High demand combined with a 50% annual increase in prices may drive customers to cheaper food categories, threatening optimistic market growth predictions, says Agus.
According to Research & Markets, the milk powder industry was valued at $31.63 billion in 2020 and is predicted to grow at a CAGR of 4.4% to $42.76 billion by 2027.
However, a steep increase in prices over the last year may be a serious blocking factor argues Agus – one of Europe’s leading milk powder market players.
In the last few years, there was an upward trend in global dairy product demand, with the dairy sector proving high resilience under the pandemic’s circumstances. In this context, milk powder market results and projections were particularly outstanding.
During the pandemic, Agus recorded an increase in sales by 25%. The company is a supplier of recognised brands in the milk powder category in Africa, Central America and the Middle East (with brands such as Royal Milk, Olimp Milk, Diamond Milk, Imperial, Pride and Milmo).
In particular, the company’s Royal Milk brand became a real icon and a benchmark in the fat-filled milk powder category – to the point where even direct competitors were copying its name and packaging visual communication.
The company contributes its position and business results to the in-depth knowledge of local markets, agile business approaches and ability to quickly adjust to customers’ needs.
Agus’s milk powders deliver essential, high-quality nutrition at affordable prices. Recently, the firm made another step in its development and fortified its products with extra vitamins and minerals.
Milk powder, which Agus says is nutritionally equivalent to fresh milk, is manufactured by dehydrating milk and is widely consumed globally due to its prolonged shelf life and no refrigeration requirements. It finds numerous applications in eating, drinking and cooking – artisanal yogurt production, to highlight just one example.
It is developing countries, with their predominantly warm climate, that are expected to drive global milk powder market growth. However, the current price increase – 50% y/y – is a serious blocking factor.
Consumers and distributors in Africa, Central America and the Middle East are particularly hit by this price increase.
Should it continue, with Ramadan coming in a few months, there is a real risk that expensive milk powder will lose its market share towards cheaper food categories.
Agus has established a project team to support the company operations with a counteraction. The main challenge is to develop cheaper, more affordable milk powder, while still performing in main applications like drinking and homemade yogurt (lait caille).
Another issue brought about by the pandemic restrictions and lockdowns is supply chain reliability, availability of containers and freight cost.
Agus’ response to these challenges was to concentrate on the physical availability of products, business efficiency, agility, flexibility, cost optimisation, team engagement, etc.
Despite the price squeeze, Agus is optimistic about the business prospects in the years to come. The company, however, does admit that the way to more impressive dynamics must lead through the expansion of the portfolio to new categories (both food and non-food) and potential acquisitions.
The firm is already active in other food categories – beverages, snacks and cereals (mostly in Europe), aimed at promoting a healthy and balanced lifestyle.
People have been staying at home more, which also translates into newly defined home-based consumption occasions of drinks and snacks.
About Agus
Agus is a branded FMCG products supplier, owner of leading brands in the milk powder category, recognised in Europe, Africa, the Middle East and Central America: Royal Milk, Olimp Milk, Diamond Milk, Imperial, Pride, Majestic and Milmo. The company operates in 50 countries on 4 continents. Within Agus’ portfolio, there are also beverages, snacks and breakfast cereals under the Hello Day!. Hello Day! is a synonym of simple, natural ingredients, high-quality raw materials, attractive and modern design. The company’s strength lies in its in-depth knowledge of local markets, agile business approach and ability to quickly adjust to customers’ needs. More information is available at AgusGlobal.com.
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