Essay: Dairy products market

The “Beurrerie de Rochefort” or “Beurrerie Mathot-SOFRA” was founded in 1948 by Arthur MATHOT, assisted by his wife. Since then there has been continuous expansion, and now it supplies more than one third of the Belgian butter market.
In 1999, on a request from the town of Rochefort, it started the manufacturing of Rochefort cheese, using the authentic recipes of the Trappist monks who had been forced to cease their activity through lack of manpower.
For some years the company Mathot-SOFRA has been exporting to neighbouring and more distant countries in the European Union, The Netherlands, Luxembourg, France, United Kingdom, Germany, Italy, Spain, Portugal, Slovenia, Hungary, Greece, Cyprus, and it is increasingly exporting outside Europe: Africa, America, Middle East and Far East.
Figure 1: Logo
Figure 2: product
You will find butters and cheeses from the company Mathot-SOFRA at wholesalers, in fine groceries, hotels and restaurants, and catering establishments and in supermarkets and chain stores.
The company exports to neighbouring and more distant countries in the European Union, The Netherlands, Luxembourg, France, United Kingdom, Germany, Italy, Spain, Portugal, Slovenia, Hungary, Greece, Cyprus. Mathot-SOFRA is increasingly exporting outside Europe: Africa, America, Far and Middle-East.
The production chain is certified by
 BRC – Global Standard Food, Version 5, Level A.
 IFS FOOD – International Food Standard, version 5, superior level.
 
2 SOCIO-ECONOMIC
2.1 BELGIUM
2.1.1 OVERVIEW
 Population 11.29 million
 GDP $454.0 billion
 GDP growth 1.4%
 Inflation 0.6%
Belgium is a Federal Kingdom comprised of three regions (the Flemish region, the Walloon Region and the Brussels-Capital Region) and three Communities (the Flemish, The French and the German communities).
Belgium has a population of 11.29 million inhabitants (2015 est.) and is one of the most densely populated countries in Europe. Brussels is the ‘Capital of Europe’: it hosts the headquarters of the European Commission, the Council of Ministers and the European Parliament. Other major international organizations, such as NATO, are also located in Belgium’s capital. That is how Brussels ranks as the world’s number two city (after Washington, D.C.) in terms of the number of accredited journalists and fourth in terms of the number of international meetings and seminars held.
With a surface of 30,500 km², Belgium is one of the smallest member states of the European Union. Nevertheless, it is a significant player in the world economy. Belgium scores particularly well for its export-driven economy and investment attractiveness. Its small size and limited internal market are the main factors behind the strong export culture in Belgium. Moreover, due to its well-developed infrastructure, good living standards, central location and highly-skilled workforce, Belgium is also praised by foreign investors.
GDP (Gross Domestic Product) reached €400.6 billion in 2014 and €409.8 billion in 2015. Due to the continuing financial and economic crisis, GDP growth was limited to 1.3% in 2014 and 1.4% in 2015.
Belgium offers the opportunity to reach 200 million consumers in a radius of 500 kilometres thanks to its central geographic position and its quality logistics infrastructures. Sea ports, inland ports, canals, airports, rail, road and motorway networks: the various communication channels in Belgium are constantly being adapted to the needs of the economy. For example, the port of Antwerp is the 2nd busiest European port and has the largest petrochemical complex in Europe. The city of Antwerp is the diamond capital with 80 % of the market in rough diamonds and 50 % in polished diamonds.
In 2015, according to the World Trade Organization (WTO), Belgium was the 12th exporter and 14th importer of goods worldwide with a share of 2.4% and 2.2% respectively. That same year it was also the 13th exporter and 12th importer of services worldwide with a share of 2.3% in both cases.
The countries that account for most investment in Belgium are the United states, the United Kingdom, France, Germany and the Netherlands. As regards the type of sector in which investments are made, investments in sales & marketing projects are at the top. The industrial sector and logistics sector are in places two and three respectively.
