DARE NOT TO DAIRY
While it’s not essential to diversify into dairy alternatives, it would be wise for the
dairy industry to at least learn one thing from the success of dairy alternatives,
RaboResearch senior analyst Tom Bailey says…putting the consumer first and
trading in the old ‘grass-to-glass’ model to ‘glass-to-grass’.
Dairy alternatives are on the rise as consumers
are increasingly going dairy-free, particularly
when it comes to fluid ‘milk’ used on things
like cereal or in coffees. More recently, biotechnology
has entered the arena, brewing
milk proteins through biofermentation. The time is right
for the dairy sector to reflect on the success of alternative
dairy products and to consider applying those lessons to
dairy, according to the latest RaboResearch global dairy
report Dare Not to Dairy -- What the Rise of Dairy-Free
Means for Dairy… and How the Industry Can Respond.
Dairy alternatives have competed in the dairy space for
decades, but competition has intensified as dairy alternatives
broaden in types, styles and categories of product.
Global retail sales growth for dairy alternatives has soared
at a rate of 8% annually over the past ten years. With retail
sales valued at USD$15.6bn, dairy-free ‘milk’ represented
12% of total fluid milk and alternative sales globally in
2017, according to Euromonitor. Nutrition, price and flavour
tend to favour dairy, but changing consumer perceptions
around health, lifestyle choices, curiosity and perceived
sustainability are increasingly drawing more people to
select ‘dairy-free’ products. Global demand for dairy is
expected to grow by 2.5% for years to come, with demand
for non-fluid categories offsetting weak fluid milk sales.
While it’s not essential to diversify into dairy alternatives,
it would be wise for the dairy industry to at least learn one
thing from the success of dairy alternatives, which may be
putting the consumer first and trading in the old grass-toglass
model for glass-to-grass. The challenge for dairy lies
mostly in fluid milk, where retail sales in western Europe
(USD$18.6bn) and the US (USD$12.5bn) declined at an
annual rate of 5% and 3% respectively, in the five years to
2017, according to Euromonitor. The results over the past
five years have favoured dairy players who have invested
in milk alternatives across the supply chain – from planting
almond trees to buying brands. The investments in dairy
alternatives have shown returns above standalone dairy.
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FONTERRA
HAPPY
Beingmate Baby & Child Food’s
steps to deal with a labelling
issue found during a widespread
audit by Chinese regulatory
authorities have satisfied
part-owner Fonterra Cooperative
Group. Beingmate was among a
list of infant formula companies
that were in breach of licensing
conditions, but explained that
the issue was how the company
labelled its DHA algae oil powder
ingredient standard. Fonterra
says the issue didn’t relate to
food safety, and Beingmate’s
explanation was accepted by
Chinese regulators the same day
the notice was issued. The company
says the audits carried out
by Chinese regulators are regular
and mandatory, and Beingmate
has been through around 1200
audits already. “The FDA publicly
stated that no unsafe product was
found in the National Supervision
Program, and all necessary
corrective action was taken by
Beingmate.” Chinese authorities
have been hard on food safety
since the 2008 melamine scandal,
when Fonterra’s then-partner
San-Lu added the chemical to
artificially bolster protein levels in
milk products, inadvertently killing
six infants and hospitalising
more than 800 others. China has
introduced tighter registration requirements
for imports after the
explosion of sales through unofficial
online channels known as the
‘daigou’ market. Fonterra owns
an 18.8% stake in Beingmate,
which it bought in 2015 for about
$755 million as part of its plan to
break into China’s second- and
third-tier cities.Fonterra wrote
down the stake by $405 million
in the first half of the current
financial year, calling Beingmate’s
losses “unacceptable.”
22 JULY 2018
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