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November 25, 2009

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8% growth for dairy revenue after crisis

CHINA'S dairy market is expected to post an 8 percent sales revenue growth this year as consumers seek more reliable higher-priced products after the melamine crisis, according to industry analysts.

China's dairy market is forecast to post revenue of 160 billion yuan (US$23.4 billion) this year, up from 148 billion yuan last year, Rabobank analysts said.

The forecast was based on listed dairy companies' third-quarter reports and market analysis, the bank said.

"Chinese consumers shifted to more reliable brands which offer more value-added premier products after the melamine crisis," said Jean-Yves Chow, Rabobank's senior analyst in North East Asia, yesterday in Shanghai.

China's dairy market was hard hit by the melamine crisis in 2008, which damaged consumer confidence in the industry. However, this year saw rapid recovery and the dairy industry revenue will be eight times the figure in 2000.

Rabobank analysts said they expect China's dairy market to post steady growth in the coming years, boosted by growing incomes.

Chow said the penetration of dairy products in less developed second and third-tier markets will also support the growth of dairy industry revenue in the future.

China posted a strong growth despite the global financial crisis.

China's economy expanded 8.9 percent year on year in the third quarter, up from the rise of 7.9 percent in the second quarter and 6.1 percent in the first quarter. Earlier this month, the World Bank raised its forecast for China's economic growth this year to 8.4 percent from 7.2 percent.


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