Analysis on Dairy Consumption in Heilongjiang Province

Wang Yang,Wang Li-min,and Li Cui-xia*

1 College of Economics and Management,Northeast Agricultural University,Harbin 150030,China

2 College of Economics and Management,Northeast Forest University,Harbin 150040,China

Analysis on Dairy Consumption Status in Heilongjiang Province

Dairy total consumption

Dairy consumption in Heilongjiang Province has a significant change in a dozen years.Consumption quantity increases obviously.In 1995,dairy consumption in Heilongjiang Province was 51 000 tons and then reached 424 000 tons by 2003.Until 2010,dairy consumption in Heilongjiang Province was 308 000 tons,which was still six times more than 1995 (Table 1).Dairy consumption structure in Heilongjiang Province had significantly been improved.There are new varieties of color milk,formula milk and fruit-flavored milk in the market which caused interest in large part of consumers and stimulated consumption.With the advent of dairy consumption boom,many people have known that dairy is important for health and form preference for dairy products.

Table1 Dairy consumption in Heilongjiang Province (1 000 tons,%)

People who don't like milk begin to accept milk and people who have milk-drinking habits begin to choose a wider variety of dairy products on more occasions.Dairy has become an indispensable part of eating consumption of the growing number of people.

Although dairy consumption in Heilongjiang Province has made great progresses,compared with the level of dairy consumption in the world,there is still big gap.As could be seen from Table 2,per capita consumption of dairy products in Heilongjiang Province is below the national average.Compared with other countries,the gap is greater.For example,as for per capita of dairy consumption,France,the USA,and Australia are 5 times,7 times,and 10 times,respectively,as large as that of Heilongjiang Province.

Comparison on dairy consumption between urban and rural in Heilongjiang Province

Urban and rural are different in many aspects in Heilongjiang Province,including dairy consumption.In 1995,dairy consumption in urban was 9 times as large as rural in Heilongjiang Province.Until 2000,this gap had widened to 33 times.With constantly improvement of income level of rural residents,the rural dairy consumption was also rising.Starting from 2004,the gap of dairy consumption between urban and rural had become narrow.Until 2010,dairy consumption in urban was 4.7 times as large as rural in Heilongjiang Province.

There are still some differences in per capita dairy consumption between urban and rural in Heilongjiang Province.In 1995,per capita dairy consumption in urban was 7.7 times as large as rural.Until 2000,this gap had widened to 31 times and then became smaller.In 2010,per capita dairy consumption in urban was 3.7 times as large as rural in Heilongjiang Province.In this process,per capita dairy consumption of urban residents was fluctuant which could be seen in 2004,2005,2008,2009,and 2010,respectively,and there was negative growth.Comparatively,rural per capita dairy consumption had never been declined,as shown in Table 3.

Table2 Comparing with per capita consumption of dairy among urban residents in Heilongjiang Province,China and some other parts of the world in 2010 (kg)

Dairy consumption of consumers who under different income levels in Heilongjiang Province

Urban residents in Heilongjiang Province could be divided into seven grades according to income levels,which are the lowest income households,lower income households,middle or low income households,middle income households,high or middle income households,higher income households and the highest income households.In 2010,total consumption expenditure of urban residents in Heilongjiang Province was 10 683.9 Yuan,food expenditure was 3 784.7 Yuan,dairy expenditure was 137.0 Yuan,and dairy expenditure shares of food expenditure ratio was 3.62%.Dairy spending accounts the proportion of food expenditure of urban residents from all income levels,and there was no obvious gaps.The biggest proportion was 3.86% of the lowest income households and the smallest proportion was 3.36% of the highest income households,as shown in Table 4.

Table3 Comparison on per capita dairy consumption between urban and rural (kg)

Table4 Dairy expenditure of urban residents in Heilongjiang Province under different income levels in 2010 (Yuan)

Rural residents in Heilongjiang Province could be divided into five grades according to income level,which were lower income households,low income households,middle income households,high income households and higher income households.In 2010,dairy consumption of high income households was the biggest,which was 3.6 kg and middle income households was the lowest,which was 2.4 kg.It could be concluded that dairy consumption of low and middle income level of rural residents in Heilongjiang Province had enormous potential,as shown in Table 5.

Table5 Dairy consumption of rural residents in Heilongjiang Province under different income levels in 2010 (Yuan,kg)

Consumption category structure

Dairy products can be divided into six categories,including liquid dairy,powder,condensed milk,milk fat,cheese and other dairy products.World consumption of dairy products is mainly in liquid milk,butter and cheese,while China mainly concentrates in liquid milk and milk powder.Although Heilongjiang is a big dairy producing province,its consumption of dairy products is not in a dominant position compared with the rest regions.Compared to the top ten regions of milk,yogurt and milk consumption of urban residents in 2010,Heilongjiang milk consumption was slightly higher than the national average,yogurt and milk consumption was roughly flat with the national average.Fresh milk,yogurt and milk powder consumption per capita was the highest in Beijing,Anhui and Hainan respectively,which were 1.4 times,2.7 times and 2.7 times,respectively as large as Heilongjiang Province (Figs.1,2 and 3).

