Is UHT milk the next big export market?

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Ultra high temperature (UHT) milk is shaping up to be the next big ticket to a ride aboard the dairy export express, according to new research from the dairy checkoff-funded U.S. Dairy Export Council (USDEC).

Chinese demand for imported UHT milk soared from nearly 18 million pounds in 2010 to a forecast 331 million pounds this year, and demand scenarios suggest China’s appetite for imported UHT milk could grow fourfold to more than 1.3 billion pounds by 2020.

“The rapid growth of China’s UHT milk market is creating opportunities for the United States to further extend its reputation as a global supplier,” says Ross Christieson, USDEC senior vice president, market research and analysis. “The U.S. industry produces large volumes of UHT milk annually, yet we have played only a minor role in serving booming Chinese consumption to date. Our research suggests that can and should change, particularly given that Chinese buyers have expressed growing interest in U.S. supply to meet spiraling demand.”

The Chinese UHT import market, the world’s largest, stood at $76 million in 2012 but went on to top $85 million in the first six months of this year.

USDEC research explored how the United States might be able to gain a larger share of the imported UHT sector as the scenario of rising demand and limited domestic supply plays out. Among the recommendations: U.S. suppliers need to develop products that better match Chinese expectations. For example, U.S. UHT milk is primarily consumed in half-pint and pint boxes and bottles, but the Chinese UHT market is dominated by 1-liter boxes.

“To be successful, we need to build capacity dedicated to exports that is closer to shipping points, as well as find a way to offer more competitive pricing for longer-term contract periods,” Christieson said.

USDEC officials see the opportunity as being broader than strictly UHT milk and China. Potential in other Asian markets, including the Philippines, and for additional products such as UHT cream and lactic acid beverages, exists as well.

“One of the reasons U.S. exports are on pace for their fourth consecutive record year is U.S. suppliers’ continuing movement toward broadening their product portfolios to meet the needs of overseas customers,” says Tom Suber, USDEC president. “Time and again over the past few years we’ve seen the U.S. dairy industry invest in the people and the processes needed to develop products specifically to meet the needs of foreign markets: bulk gouda cheese, milk protein concentrate, nonfat dry milk/skim milk powder with tighter specifications and, most recently, whole milk powder. UHT milk is the next in line.”



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