Tetra Pak: Emerging markets to drive dairy industry boom

Packaging giant Tetra Pak has identified 2.7 billion low-income consumers in developing countries as the dairy industry’s next big growth opportunity.

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Tetra Pak has published new research that shows that low-income consumers will, in future, expect a rise in prosperity, purchasing power and a desire for packaged liquid dairy products (LDP).

Consumption by low-income consumers in developing markets is forecast to increase from about 70bn litres in 2011 to almost 80 billion litres in 2014, according to Tetra Pak’s Fifth 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.

“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,” said Tetra Pak president and chief executive Dennis Jönsson.

He added: “They make up almost 40% 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 $2-$8 a day and are virtually untapped by today’s dairy processors, according to Tetra Pak.

India and China

Called Deeper in the Pyramid (DiP) consumers by Tetra Pak, they make up about 50% of developing countries’ population and consume 38% of LDP in developing countries. Half of these DiP consumers live in India and China.  The Tetra Pak research focused on six countries which account for more than 76% of LDP consumption by DiP consumers in developing countries:  India, China, Indonesia, Brazil, Pakistan and Kenya.

The global DiP population is forecast to fall by a compound annual growth rate (CAGR) of 3% a year from 2009-2020. The population living on more than $8 a day is set to rise by 4% (CAGR) annually, according to Boston Consulting Group, which helped Tetra Pak to develop the DiP classification.

“Today’s low-income consumers are tomorrow’s middle class,” said Jönsson, noting “this is a golden opportunity for dairy processors to cultivate consumer loyalty among a new generation of dairy consumers in developing countries.”