Demand of packaged dairy products grows

The growth of packaged liquid dairy products has increased by 19 per cent per annum during 1999-2009 in Pakistan.

KARACHI: Increasing urban population, more educated consumers and an emerging middle class have helped increase the growth of packaged liquid dairy products (LDP) by 19 per cent per annum during 1999-2009 in Pakistan.

In 2009, LDP consumption reached 18.9 billion litres, keeping Pakistan as the fourth largest LDP consumer in the world after India, China and the United States.

The latest issue of Dairy Index, a bi-annual newsletter which tracks facts, figures and trends in the global dairy industry, has forecast that changing demographics are driving demand of LDP in Pakistan.

First brought out in June 2009 by Tetra Pak, the Dairy Index is based on the company’s vast database (Compass) and unrivalled experience in tracking and analysing category consumption patterns and trends in more than 150 markets around the world.

The Dairy Index says that over the last 10 years, the ratio of urban population in Pakistan has grown by three percentage points and as people move further away from dairy farms, availability and access to fresh, unpackaged milk is significantly impacted.

The increase in urbanisation has also created a more educated and sophisticated segment of consumers, which values safety, hygiene and convenience of processed and packaged milk.

From 2006 to 2009 alone, consumption of packaged LDP grew by 8.4 per cent per annum compared with demand of unpackaged products, which only grew by 2.1 per cent per annum, it said.

Rising population of Pakistan is also increasing the number of people falling into the middle-class category. These people can now afford more premium-priced products such as skimmed milk and ready-to-drink flavoured milk.

Currently, 30 per cent of Pakistan’s population is under nine years of age and 53 per cent is under 19 years. To appeal to these younger consumers, dairy producers have the opportunity to promote ready-to-drink flavoured milk products.

According to Tetra Pak, flavoured milk represents only 2.5 per cent of LDP market. However, it grew by 79 per cent per annum from 2007 to 2009 and is forecast to grow by an additional 23.1 per cent per annum from 2009 to 2012.

The packaged milk industry has been expanding owing to increasing demand. However, industry officials repeatedly voice their concerns over increasing cost of production in the country.

An official of a leading packaged milk company told The Express Tribune that the annual increase in packaged milk prices is 30 per cent mainly because of rising cost of production.

Azhar Ali Syed, Managing Director Tetra Pak, said: “With Pakistan’s population growing by 1.6 per cent annually and total LDP consumption forecast to grow even higher over the years, the dairy industry is expected to remain strong.”

Milk has always played a central role in the diet but with demographic changes driving new preferences, the era of plain, white, unpackaged milk is rapidly changing. “Our dairy industry needs to understand these changes and leverage them as productive opportunities,” Syed added.

Published in The Express Tribune, July 28^th, 2010.