A new research has identified 2.7 billion low-income consumers in developing countries as the global dairy industry’s next big growth opportunity due to an expected rise in prosperity, purchasing power and desire for packaged liquid dairy products (LDP).
Study shows that consumption by low-income consumers in developing markets is forecast to increase from about 70 billion litres in 2011 to almost 80 billion litres in 2014, according to the Dairy Index, which tracks worldwide facts, figures and trends in the global dairy industry. Many of these consumers are expected to switch in coming years from drinking loose milk to packaged milk.
The study was conducted by the Tetra Pak, the world’s leading food processing and packaging company. Tetra Pak President and CEO Dennis Jönsson said, “Low-income consumers represent one of the biggest growth opportunities for the dairy industry. The key to tomorrow’s success is reaching these consumers today,” he maintained.. “They make up almost 40 percent of the world’s population and live in economies driving our industry’s growth and they are growing more affluent.”
These low-income consumers live on Rs180 to Rs750 a day and are virtually untapped by today’s dairy processors. Called Deeper in the Pyramid (DiP) consumers by Tetra Pak, they make up about 50% of developing countries’ population and consume 38 percent of LDP in developing countries. The Tetra Pak research focused on Pakistan, India, Indonesia, Brazil and Kenya, which together account for more than 76 percent of LDP consumption by DiP consumers in developing countries. Many DiP consumers are expected to grow in affluence, shifting from low to middle incomes by the end of the decade, boosting their purchasing power and the range of products they buy. As they gain the increase in spending power along with greater awareness of food safety and a need for convenient, ready-to- drink solutions is expected to increase the demand for packaged products. “Today’s low-income consumers are tomorrow’s middle class,” said Azhar Ali Syed, Managing Director Tetra Pak Pakistan, noting “this is a golden opportunity for dairy processors to cultivate consumer loyalty among a new generation of dairy consumers in developing countries such as Pakistan.” Tapping into this market is not without its challenges, according to the report. Tetra Pak has identified three key challenges for dairy processors seeking to reach consumers in this growth market. They need to make products which are affordable, available and attractive to consumers on limited incomes. That means dairy processors must produce healthy, safe and nutritious packaged dairy products without adding unsustainable costs. They must also make them available in small traditional stores in remote rural areas or congested cities where low income consumers shop.