DENNIS JÖNSSON Dairy will become a more globalised business in the next 10 years
Changing dairy consumption patterns in developed markets and rising consumption in emerging markets is resulting in increased trade from dairy producing countries to emerging markets, says Swiss food packaging and processing multinational Tetra Pak CEO Dennis Jönsson.
Emerging market demand is booming and global dairy production will not be able to keep pace with the growing demand, despite higher output in dairy producing countries and investments in emerging markets to boost local supply.
“Global dairy consumption is expected to rise by 36% between 2014 and 2024 to reach 713-million tons of liquid milk equivalent,” says Tetra Pak South Africa MD John Strömblad.
This increase is being fuelled by population growth, rising prosperity and urbanisation in Africa, Asia and Latin America. This booming demand is predicted to put pressure on prices and profits by exposing a supply deficit within the next ten years.
Increased demand from countries such as India and China and regions such as the Middle East and Africa will not be met locally and supply from traditionally export-led countries will struggle to keep pace, creating a latent demand gap.
Global white milk consumption is forecast to rise by 1.8% a year between 2013 and 2016 to reach 223-billion litres.
Developed country dairy consumption patterns indicate a preference for nutritional benefits and higher-value dairy products, such as flavoured milk, yoghurt and fruit juice-blended drinking products, associated with lifestyle changes in these countries.
“Dairy will become a more globalised business and milk products will increasingly travel around the world. The Tetra Pak Dairy Index 2014, which aggregates data from a network of dairy experts and companies in 170 countries, indicates that dairy companies must provide new products in their domestic markets and seize fluctuating opportunities in emerging markets.”
Investments to increase dairy production in emerging markets has also boosted demand for dairy processing equipment, with the milk powder processing equipment market expected to grow at 5% a year between 2014 and 2020. This will increase the market from the current €551-million to €740-million.
“Tetra Pak is engaging potential partners to complement its local facilities and is strengthening its competencies to meet demand for processing equipment. It is also looking at its processing equipment manufacturing strategy to meet demand as quickly and as well as it can,” says Jönsson.