Archive: Optimistic long-term outlook for dairy as demand set to outpace supply

Published 10 October 14

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Global consumption of dairy products is expected to rise by 36% during the next decade, according to a recent report by Tetra Pak. It states that the outlook for the global dairy industry remains extremely strong, as demand growth is likely to outstrip supply. Population growth, rising incomes and urbanisation in areas such as Africa, Asia and Latin America will remain the key drivers of demand. Although global dairy prices have been in decline for most of 2014, the report supports the view that global demand will sustain prices in the long term. Price volatility will continue but the deficit of supply is likely to bring about a rise in prices over the ten year period, a view also held by the OECD-FAO.

The spectrum of dairy products required is likely to widen as emerging markets continue to demand basic products, while mature markets such as those in Europe create the need for new added-value products. Although consumption in many developed countries is reported to be in decline, the UK is singled out as one market in which liquid dairy product consumption is growing. This has result from both population growth and a number of new product launches in the UK. Products such as flavoured milk and drinking yogurt are also in growth in countries such as Germany and Australia. 

The report highlights that cooperation in the supply chain and industry consolidation will be important in securing sustainable supplies of milk and stable profits for dairy producers – an opinion shared by other organisations including Rabobank. The report concludes that dairy companies will need to be able to react to both the supply and demand challenges of the industry in order to secure its long-term future.