and it is also a significant player in the infant nutrition market.
Challenges and Opportunities
Danone faces competition from both local Chinese dairy companies and other international brands. However, its strong portfolio in the yogurt and functional foods segments offers opportunities for continued expansion. The growing health-consciousness of Chinese consumers presents an opportunity for Danone to leverage its probiotic and low-sugar product offerings.
5. Fonterra
Company Overview
Fonterra is a New Zealand-based dairy cooperative and one of the largest dairy exporters globally. The company produces a range of dairy products, including milk, cheese, butter, and infant formula, and has a growing presence in China.
Market Position
Fonterra’s market share in China’s dairy market is smaller than that of domestic players like Yili and Mengniu, but the company is well-positioned in the infant formula and powdered milk segments. In 2023, Fonterra controlled around 4% of the Chinese dairy market, with a focus on premium dairy products.
Challenges and Opportunities
Fonterra’s challenges in China include strong competition from both local and global brands. However, its focus on high-quality dairy products and its reputation for premium offerings in the infant formula market presents opportunities for growth in the evolving dairy landscape in China.