The output volume of liquid milk continuously increased in China in recent years, from 20.61 million tons in 2011 to 24.98 million tons in 2015, while the annual growth rate had a declining trend. The main reasons include the upgrade of products, the decline of output volume of low-end liquid milk as well as the increase of imported dairy products.
Source: http://www.shcri.com/food/33303-liquid-milk-industry-overview-in-china-2011-2020.html
Consumers become reasonable in selecting liquid milk because of frequent safety incidents of dairy industry in China. Their selection range is enlarged because substantial imported liquid milk enters Chinese market at present. A number of consumers prefer imported liquid milk due to the crisis of confidence towards domestic products, which cause certain impact on local enterprises in China. According to market research by CRI, the market concentration rate of sales revenue of Top 5 enterprises in liquid milk industry was less than 50% in China in 2015. The development space is still considerable for small and medium sized enterprises and new entrants.
The liquid milk market is experiencing an intense competition and an upgrade in the demand of consumers. High-end products with large profit margin and mid-end ones with good reputation are preferred by liquid milk manufacturers due to the increase of raw material cost and the decrease of profit margin. Meanwhile, many large-scale liquid milk manufacturers develop new products with special taste, high nutrition and differentiation to complement the market shares outside that of the pure liquid milk and plain yogurt. Some liquid milk manufacturing enterprises increase their investment in normal temperature yoghourt such as Momchilovtsi of Bright, AnMuXi of Yili and Chunzhen of Mengniu.
According to CRI, the liquid milk industry will experience a stage of market adjustment and industry upgrade with an intense competition in China in the next few years. However, the demand for liquid milk with high quality will increase further due to the growth of resident revenue and the consumption in China. It is estimated that the CAGR of market size of liquid milk will reach over 10% in China from 2016 to 2020.