Fig.1 Urban residents per capita milk consumption in 2010

Fig.2 Urban residents per capita yogurt consumption in 2010

Fig.3 Urban residents per capita milk powder consumption in 2010

According to a survey about dairy consumption in Heilongjiang Province,consumers buy fresh milk,yogurt,milk powder,ice cream,and cheese respectively account for 73.7%,69.4%,19.6%,36.4% and 4.3%.It can be found that consumers drinking milk accounted for the largest proportion,and then consumers selecting yogurt followed.Consumers choosing cheese are the least.Milk is the traditional dairy product.It is more acceptable to people,so there is more milk consumption.Yogurt becomes more and more popular mainly due to the unique taste,and its advantages that other dairy products don't have.In particular,it address people suffering from lactose intolerance milk issues.Cheese consumption accounts for a low proportion mainly for two reasons.First,price of cheese is higher than other dairy products.Second,Chinese people are not accustomed to the special taste of fermented cheese.But cheese is dairy products with higher added value.Refined 10 pounds of milk,fermented to produce 1 kg cheese.Per 100 grams of cheese containing 799 mg of calcium,which is about seven times the milk.Due to fermentation,cheese produce large amounts of lactic acid bacteria,which can enhance human immunity,promote metabolism,and enhance vitality.Cheese is also rich in vitamin A,B2,proteins,peptides,amino acids and zinc,which are essential for bodies.As people's awareness of nutrition is strengthening and consumption level is raising,cheese consumption market has huge potential (Fig.4).

Fig.4 Dairy consumption structure of Heilongjiang Province in 2012

Consumption brand structure

According to the survey about dairy consumption in Heilongjiang Province,most consumers buy Mengniu brand,followed by Yili brand,accounted for 30% and 20%.Wandashan as a local brand is the third in Heilongjiang Province market.Longdan,Huayi,Jintian and Wanjiabao share less markets.Why will the majority of consumers choose Mengniu,Yili and Wandashan? The reasons are as the followings: relatively reliable quality,advanced technology,product variety,and convenience sales channels.In addition,big brand advertising effort is relatively large,which often hires celebrity endorsements,and wins the trust of consumers (Fig.5).

Consumption channels

As market system in cities is relatively perfect and sale channels are unimpeded,urban residents in Heilongjiang Province buy dairy products more convenient.People can buy a variety of brands and various grades of dairy products in large supermarkets,medium-sized warehouse and small convenience stores.63.8% of consumers most often go to large supermarkets to buy dairy products,mainly due to good environment and quality assurance;19.8% of consumers choose to go to medium-sized warehouse store and 8.2% of consumers choose to go to a small convenience store,mainly due to the purchase of convenience;8% of consumers choose to buy dairy products at other locations,for example,early market,milk stations or order milk.Overall,most urban consumers can buy dairy products nearby home,and can always buy dairy product that needed.70% of consumers always buy dairy products at the same point of sale.

This shows that currently dairy sale channels are relatively smooth.

Fig.5 Brand preference of dairy product in Heilongjiang Province

Convenience of rural resident buying dairy product is relatively week.Usually they can only buy dairy product from nearby retail outlets,and there are fewer dairy products and variety is not complete.If they want to buy some well-known brands of dairy products,they can only to go to the supermarket in towns.This mainly because that demand of dairy products is small.If price is high,sell will become more difficult.Coupled with some dairy products'shelf life is short,so convenience stores are unwilling to take risks.

Consumer information source

Among information source,media is the most important kind of information sources.The ratio of people who are exposed to a variety of media and the media influence on consumer buying behavior are quite different.56% of consumers get information through television,21.8% of consumers get information from tasting by themselves or friends.Other consumers always get information from advertising.Obtaining information from TV media accounting for the highest proportion has much relationship with a lot of advertising from enterprise.In addition,the survey finds that 61.8% of consumers would like to pay attention to the information on dairy bags,only 15% of consumers will not pay attention to the bag information,which shows that instructions from dairy bag is also a channel of getting information.

Analysis on Factors Influencing Dairy Consumption in Heilongjiang Province

Income level

Consumption function is drawn from economics through a series of theoretical and practical arguments.Consumption is a function of income.The independent variable is income,which directly determines consumption (Cheng et al.,2001).Then,it can be concluded that income level of urban and rural residents is the most important factor that influences consumption.Consumption will be greater with the income being higher.As shown in Table 6,from a national perspective,in 1995,dairy consumption expenditure of urban residents accounted for 0.73% of annual disposable income.Until 2010,the proportion has been 1.04%.

