After earning an excellent reputation for its yogurt products in the Chinese market, Yoplait, the world's second-largest yogurt brand, announced this week the launch of a new range of premium low-temperature milk products in China.
The latest launch includes four products made from either whole or skimmed milk and has been developed with two key markets in mind, namely the high-end retail markets in first-tier cities such as Beijing and Shanghai. The second target market for Yoplait is catering channels such as café chains/milk tea chains and confectionary store chains selling baked goods.
Yoplait entered the Chinese market in 2015. At present, it only sells fermented milk through its online channel (Tmall) and offline channels (supermarkets). In order to maintain its momentum, it is crucial to expand product categories to take advantage of growth opportunities in China's high-end milk market.
Data shows that the value of China's fresh milk, fresh yogurt, and probiotic yogurt market exceeded 42.7 billion yuan in 2018, a figure made possible by an equally impressive annual growth rate of 6.1%.
In November 2019, Chinese dairy company Junlebao introduced a new fresh milk product line called Yuexianhuo. One week ago, Chinese dairy giant Yili launched three kinds of pasteurized milk products, showcasing the level of confidence the company has in the growth potential of China’s fresh milk segment.
Yoplait's move to ratchet up expansion in China's catering market is forward-looking. In 2019, the annual revenue of China's catering industry grew by 18%, with the café chain market boasting even higher growth of 31%. Fueled by the cooperation with Starbucks, Luckin, and other major high-end coffee chains, Yoplait is poised to seize the growing catering market opportunities.
Nevertheless, it is facing rivals like Fonterra’s Anchor and FrieslandCampina's BLACK&WHITE in the catering segment. Fonterra's catering services division in Greater China saw a 40% increase in product sales in the fiscal year 2019, thanks to higher sales of light cream and UHT milk in the catering channel. Meanwhile, in milk tea restaurant chains, BLACK&WHITE liquid milk and cream products occupy the dominant market position.
With forecasters projecting massive growth in catering, Yoplait's targeting of the sector must be viewed as particularly savvy. Similarly, a move towards premiumization in the fresh milk sector also presents significant opportunities. Early movement in the right direction is rewarded handsomely in China. Getting in on the ground floor in these high growth sectors of China’s dairy sector looks like a great punt by Yoplait. Yoplait has big plans for China and is looking to cement its position as a purveyor of high-end nutritious products produced using the best ingredients. Securing contracts with big brands like Starbucks is a massive scalp for Yoplait, and we are expecting better things to come. Let's continue to watch this space!