Could India be the Next China for Dairy Exports?

October 14, 2015 09:07 AM

Consumers in India, the world’s second most populous country with an estimated 1.25 billion people, are developing a taste for western-style cheeses and cheese in general. Increasing demand for cheese in India could prove positive for world dairy markets in time.

According to a recently released USDA Gain report, Cheese Demand Rising—New Market Opportunities, Cheese consumption in India is climbing, and cheese manufacturers there are increasing output by 15 percent annually to fulfill that demand.

“In spite of India’s growing market, many world dairy exporters are unlikely to vie for India’s 1,200 metric tons of cheese imports any time soon,” says Sara Dorland, analyst with the Daily Dairy Report and managing partner at Ceres Dairy Risk Management, Seattle. “The impact that India’s growing demand could have on the country’s internal product mix, however, could affect world markets.”

USDA estimates India’s retail dairy market at just over $10 billion in 2014. Most of the country’s dairy market, 83 percent, is made up of fluid and flavored milks. Cheese commands only 2.4 percent of the total market value. USDA’s report put India’s cheese demand near 219 million pounds in 2014, thus 15 percent growth in India’s cheese consumption would put India’s total cheese use at 252 million pounds by the end of this year, according to Dorland’s calculations.

Currently, cheese demand is outstripping India’s 4.4 percent compound annual growth in milk production, experienced over the past eight years, according to Dorland. “At that rate, India’s manufacturers may need to consider shifting milk away from ghee and skim milk powder or look to imports to fill future gaps—both could make world exporters take notice,” she says.

Historically, Paneer has been the cheese of choice in India. “Paneer is an ingredient in many curry recipes and, therefore, a household item in India. But a younger and expanding middle class is setting its sights on a more worldly diet, seeking more cheddars, mozzarellas, goudas, and parmesans,” Dorland notes.

Processed cheeses are both the most popular varieties in India and the most common due to their long shelf lives and consistent appearance. Processed cheeses are also sold in several packaging types from cubes to spreads.

“The uses for processed cheese are as varied as the packaging, ranging from pasta and pizza to kebabs and fritters,” says Dorland. “Retailers are primarily responsible for exposing more affluent consumers to a growing variety of foreign cheeses, but upscale hotels and eateries are also playing a role.”

Retail establishments and upscale hotels and restaurants are also responsible for India’s growing cheese imports, but unreliable refrigeration along points in the supply chain and the resulting off-flavored product could continue to reign in cheese imports in the short term.


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