The dairy products market represents the expected evolution for the period 2017-2027. worldwide. Specifically, the compound growth rate is estimated to be 5.35% per year, according to consulting firm Mordor Intelligence.
Likewise, analysts at Rabobank – a Dutch financial entity founded in 1972 specializing in the international agricultural sector – expect some growth in the sector’s production during 2023. However, this growth is likely to be moderate due to ongoing cost pressures faced by dairy farmers as liquid milk prices milk is weak.
Therefore, it is assumed that during the first half of the current year, milk production in the main export regions at the global level will grow by only 1%.
As a result of this combination of costs and income, a decline in the growth of the supply of dairy products and weaker demand in the markets is generally expected.
In this regard, it is estimated that the recession in the sector will depend on the extent of the reopening of the Chinese economy, as well as the trade flow generated in the Northern Hemisphere.
Therefore, high food price inflation, combined with a modest recovery in milk production, can be expected to weaken dairy markets.
- Indeed, consumer budgets are expected to be affected by widespread food price inflation, the impact of which may vary by region and individual subsectors.
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Consequences of the pandemic on the dairy market
In this sense, it can be seen that the recent COVID-19 pandemic has affected daily life around the world, although the dairy sector has remained relatively stable during this period.
However, the reduction in the overall average level of gross domestic product in many countries as a result of the pandemic has clear implications for the dairy sector.
Since the consumption of this food segment is related to the increase in per capita income in certain regions, it should be noted that:
- European Union (EU) turned out to be the largest producer of bovine milk in the world during 2022, a year in which the 27 countries that make up the EU together produced around 144 million metric tons of this basic input.
- On its part, NOW (USA) – with 102 million metric tons – and India – with 97 million – were in second and third place.
- Argentina With its almost 12 million tons, it ranked tenth in the world ranking, which was approximately 547 million total metric tons, worth 893 billion US dollars during 2022.
In this context, demand for the universe of basic and processed dairy products has remained relatively stable in the US despite rising prices. In contrast, European consumers began to feel the effects of higher prices at the retail level.
Similarly, the demand in China decreased due to policies of closing access to places affected by the COVID pandemic with disruptions in transport logistics to food service outlets. This affects the level of stocks in general, especially in the offer of imported products.
However, import demand from the dairy market is expected to pick up again in the second half of 2023. This will depend on measures adopted by local authorities that could lead to the easing of current internal movement restrictions.
The future of the dairy market in Argentina
As for Argentina, the US Department of Agriculture published a report at the end of 2022 that predicts that the country’s agricultural production sector could see a slight improvement in production indicators, as long as the climate forecast improves during 2023, with a consequent positive effect on the dairy segment. products.
Indeed, the domestic agricultural sector is currently going through a complicated situation as a result of prolonged consecutive droughts and the constant increase in inputs required to carry out the exploitation and processing activities in the sector, among other things.
According to this forecast, in the case of milk, Argentina could recover to produce 12 billion liters again in 2023, after extremely dry summer weather conditions and a cold autumn affected yields in 2022 and put an end to two consecutive periods of increasing milk production.
In this sense, it is worth pointing out that the Argentine domestic market is very competitive, since apart from the presence of relevant national players such as Mastellone, Williner, Sancor, La Suipachense, Noal or Punta del Agua, renowned international companies such as Nestlé, Danone, Fonterra Co- operatives, Saputo and others.
Most of these companies were active in mergers and acquisitions with smaller local processors, actively participating in market product innovation.
In this way, the world’s leading companies concentrate a significant part of the industry, which have expanded in recent years with regard to their expansion strategy.
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Dairy products and functionality: a duo with enough demand
On the other hand, considering global consumption trends, there is an increasing demand for organic and functional dairy products. The latter are considered healthier because they contain potentially energy-boosting ingredients, such as:
Even cases such as milk containing omega-3 fatty acids and cheeses and yogurts – which include probiotics – have been identified, occupying an increasingly important position in the market, since they are articles containing additives intended to promote health, providing physiological benefits. its basic nutritional power.
Likewise, the role of plant-based milk substitutes (for example, beverages based on or containing soy, almonds, rice, and oats) has increased in many regions of the world.
In this direction, available substitutes continued to expand beyond traditional options under these circumstances:
- In response to lactose intolerance
- Out of interest in general health
- For consumer care
- According to the alleged impact of milk production on the environment
Therefore, although flexible vegetarian, vegetarian and vegan diets are on the rise due to increasing consumer preferences, their ultimate effect on dairy consumption is unclear.
Likewise, lactose intolerance is an aspect of concern for some consumers, with an increasing number of lactose-free dairy products available to those who cannot consume it or wish to opt for plant-based alternatives.
Sustainability in the dairy market
In conclusion, the pandemic strengthened the already existing trend among the population in favor of the “sustainability” of the offered food products.
- It is clearly visible that some consumers try to have a positive impact on the environment through their daily activities, which of course also includes the appropriate selection of food and drinks they choose.
Likewise, in the dairy market, consumer preference for the relatively diffuse concept of “pure taste” is growing, in pursuit of which various technological developments have taken place in the sector of ingredients aimed at improving the texture and nature of “taste” in recent years. ” products, as well as the functionality they represent.
Faced with this new reality, companies and organizations face the need to adapt to new industry parameters as well as consumer preferences, among other challenges.
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