Guangzhou China Jan.10, 2011 -China's dairy industry remains profoundly affected by the 2008 melamine scandal and the subsequent scares such as the hormone issues raised last year regarding formula. It will take at least several years for domestic consumers to recover their confidence. The culling in 2009 has curbed raw milk supply and contributed to increasing production cost, and inflation has been proven an increasing issue from Q4 2010.
However, China's dairy industry has made much progress in 2010. Data from Dairy Association of China (DAC) show that local dairy production has reached about 17.67 million tonnes in the first ten months of 2010, up 10.71% over the same period of 2009 (The figure includes drinking milk of about 15.09 million tonnes and powder products of about 2.57 million tonnes, up 10.1% and 14.3% respectively over the same period of 2009).
In 2011, the government policy, consumer market and corporate environment will bring great opportunities for dairy processors to expand their business, according to Mr. Wei, Deputy Director of DAC.
Competition within the industry is expected to become more intense in 2011, with the increasing consolidation of the dairy industry at the same time. The larger dairy processors will still hold the upper hand, but there will also be opportunities for the 2nd/3rd tier players to succeed if they can fund development, all of which will boost the reconstruction of the local dairy industry.
Source: CCM International