Despite a weaker demand for whole milk powders in China, a West Coast dairy co-operative is continuing to invest and grow its business in the market.
Milk powder Photo: 123rf
Westland Milk Products was one of three New Zealand dairy companies this month to lower their
forecast farm gate milk price, with weaker Chinese demand a factor.
The company's Shanghai manager Gregg Wafelbakker said being on the ground and understanding consumer trends indicated it was still very much a strong market.
Between 15 to 20 percent of the company's business was focused in China and the country was its core market for value add products, he said.
"In some parts of dairy consumption in China there has been flat or declining consumption...but in the areas Westland is investing in we are still seeing growth to date at between 10 and 30 percent.
"UHT milk and cream, infant formula, there's been more investment in our consumer butter and food service brands.
Consumer trends and demands were changing, he said.
"We've seen a reduction in imports of whole milk powder, but there's many reasons for that. There was high purchase and high stock in 2014 and parts of 2015, but China's evolving and it's evolving very, very quickly.
"Over the past ten years we've seen this growing lower middle class, but now we're seeing the emergence of the middle class and the upper middle class."
That group had more discretionary income and were wanting to spend it on consumer goods, he said.
"In the past you may have seen consumers buying low protein dairy beverages, which certainly used imported whole milk powder for example and some of those products are flat or demanding, but we're seeing more demand for more premium products or high quality products and they will continue to use imported powders.
"There's an evolution going on at the moment, by no means could we draw a conclusion that there's going to be no demand for imported powders in China because I don't see that being the case," he said.