As per the estimates of a recent report by Persistence Market Research (PMR), the consumption of UHT milk worldwide is on a rise, leading this market to expand at a 12.8% CAGR from 2013 through 2019. The report projects that by the end of 2019, the UHT milk market will be worth US$ 137.7 billion. Broadly speaking, this growth stems from the fact that more and more people are now aware of the many storage-related benefits UHT milk. Consumers are purchasing packaged milk to overcome the limitations associated with fresh milk, which has a comparatively shorter shelf life.
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UHT milk is treated at ultra high temperatures, which in effect is a sterilization treatment for the milk. This extends its shelf life to up to 9 months, as long as it is not opened. Wikipedia estimates that 7 out of 9 people in Europe consume UHT milk, as compared to pasteurized milk. Globally, this number is not as high, but is certainly on the rise.
If we were to drill down to the specific aspects impelling the global UHT milk market, the drivers could be pinned down to the following:
- Western consumption patterns are catching up in other parts of the world: Consumers are now more receptive toward packaged products, and this attitude also applies to milk. What also works in favor of the UHT milk market is that people in populous and developing regions of the world (such as China and India) are increasingly adapting the apartment culture and the nuclear family system, which limits their food storage and refrigeration capacity. In such situations, UHT milk makes for an ideal option. Greater exposure to Western lifestyles has further spurred demand for UHT milk.
- Lack of refrigeration systems augurs well for UHT milk: Pasteurized milk simply cannot be stored with refrigeration systems, whereas UHT milk can easily be stored for between six and nine months even if it is not stored in a cool place. Cooled transportation systems are significantly more expensive than regular transportation systems. Naturally, the long shelf life of UHT milk is its greatest advantage in countries that have a warm climate or do not yet boast efficient cooling systems through the entire logistics chain.
- Lower prices of UHT milk attract more consumers: A number of companies in the global UHT milk market are forced to be extremely competitive if they are to stock their products with large retail chains. Price wars are commonplace in this market because supermarkets—the most critical distribution channel for UHT milk—give precedence to products that are affordably priced. In fact, a number of retail chains have gone one step ahead in this competitive setting to partner with local dairies to develop indigenous brands.
However, product differentiation is one hurdle that companies in the UHT milk market need to cross. Because pricing does not vary much from one brand to another, and each brand has an equally wide range of products available, the switching cost remains low. Innovative products, aggressive pricing and high-impact marketing campaigns are a potential solution to this problem.