Belgium also boasts an exceptional higher education and training system, with excellent math and science education, top-notch management schools and a strong propensity for on-the-job training. These elements contribute to an overall high capacity to innovate. Belgium’s goods market is characterized by high levels of competition and an environment that facilitates new business creation. Business operations are also distinguished by high levels of sophistication and professional management.
2.1.2 DAIRY PRODUCTS MARKET BELGIUM
2.1.3 CHEESE INDUSTRY
2.2 INDIA
2.2.1 OVERVIEW
 Population 1.311 billion
 GDP $2.074 trillion
 GDP growth 7.6%
 Inflation 5.9%
India has made one of the most remarkable evolutions in development and growth of our times.
Together with its population of 1.3 billion people, the county experienced an agricultural revolution that results into a global agricultural home for export of food, global pharmaceutical, steel and information technology companies. Health conditions have improved, the middle class expanded, life expectancy has more than doubled, literacy rates have multiplied with four.
The nation enters the 21st-century with the largest and youngest workforce in the world, which results in some 10 million people who leave their hometown to conquer the war on talent. Due to this largest rural-urban migration of this century, India develops an enormous human potential that will create the shape of the promising future for this the country and its people.
Today, India still needs to conquer some challenges:
• Investments for job creation
• Housing for the new generations
• Financing infrastructural goals
• Creation of more liveable towns
• Reduction of the poverty rate and the corruption issue
Today, still more than 400 million inhabitants, in other words one third of the world’s population, lives in poverty. Between 2005 and 2010, 53 million of them escaped poverty, but the possibility that they will fall back into poverty is plausible.
In India you experience diversity in all dimensions; region, gender, caste and many others USD. While the gross national income per capita was almost 1.5 thousand in 2011 (amongst the poorest in the world concerning middle class), some rates are still 3 to 4 times higher than some more advanced states.
Concerning education, less than 10% of India’s work force has attended secondary education. Because primary education is universalizing everywhere, the outcomes remain low. Moreover too many people that studied secondary education is not able to compete in today’s challenging job market. These days the country sees education as the foundation of new discoveries, new knowledge, innovation and entrepreneurship that triggers growth and prosperity of the individual as well as that of a nation. India is capable to deliver skilled people, but there are still some issues about education in other parts of the country.
India is still struggling with infrastructure, the current projects will solve a lot of the misery. The only question is: When will these projects finish? Due to financial issues, building companies can work from time to time, but not on a continuous base. 1 out of 3 rural inhabitants are not able to use the roads during heavy weather conditions. Highways are not big enough, just like the lacking capacity of (air)ports. The train infrastructure could use some renovations as well. And lastly more than 300 million people are not able to connect to the national electrical grid. If inhabitants are able to connect, they face frequent disruptions.
Health care will be equally important in the future. According to recent numbers (2015) the sector should have been improved, but looking at maternal and child mortality rates and malnourishing, the nation has to conclude that real numbers are comparable with those in the world’s poorest countries.
Looking at today’s leaders, they seem confident to continue their successes with the rest of the country. The future lays in their hands to improve living standards for tis 1.2 billion inhabitants.
2.2.2 DAIRY PRODUCTS MARKET INDIA
Besides being the biggest producer of milk in the world, India can also be considered as the biggest consumer of dairy. Numbers tell us that an average household spends 15% of its food expenditure on milk. -This will change in the future since the GDP is growing and incomes rises as well.-
Today, the nation provides the world with 1/6th of the global milk production or 116 million tonnes of milk and this keeps growing with 4% each year. (Compared to 2% in other countries.) However India will need to conquer some challenges, if they want to make progress with the dairy industry in the future. Even though the supply of milk is increasing, the demand for milk is skyrocketing.
India needs to find a solution to raise productivity as its production. If the country wants to keep costs low, it will have to play the productivity card which means that progeny testing and artificial insemination will become crucial in the near future.
Talking cost pricing, the production of milk in India is costly compared to other countries like the United States, because of higher interest rates, higher cost of cattle feed and more expensive land. On the other hand, the nation benefits cheaper and more available labour. So the objection is meeting the growing demand with enhanced milk and limited resources.
