By Liu Jie (China Daily)
Updated: 2008-01-18 10:59

Increased health consciousness and more marketing have seen double-digit sales growth in milk products, according to a report by global market researcher Euromonitor.

Demand for milk is rising in both urban and rural areas as a result of efforts to promote dairy products as healthy by the government and manufacturers.

Affordable prices of products like ultra-high temperature (UHT) and fresh/pasteurized milk are also encouraging more consumers to drink milk on a daily basis.

Meanwhile, manufacturers have been developing different types of milk to satisfy flavor and health demands. In 2007, milk product sales increased 14 percent to 108 billion yuan.

Flavored milk drinks registered the highest growth of 21 percent in value terms, according to the report. After the successful launch of Mengniu Suan Suan Ru, a UHT milk product with a sour flavor, more players have entered the sub-sector with similar products, such as Yili's You Suan Ru and Sanlu's Suan Suan Ru.

Sales of milk drinks flavored with fruit juice have also seen rapid growth, with Wahaha's Nutrition Express a strong performer. According to industry definitions, milk drinks flavored with fruit juice are referred to as "milk beverages". Milk beverages are usually packaged with trendy designs to attract children and teenagers.

More health and wellness products are available on the market like high-calcium, low-fat or non-fat milk. The report noted these products appeal to those concerned about their health, particularly female consumers in big cities.

Although milk is regarded as inherently nutritious with high calcium content, consumers are increasingly likely to prefer milk fortified with healthy ingredients.

In 2007, the market was mainly controlled by domestic players like Mengniu and Yili, both from the Inner Mongolia autonomous region, the report said.

Yili Industrial Group Co Ltd was unable to defend its No 1 position against Mengniu, but nevertheless saw sales growth of 27 percent in 2006, accounting for 18 percent of value sales. Although the bulk of the company's value sales stem from long-life/UHT milk, Yili has paid more attention recently to milk beverages, which offer higher profit margins.

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