Table6 Dairy consumption expenditure and disposable income of urban residents (Yuan,%)

Price level

There is direct relationship between price and consumption.Generally speaking,normal commodity price has a negative correlation with consumption (Zhang et al.,2006).From economy perspective,the price level here refers not only to the price of the goods themselves,but also includes the price of the underlying commodity.Dairy price is higher than other foods and dairy is not the basic food for people.Therefore,people always buy other cheaper foods without considering on healthy.

Dairy quality

With people's awareness of health improving,product quality has become a key factor that people care before buying.Along with a series of dairy products security incidents breaking out,for example,melamine incident,aflatoxin events and "false foreign milk powder" incident,people no longer trust dairy product.Consumers always choose products with relatively reliable quality (Su and Li,2011).

Consumption habits and health awareness

Habit is one of the key factors that influencing dairy consumption.Unlike western countries,Chinese food has various kinds and many options.Dairy food is not traditional food for Chinese people.It can be said that majority of people don't have habits on selecting dairy product.So before 2000,annual per capita consumption of dairy products in China was very low compared with other countries.With rapid development of dairy industry,as well as to popularize the knowledge of human nutrition and health,people (especially young people with higher levels of education) are increasingly aware of the important role of dairy products for human health.More and more people begin to try to consume dairy products.People's consumption habits also gradually change.

Policy guidance

In recent years,there is a series of policy to expand dairy consumption.For example,School Milk Program was put up in 2000 and Milk Action Plan was started from 2002.When premier Wen Jiabao inspects of dairy work in Chongqing in 2006,he expressed a wish that everybody in China could drink a pound of milk everyday,especially for each child.Under the guidance of dairy policy,dairy consumption had been improved.In addition,when dairy industry suffered heavy losses,policy from government helped maintain the stability of dairy market (Xu and Li,2010).

Analysis on Dairy Consumption Trends in Heilongjiang Province

Growth in total consumption

Dairy consumption in Heilongjiang Province will show a rising trend mainly due to the following aspects.First,both per capita dairy consumption and dairy total consumption are below the national average.So there is huge room for dairy consumption growth.Second,the disposable income of urban and rural residents in Heilongjiang Province presents a rising trend (Fig.6).With the increase in disposable income,people have the ability to purchase higher-priced and nutritious dairy products,which is the basic condition of dairy consumption.Third,as income levels increase,people will increase the consumption of animal foods,especially dairy product,because that dairy has long been recognized as the most nutritious and the most easily absorbed food by body (Shi et al.,2007;Zhong and Hou,2010).At last,with the advance of urbanization in Heilongjiang Province,dairy consumption would increase,because urban population consumed more dairy products than those of the rural population.

Fig.6 Income trend of urban and rural residents in Heilongjiang Province

Dairy consumption based on liquid milk

Since China'introduction of UHT milk in 1997,the growth in liquid milk drived dairy industry to a period of rapid growth.In 2010,per capita consumption of fresh milk in Heilongjiang Province was 11.5 kg and milk powder was 0.4 kg,the former was nearly thirty times the latter.Therefore,in the future,liquid milk consumption will still be the main driving force in Heilongjiang Province.

Narrow gap between urban and rural dairy consumption

Overall,the income of urban residents is still much higher than the income of rural residents.At present,the income of urban residents in Heilongjiang Province is 2.2 times the income of rural residents.Therefore,dairy consuming ability of urban residents is greater than rural residents.In the coming period,urban residents of Heilongjiang Province are still the major dairy consuming groups.However,in the long run,dairy consumption of rural residents in Heilongjiang Province has developed compared to the past.With the improvement of health awareness and income level,the rural dairy consumption market will be further expanded (Xu,2009;Luo,2003;Zhao,2003).Dairy consumption gap between urban and rural will continue to be narrow.

Further subdivided dairy consumer market

With the continuous expansion of dairy consumption groups,demand for dairy products is diverse.For example,mothers as office workers wish to purchase convenient drinking liquid infant milk;young people of single life will like to choose individually wrapped milk and personalized brand milk;the old want to buy milk with lower cholesterol to maintain their health (Tetra,2011).Dairy enterprises must continue to produce a variety of dairy products in order to win the market.

Conclusions

Heilongjiang Province is a large dairy province,but the "large" refers to large output,rather than large consumption.There is huge potential in dairy consumption in Heilongjiang Province.Combination of Heilongjiang dairy consumption trends,dairy enterprises should identify market position,explore rural consumer market deeply,design diversified dairy and formulate a reasonable price.In the mean time,dairy enterprises should pay more attention to high value-added and more personalized dairy products in order to win more consumers.

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