China has not traditionally presented significant opportunities for foreign dairy companies, but the tastes of Chinese consumers are changing fast and this has been reflected in the recent rapid growth in sales of dairy products. As retail buyers have squeezed the margins in Europe and North America, Asia has become an increasingly attractive market, particularly for suppliers based in Australia and New Zealand.

In 2006, total dairy consumption in China reached 19 million tonnes and the market has grown at a compound annual growth rate of over 10 percent since 2003. Consumption per capita is still low and the chilled product supply chain is still developing, so companies need the right strategy to identify areas of opportunity, penetrate the market and distribute their products effectively.

While per capita consumption levels are low, the size of the market and its potential for sustained growth mean China’s impact can no longer be ignored. Demand from China is already having a bearing on market prices for many dairy products across the world.

This report, produced by KPMG China’s Commercial Due Diligence team, focuses mainly on the growth in demand for staple milk products in China, but will also be relevant to anyone involved in producing and trading other dairy-related products such as butter fats and ice cream. This report touches on emerging challenges facing the dairy industry in areas such as logistics, distribution, marketing, quality and safety.

KPMG findings:

• China’s dairy market is large and growing, but it is also a fragmented market that presents unique challenges for food and dairy companies.
• For some product categories, China is still highly import-dependent, creating opportunities for investment and market penetration of new products.
• Government policy is supportive of the dairy sector and importers face relatively few barriers, compared to many more mature markets.
• There are opportunities for international food and dairy companies to introduce and help develop the downstream and distribution functions as the dairy market matures.

Download The milk and dairy market in China

PDF format, 736KB, 12Pages. Provided by KPMG China.

About KPMG

Overview

KPMG is a global network of professional firms providing audit, tax, and advisory services, with an industry focus. The aim of KPMG member firms is to turn knowledge into value for the benefit of the firms' clients, people, and the capital markets. With more than 123,000 people worldwide, member firms provide audit, tax, and advisory services in 145 countries.

About KPMG China

KPMG China has eleven offices (including KPMG Advisory (China) Limited) in Beijing, Shenyang, Qingdao, Shanghai, Chengdu, Hangzhou, Fuzhou, Guangzhou, Shenzhen, Hong Kong and Macau, with more than 7,000 professionals.

In 1992, KPMG became the first international accounting firm to be granted a joint venture licence in China, and our Hong Kong SAR operations have been established for over 60 years since 1945. This early commitment to the China market, together with our unwavering focus on quality, has been the foundation for accumulated industry experience, and is reflected in our appointment by some of the China's most prestigious companies.

As China businesses join the global economy and international companies seek to enter the China market, KPMG's blend of international experience and local knowledge makes us well-positioned to serve our clients in this increasingly complex, but exciting market.

Our single management structure for all our China offices allows efficient and rapid allocation of experienced professionals wherever the client is located in China. The flexibility of this single structure allows us to effectively serve companies across China - and we have many projects where professionals from different offices work together on a project under the supervision of a single nominated client partner, who has operational control of all resources.

Our business in China has established industry groups, enabling targeted, industry-specific experience and solutions to be delivered where needed. For our clients, this focus on industry and country specific knowledge means we can deliver exceptional people with an intimate knowledge of your specific business issues, as well as an overriding commitment to strive for the highest quality services.

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