‘Huge China dairy potential’: Yili predicts rising demand for value-added and sustainable products

By Pearly Neo

- Last updated on GMT

Chinese dairy giant Yili has predicted that local consumer demand for value-added and sustainable dairy is likely to increase over the next decade. ©Yili
Chinese dairy giant Yili has predicted that local consumer demand for value-added and sustainable dairy is likely to increase over the next decade. ©Yili

Related tags Yili China Dairy

Chinese dairy giant Yili has predicted that local consumer demand for value-added and sustainable dairy is likely to increase over the next decade, with the backing of technological innovation to solve local industry challenges.

Yili recently presented at the virtual Global Dairy Congress , where it also walked away as the only award winner from Asia at the World Dairy Innovation Awards with three of the most-coveted awards: Best Dairy Drink, Best Functional Dairy, and Best Packaging Design.

Speaking to FoodNavigator-Asia​ after the congress, Yili Assistant President Dr Yun Zhanyou emphasised his confidence in the growth of the Chinese dairy market for the near future and highlighted that Chinese consumers are increasingly on the lookout for value-added and sustainable dairy products.

“Although China's dairy industry is growing at a fast pace, the gap between China's dairy consumption per capita and the world average is still large, which means there is huge potential for future growth - We are confident about the growth of the Chinese dairy market,”​ he told us.

“In addition, the Covid-19 pandemic has raised consumers’ awareness about the importance of healthcare and the health benefits of drinking milk have also been recognized by more consumers.

“As consumers become increasingly health-conscious, they are expecting to see more [value-added] dairy products too. [This is not only limited to nutritional value-adds], as we know local consumers are more willing to try new products that are technologically advanced and can provide cool stories to share in social discussions.

“[The key here is to focus on] technological innovation and developing products featuring a more rational nutritional profile and a compelling brand story, as well as more functional attributes.”

Yili Cute Star 2
Yili's Cute Star drink for kids. ©Yili

As such, examples highlighted here included the three products that won Yili the global awards recently such as the Best Dairy Drink, Cute Star Rub Your Tummy Dietary Fiber Yoghurt Drink, was made based on consumer insights to target children, using a low-sugar formula and packaging design with concave curved radians convenient for kids to grasp with one hand.

The TOORan Black Milk Powder won the Best Functional Dairy based on its formula containing traditional herbs and walnut peptides to support emotional well-being and hair health, with packaging designed to appeal to Gen Z consumers, whereas the SATINE X Palace Museum Product Special Edition range matched premium, high-end attributes to appeal to the ‘cool’ aspect that younger consumers are in search of to share on online platforms.

“[China also has the] Healthy China 2030 national strategy, and increasing milk consumption is an important way to improve dietary structure [and] the National Health Commission’s Dietary Guidelines for Chinese Residents also recommend drinking 300g milk per day for all residents - All of the above have provided strong policy support for the development of China’s dairy industry,”​ said Dr Yun.

In addition, sustainability was also mentioned as another rising trend growing in necessity in China after the country announced plans to reduce carbon emissions, and Dr Yun predicted that local dairy firms will be placing a lot more focus on this area moving forward.

“China [has already announced to] strive to achieve peak carbon dioxide emissions by 2030 and carbon neutrality by 2060,”​ he said – committing to a peak carbon emission in a certain year is to commit to not let this number climb any further after that year.

“[As such], Chinese dairy companies will also become more committed to supporting sustainable development and will actively promote greener and healthier lifestyles.

“This means that products which are green, organic and produced with less carbon will be more popular.”

Solving local challenges with technology
Yili TOORan Black Milk Powder1
Yili's TOORan Black Milk Powder ©Yili

Dr Yun also highlighted that the company’s dedication to innovation is driven by technology, and expressed his belief that technology is also the key to solving current challenges in the overall Chinese dairy industry.

“Quality control [is one major challenge], and Chinese consumers’ growing demands for quality [have led] Yili to use visible GPS to track the transportation of raw milk to ensure milk quality -data from dozens of testing laboratories across the country can be monitored simultaneously at Yili’s headquarters,”​ he said.

“In terms of product innovation, Chinese consumers’ product needs are becoming increasingly segmented, personalised, and diversified. However, the traditional FMCG sales model, which features a long sales chain and hierarchical procedures, makes it difficult to collect real-time consumer feedback and respond quickly, so [here we have turned to big data] for feedback.

“In terms of business management, [we have seen that] it is necessary to improve the level of automation, transparency and intelligence to improve efficiency, [hence we use] Manufacturing Execution Systems (MES) intelligent [solutions] and supply chain traceability [to increase business efficiency].”

APAC dairy growth

Yili is also very active in several other APAC markets, especially in South East Asia, and Dr Yun added that the growth of the dairy industry in these places is also happening at a fast pace.

“Emerging markets such as Southeast Asia, both urban and rural, are also experiencing rapid growth in demand for milk,”​ he said.

“Differentiated and innovative products targeting niche demands are also becoming more popular here - For example, Yili's Xujinhuan ice cream, featuring natural puree coating and a refined shape created by liquid nitrogen freezing technology, has achieved great success in the market.

“All in all, we remain optimistic about the dairy market in Asia Pacific.”

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