The cost of milk production is not the only challenge for India’s future, think about:
 fast urbanization
 a younger generation that takes barely interest in dairy farming
 escalation of real estate prices
The government needs to develop infrastructure, make investments in farming and improve feeding methods. Lastly they could considerate lower taxation to boost the dairy sector.
Main dairy products:
 Fluid Milk
 Ghee (clarified butter)
 Butter
 Yogurt
 Khoa
 Milk Powder
 Paneer (cottage cheese)
 Others, including Cream, Ice Cream
2.2.3 CHEESE INDUSTRY
Approximately 35% of India’s total milk production is processed. Most milk is sold through unorganised channels and consumed in a farm-fresh, or unpasteurised, state, while the organised dairy segment constitutes only 15 to 20% of the total processing market. The main value-added products include milk powder, whitener, packaged milk, butter, ghee, yoghurt, cheese, and ready-to drink milk products, which are, thanks to strong consumer demand, growing at rates between 15 and 25%. The world’s primary cheese markets in Europe and North America are saturated, a situation that is forcing suppliers to look elsewhere, such as to Japan and Russia, which are currently major importers, and to developing markets like India. The Indian cheese market is presently worth around US$237 million, but is expected to grow at roughly 15 to 20% annually in the coming years. The Indian cheese market is expected to grow at a CAGR of nearly 18% between 2015 and 2020. Measured by sales, it is forecast to grow at a CAGR of 31% during the same period. Product-wise, the global market features almost 3,000 varieties of cheese, whereas only about 40 to 45 variants are marketed in India, presenting much room for the market’s expansion. By industry estimates, current household penetration in terms of cheese consumption is less than 7 to 8%. Per capita consumption of cheese in India is a mere 200 grams per year in contrast to the global average of 7 kg per annum. The average for urban India, however, is 700 grams per person and the country’s six largest cities consume approximately 60% of all cheese sold in India.
Processed cheese represents 45% of the total dairy market in India and is likely to grow by a more than average Compound Annual Growth Rate of around 25%. Not spreadable processed cheese accounts for around 60% of the processed cheese segment. The unprocessed cheese market is largely associated with the soft cheese category in India, usually paneer. This traditional soft cheese constitutes over 55% of this market, with only a small fraction thereof being contributed by the organised sector. In light of consumer behaviour, it is expected to hold a large part of the market for years to come. The market has been dominated by cooperatives and regional players, with only a few international players making any inroads. The Gujarat Cooperative Milk Marketing Federation (GCMMF) with its Amul brand of cheese has been a forerunner and holds a majority share of the market, followed by Britannia. The imported gourmet cheese market currently occupies a mere 5 to 7% of the total cheese market, but this niche segment is growing at over 30% a year. The rest of the market is split between other players such as Parag Milk Foods, Gowardhan Foods, Danone, Milky Mist, Heritage Foods, Mother Dairy, Vijaya Foods, Milkfed and Verka. Some of the global brands that have a long-standing presence in India include Dabon International, Bongrain SA, Kraft’s, Fromageries Bel, and Arla Cheese. GCMMF with the Amul brand continues to be the main operator in the branded cheese market in India. It pioneered the market for processed, branded cheese. Britannia Industries joined the fray in the cheese market in mid-1990s through an arrangement with Dynamix Dairy Industries (DDI). Britannia’s cheese is sold in tins in cube form, and in individually wrapped slices. The Britannia network has some 60,000 dairy outlets equipped with cold cabinets, refrigerators and insulated boxes. Amul covers some 500,000 retail outlets. Britannia has launched new variants of flavoured cheese. The cheese cubes are available in three flavours Masala Mania, Mirchi Poppers and Cream ’n Onion. Amul has a cheese spread in garlic and pepper flavours. Pune-based Parag Milk Foods, with the brand name Go (for Gowardhan), sells cheddar and mozzarella, and reportedly plans to introduce emmental cheese to the market. All Gowardhan cheese products are made in a world-class facility located in Manchar (near Pune) in a state-of-art advanced cheese plant with a staggering production capacity of 40 metric tonnes of cheese per day. Cheese products offered by Gowardhan include processed cheese and cheese spreads, cheese slices, sandwich slices, pizza cheese, mozzarella cheese, pizza topping, cheddar cheese (including orange cheddar), gouda cheese, monterey jack cheese, colby cheese, emmental cheese, parmesan cheese, cheese wedges, and nacho cheese. It produces mozzarella cheese in shredded and diced forms too. French cheese major, Fromageries Bel, has entered the Indian market with La Vache Kirit (popularly known as The Laughing Cow) which is produced at Bel’s facility in Poland exclusively for the Indian market. In addition to The Laughing Cow (creamy cheese in cube form) Fromageries Bel has launched Babybel (semi-hard with a wax coating appropriate for sandwiches). Along with Laughing Cow, Woerle’s Happy Cow cheese brand from Australia, Nestlé and Kraft’s brands have started marketing their products in the Indian market. Himalaya International Ltd, Himachal Pradesh, prepares mozzarella cheese, exclusively for export. La Ferme Cheese has begun a line of handmade farm cheeses for Auroville, Pondicherry. The firm uses traditional cheese-making methods. The team includes professional Indian, Dutch and French cheesemakers who use natural whole cow milk, salts, vegetarian enzymes and seasoning cultures. From fresh cheese including mozzarella, feta, ricotta, to seasoned cheeses like lofabu, auroblochon, parmesan, and jeera cheese, La Ferme produces about 100 kg of handmade cheese in over 10 varieties daily. Foreign cheeses in India include provolone, colby, mozzarella and parmesan from Italy, cheddar from Holland, and gruyere. US-based Philip Morris, which brought in its Kraft cheese brand earlier, has gained a significant presence in the market. The rest of the market is spread among Verka, Nandini and Vijaya. Dabur claims a product range of 20 varieties of cheese under the Le Bon brand. Dabon has a manufacturing facility at Noida with an installed capacity of 12,000 tonnes per annum. Players such as Dabon have realised the importance of “Indianisation” and added paneer to their portfolio, while others are adding tins, cubes, slabs, sticks and similar items to their product offerings. Looking at prices, the average unit price has registered an increase over the past year as a result of consumers upgrading to more premium variants as well as an increase in milk prices and inflation in general. Premium imported cheese has takers too. Western-style processed cheese is sold by large companies under their brands. The processed cheese market including its variants like processed cheese, cheese spreads, mozzarella, flavoured and spiced cheese, is estimated to be 10,000 tonnes per annum (HS & SL estimates). India’s four metro cities alone account for more than 60% of total cheese consumption. Mumbai is the largest market, accounting for 30% of all cheese sold in the country, followed by Delhi (20%), Kolkata (7%) and Chennai (6%).
2.3 INDONESIA
2.3.1 OVERVIEW
 Population 257.6 million
 GDP $861.9 billion
 GDP growth 4.8%
 Inflation 6.4%
Indonesia, a country with more than 300 ethnic groups in Southeast Asia, has accomplished a huge economic growth since the late 1990s Asian financial crisis. This resulted into an increase of the gross national income per capita from 560 dollar (2000) to $3,630 (2014). This means that today, this nation is world’s 10th largest economy concerning purchasing power and cut poverty enormously with more than half since 1999, to 11,2% (2015)
In 2005 Indonesia started it’s twenty-year development program. Split up in 4 medium-term plans called ‘Rencana Pembangunan Jangka Menengah Nasional’, each with different development priorities. 2016 is part of the third phase of this program and focusses on infrastructure development and improving social assistance programs in education and healthcare.
For example in 2018 Indonesia organises the Asian Games, a major sports event of Asia where Indonesia’s LRT (Light Rail Transit) will play an important role in the thus far barely developed public transport.
Today, Indonesia is becoming less underdeveloped, the European Union is reducing the investments in Indonesia, the standard of living is rising, but there are still some challenges to conquer:
The demand for products, which is the main cause of Indonesia’s GDP growth, has been slowing down since 2012. Just like the demand for commodities, the pace of growth in fixed investment, exports and consumption has been slowing down. Which causes an impact on the reduction of Indonesia’s poverty rate. The rate decreased with 1 % per year since the beginning of 2007 until 2011, from 2012 until today this has to 0.3% annually. Approximately 40% of all people cluster around the national poverty line (330,776 IDR or 22.80 EUR) and 28.6 million inhabitants out of the 252 million still live below the poverty line.
