Thirsty Thoughts Flavoured Milk Annual Market Quantification October 2011

Setting the scene 2 Within the flavoured milk category, key traditional flavours remain popular with consumers, such as chocolate, strawberry and banana, while new variants are regularly introduced to keep the category dynamic and to retain consumer attention. Ready-to-drink flavoured milk is only one of many dairy products offered by dairy producers. Milk products are already a part of a consumer’s daily diet and flavoured milk helps the dairy industry to promote overall milk consumption in new and attractive ways. The South African flavoured milk market consists of both large and small players. Some of the major players within this market include Clover, Parmalat and DairyBelle, and several retailers such as Spar and Woolworths offer housebrand flavoured milk. The flavoured milk industry consistently promotes the natural and value-added health benefits of the product and consumers perceive it as a healthy alternative to other non- alcoholic beverages. The South African flavoured milk market is predominantly based on cow’s milk but flavoured milks are also available in other varieties such as soy, goat or rice milks. These varieties are often promoted as suitable for consumers with an intolerance to cow’s milk. Popular packaging within this market includes plastic and carton with popular sizes ranging from 250ml to 1 litre packs.

2010 Category Distribution 3

Annual Growth Rates 4

Flavoured milk growth in slump 5 Flavoured milk saw a decline during 2010 as production slowed and demand for this product declined. Even though flavoured milk saw increased movement in the wholesale sector, the majority of the market saw decline in consumption, with foodservices dropping 18.2% of the sector consumption. These declines come after a string of poor performances since 2008, when the category saw a decrease of 5.8%, continuing through 2009 and moving forward into The category is expected to gain popularity once again in 2011 as producers invest more in marketing and special offers. Steri-Stumpi have begun targeting the young adult demographic and have held several competitions and specials to attract this profile of consumer. Only wholesale saw an increase in consumption during 2010, with declines recorded for retail and foodservices direct. Retail volume decreased by 10.4% in The larger pack sizes saw increased popularity this year, possibly indicative of the consumer quest for value-for-money in buying bulk rather than individual products.

Thirsty Thoughts Flavoured Milk For more information, contact: Jan Wegelin Research Manager Tel: (011) Mobile: