In his presentation on the DAIRY BUSINESS-2018 conference in Kyiv, Jukka Likitalo gave a wide picture of the world dairy trade and general tendencies. Some of the points of his presentation are below.
I would like to draw your attention to the trade of milk powder with vegetable fat. This is now a fast growing market segment. The GIRA consultancy estimates the total market size for fat filled milk powders at about 600 thousand tonnes.
The main market for this product is Western Africa. One of the reasons why vegetable fat-filled milk powders are so successful is their long shelf life. Such powder can be kept longer even when there is no strict temperature control. Its shelf life is longer than that of whole milk powder. It’s also cheaper than WMP and it is ideal for countries with a hot climate and limited cold chain infrastructure. The domestic production in these countries, for example Senegal, is increasing but cannot follow demand. In addition, only a small share of milk in countries like Senegal is processed, about 10%, and raw milk cannot be transported over long distances.
Another factor that is helping the trade of vegetable fat-filled powders is that the import duties for such powders are really low. In most cases they are about 5-10% in that region. All these factors help the growth of this market segment.
Another trend, which I guess is mostly an issue for Western Europe and North America: quite strong increase of sales of alternatives to dairy products, mainly drinks made from vegetable sources. The growth of this segment is significant but the volumes remain small. It is worth to keep this trend in mind. In the EU, a share of around 3% of the fresh milk market and in the US maybe more, 6%, is occupied by plant-based alternatives. What we observe in Europe is a decline in consumption of drinking milk which is not only due to the growing market of dairy alternatives, but because people simply drink less milk and at the same time they consume more other dairy products.
Why would anyone choose a dairy free diet? Some people think that dairy free is simply better – it is considered as more healthy. There are more and more people who become vegans. Their number is estimated now as 1% of the population in the US and probably their share in the EU is similar. So more people who do not eat any products of animal origin. But I think dairy alternatives have challenges as well because they are not able to match the taste of milk and they are less nutritious. They are also quite highly processed products, need a lot of additives, they cost more than regular dairy products, and there is a strong competition from special categories of dairy products that are perceived as more sustainable, such as organic or GMO-free dairy products.
In the EU, people also have a lot of concerns around animal welfare and about how food ingredients are produced – trends like GMO-free or pasture milk. The market for organic dairy is also growing fast in some EU countries, as is demand for “local” products.