Access advantages: Distribution gains driving China dairy growth but reduced sugar products remain crucial

22-Apr-2024 - Last updated on 22-Apr-2024 at 02:45 GMT

Yili believes that cold chain advances and new distribution models have transformed the sector but reduced sugar products are still ‘basic but crucial’. ©Yili

Related tags China Dairy sugar reduction

China dairy giant Yili believes that cold chain advances and new distribution models have transformed the sector in the country, but advises that reduced sugar products are ‘basic but crucial’ to maintain growth

With dairy having become increasingly well-established as a protein source in China over the past few years, many new brands have entered the market.

But according to market leader Yili, it is not enough to simply have a good product, as brands also need to ensure availability across multiple channels across the entire country.

“The thing about dairy products is that traditionally there were significant challenges with cold chain transport and shelf life due to the nature of these, but in today’s society it is essential for food and beverage products to be accessible and convenient for consumers to consume,” Yili Yoghurt Business Unit Product R&D Manager Yin Xiaojing told FoodNavigator-Asia.

“In order to do this, China has seen the advent of a very diversified distribution network has come into play for dairy, where in addition to traditional distributors such as supermarkets and convenient stores, new forms of retail business models are dominating the market.

“This includes online purchase and doorstep delivery services, e-commerce platforms as well as community group-buying, all of which [almost seem basic] now but have been crucial to enhance the accessibility of these products.

“It has also become possible to reach low-tier markets across China as well due to the improvements of cold-chain-based supply chains and logistics development in the country, as well as emerging commercial models like Online-to-Offline (O2O) commerce, reaching more consumers through diversified distribution channels which has in turn spurred consumer demand for yogurt products.”

In addition to logistical transportation and online platforms, Yili also views convenient consumption as a form of accessibility to consumers.

“Accessibility also means enabling consumers to be able to consume these dairy products at any necessary time or occasion – so this means providing consumers with a wide variety of options,” she said.

“Taking yoghurt for example, there can be medium-sized (about 400g) products which are are value-for-money and fit perfectly in a breakfast or meal replacement scenario; as well as portable small PET packages and stand-up pouches which are useful when consumers are on the go.”

Sugar reduction no longer just a trend

The firm has also highlighted sugar reduction as a continued driver in the dairy sector, positioning this as not so much a trend as a necessity.

“The demand for reduced sugar products is still coming from a large group of consumers, in line with the demand for healthier food,” she said.

“This has become an important area of focus for Yili, and we have our own sweetness toolkit in our digital management system alongside in-depth research into sugar reduction technology.

“One of the products created based on this was the Changqing zero-sucrose flavoured probiotic drinking yoghurt, which uses a combination of maltitol and steviol glycosides to achieve zero sucrose whilst maintaining the desired sweet-sour balance in yoghurt with no off-notes.

“The range also uses seasonal fresh fruits such as strawberries from Dandong, Liaoning Province, yellow peaches from Shiqiao, Jiangsu Province and raw oats harvested near 41°N latitude to strike a balance between health benefits and taste.”