2. 7 billion untapped dairy consumers

CONSUMPTION by low-income consumers in developing markets is forecast to increase from about 70 billion litres in 2011 to almost 80 billion litres in 2014, according to the Dairy Index, which
tracks worldwide facts, figures and trends in the global dairy industry.

The research, the fifth of its kind commissioned by Tetra Pak, has identified these low-income consumers in developing countries – some 2.7 billion of them – as the dairy industry's next big growth opportunity.

"The key to tomorrow's success is reaching these consumers today," said Tetra Pak president and CEO Dennis J?nsson at a briefing in May. Whilst these low-income consumers live on just $2 to $8 a day, many of them are expected to switch from drinking loose milk to packaged milk, the world's leading food processing and packaging company said.

These consumers also come from countries where there is an expected rise in prosperity, purchasing power and desire for packaged liquid dairy products (LDP). "They make up almost 40% of the world's population and live in economies driving our industry's growth and they are growing more affluent," Mr J?nsson said.

'DiP' consumers
In spite of being the next big market for LDP, Tetra Pak research found that low income sectors are virtually untapped by today's dairy processors. Called Deeper in the Pyramid (DiP) consumers in the study, they make up about 50% of developing countries' population and consume 38% of LDP in developing countries.

The Tetra Pak research focused on Brazil, China, India, Indonesia, Kenya and Pakistan. These
six countries account for more than 76% of LDP consumption by DiP consumers in developing countries, and India and China together account for half of all DiP consumers.

The global DiP population is forecast to fall by a compound annual growth rate (CAGR) of 3% a year from 2009-2020. The population living on more than $8 a day is set to rise by 4% (CAGR) annually, according to Boston Consulting Group, which helped Tetra Pak to develop the DiP classification.
As many DiP consumers grow in affluence, shifting from low to middle incomes by the end of the decade, they are expected to boost their purchasing power and the range of products they buy. As they gain increase in spending power along with greater awareness of food safety and a need
for convenient, ready-to-drink solutions are expected to increase the demand for packaged products.

"Today's low-income consumers are tomorrow's middle class," noted Mr J?nsson of the findings.

"[This] is a golden opportunity for dairy processors to cultivate consumer loyalty amongst a new generation of dairy consumers in developing countries,"he also said.

Not without pitfalls
Tapping into this market is not without its challenges, according to the report. Three key challenges for dairy processors seeking to reach consumers in this growth market are cited in the research: products need to be affordable, available and attractive.

? Affordability – Products need to be affordable to consumers on limited incomes. This means dairy processors must produce healthy, safe and nutritious packaged dairy products without adding unsustainable costs.
? Availability – Supply chain must account for a wide range of shops. Dairy products must be made available in small traditional stores in remote rural areas or congested cities where DiP consumers shop.
? Attractiveness – Products must meet the needs of DiP consumers – Innovation and efficiency will be vital in helping the industry to develop products, packaging and processing to meet the needs of these low income consumers.

In other words, Mr J?nsson said, "We must develop products differently, distribute them differently and sell them differentlyNike