Due to a faster population growth than employment growth than, you can notice the downtrend in job creation. Another consequence is that public services are insufficient with middle income standards, which results in health and education complications. For example, Indonesia’s maternal mortality rate is 126 which is much higher that the Millennium Development Goal, besides that another 37% of the Indonesian children under the age of 5 suffer from stunting or short height.
Other noticeable cases are the regulatory uncertainties and high logistic costs. But there is light at the end of the tunnel. Indonesia’s leaders, president Jokowi and his cabinet, realise that they considered the nation too long as independent. They make it very clear that Indonesia is open for new business. Also in the dairy industry, Belgium makes progress.
2.3.2 DAIRY PRODUCTS MARKET INDONESIA
Dairy products are becoming more and more popular in the alimentation of the Indonesian upper population. This creates great opportunities for both local producers and foreign exporters. Even if the country has improved, there are still some logistical challenges concerning inadequate road, rail and a lack of cold storage facilities for overland transportation of perishable goods and frozen food. But the situation keeps improving with the fast expansion of modern retail across the nation which gives the population access to fresh dairy products. The potential of Indonesia in the fast-growing Southeast Asian region could make the country an attractive hub for dairy manufacturing. But the gap between local production and consumption is becoming wider and so international importation is needed. However, the government plans to meet at least 50% of national milk demand domestically by 2020.
“Meanwhile, the rapid increase in demand means Indonesia will remain heavily dependent on milk imports in the foreseeable future, which creates an attractive market for foreign-based exporters. Imports of milk and dairy products require an import permit (SPI) upon approval from the National Agency for Drug and Food Control (BPOM), which can take up to 100 working days to obtain. Before applying for the permit, foreign companies need to be pre-listed as exporters with Indonesia’s Ministry of Agriculture. Dairy companies wishing to export to Indonesia are advised to work closely with an Indonesian importer to apply for approvals and permits.”
2.3.3 CHEESE INDUSTRY
2.3.3.1 Actual consumption
Due to the rising in standards of living among the middle class population and the growing influence of the Western culture, the consumption of cheese is forecast to improve in the future. Nowadays, dishes like pasta, pizza, cakes are becoming more popular so people are becoming more aware of its taste. In 2015, foodservice outlets and urban housewives increasingly incorporated cheese into food products.
2.3.3.2 Change of food habits
Another big driver of dairy demand is the increasing presence in the region of Western fast food and coffee chains, according to Jan Vistisen, head of marketing and sales at AustAsia Food,
the Singapore-based sales, marketing and distribution arm of PT Greenfields. According to him, Coffee chains such as Starbucks and Coffee Bean & Tea Leaf spend as much money on milk as they do on coffee,
and the quantities of fresh milk they consume are enormous. “Similarly, burger and pizza chains have great demand for cheese products.” Dairy consumption in Indonesia, Singapore, Malaysia and
the Philippines is projected to increase 6-8% per year going forward, but these countries won’t be able
to produce enough additional milk to meet demand. So if you’re a large milk producer and processor,
this is where you want to be.
2.3.3.3 Import and local production
The cheese market in Indonesia is dominated by Kraft who remained the most established cheese brand in 2015, commanding a 61% value share in 2015. The company was one of the first active in the sector and offers a large variety of cheese products to the Indonesian population. As Kraft, most of the cheese consumed in Indonesia is imported. However the local producers are becoming more and more active in the market and the promotion of their products. PT Bukit Baros Cempaka, for example, offers Natura Gouda cheese, inspired by The Netherlands’ specialty cheese. Prochiz is another local brand that steals some light in the Indonesian cheese industry. Produced by PT Mulia Boga Raya, Prochiz is manufactured in Cikarang, West Java. In the link following you can find more local cheese producers in Indonesia: http://www.dairyproducts1.com/cheese-suppliers/indonesia.html