adpi - american dairy products institute > home - global ......4/24/2019 global markets landscape...

4/24/2019

Global Markets Landscape (2019 USDEC) 1

2019 ADPI Dairy 360

Global MarketsA Look at the Global Dairy Market Landscape

2

What’s Changed / Changing in our

Business and Competitive Landscape?

4/24/2019


The New Reality: Comprehensive and Progress Agreement for Trans-Pacific Partnership (CPTPP)

3

• Trade deal moving forward without USA, to detriment of U.S. farmers

‒ On December 30, 2018, entered into force for Canada, Australia, Japan, Mexico, New Zealand, and Singapore

‒ On January 14, 2019, entered into force for Vietnam

From NAFTA to USMCA Agreement

4

• U.S.-Mexico-Canada Agreement agreed to in principle on Sept. 30, signed Nov. 30

• Still needs ratification‒ Including Congressional

approval

4/24/2019


New! Japan-EU Economic Partnership (JEEPA)

5

• Took effect February 1

• U.S. disadvantaged without a comparable agreement‒ Visit usdec.org for comprehensive study on potential economic impact

Potential Impact to U.S. Dairy Ingredient Exports from JEEPA

Source: USDEC/Meros Consulting

Expansion of EU Bilateral Impacts

6

4/24/2019


China: More Storms Ahead?

7

Product Jan.-July 2018 (MT)

July-Oct. 2018 (MT)

July-Oct. 2017 (MT)

July-Oct. 2018 vs. July-Oct 2017

(% and MT)

SMP 15,210 4,523 9,854 - 54% -5,331 MT

WMP 10,164 170 5,323 - 97% -5,153 MT

Whey (excl. WPI)

122,805 47,243 75,535 -37% - 28,292 MT

WPI* 4,129 2,942 2,284 29% 658 MT

Lactose* 53,599 29,647 23,567 26% 6,080 MT

Total 205,907 84,525 116,563 -27% -32,038 MT

Key U.S. Dairy Ingredient Exports to China

*Retaliatory tariffs went into effect for lactose and WPI on 9/24. Lactose dropoff in October was 9% (611MT).

• Retaliatory tariff situation

• African swine fever

• Economic slowdown

• Election politics

• Huawei

….. And MORE!

SMP: What’s on the Horizon?

8

• EU intervention stocks finally near depletion

• Reduced EU powder production?

• Excellent pasture conditions in Oceania… potential for strong/record production?

4/24/2019


F&B Trends

9

Everywhere we seem to turn…• Plant

• Sustainability

• Plant

• Sustainability

• Plant

• Sustainability

• Plant

• Sustainability

Sustainability: Need to Watch Regulatory Front

10

• More sugar taxes on the table for Southeast Asia

• Plastic waste bans impact packaging decisions

• Halal regulation updates in Indonesia

• China tightens the use of vegetable oil

• Harmonisation of ASEAN Food Standards

• Governments will play a major role in sustainability efforts

• Sustainability initiatives increasingly impacting regulatory policies and guidance, even in Asia

4/24/2019


Halal: Not Just for Southeast Asia/MENA

11

• The organic food market in India

• Halal market in Japan

• Bread market in Southeast Asia

“As of 2016, Malaysia’s halal product exports to Japan were valued at RM$2.67bn, which is 20.8% higher than 2015”

Source: Euromonitor

Acceleration of Technology/Digital Transformation

12

• How customers/consumers get information and use technology for business and purchasing/shopping rapidly changing- We need to adapt too, to not get left behind

4/24/2019


0

40

80

120

160

200

Asia Africa LatAm Middle East NorthernAmerica

Oceania Europe

mill

ion

sPopulation Growth, 2017 to 2022

Nearly 80% of Population Growth in Asia, Africa

13Source: United Nations

India

China

SE Asia

Other Asia

Sub-Sahar. Africa

No. Africa

14

GlobalTrade

Trends

4/24/2019


World Milk Production Growth has Decelerated

15Source: USDEC, government reporting agencies.

(1.5)

(0.3)

0.9

2.1

3.3

4.5

5.7

(6,000)

(2,000)

2,000

6,000

10,000

14,000

18,000

10 11 12 13 14 15 16 17 18 19f

% c

hang

e vs

. prio

r ye

ar

volu

me

ch

an

ge

vs.

pri

or

yea

r, 0

00

MT

Milk production change vs. prior year

EU-28 U.S. NZ Aust China % chg

World Trade: 2018 Growth Was a 5-Year High

16Source: USDEC, Global Trade Atlas.

-1.8

0.0

1.8

3.6

5.4

7.2

9.0

10 11 12 13 14 15 16 17 18 19f

% c

hang

e vs

. prio

r ye

ar

Global trade - change from prior year(SMP, WMP, cheese, butterfat, whey)

4/24/2019


U.S. DAIRY EXPORT COUNCIL | 17

Where U.S. Exports Stand Now

4.43.7

4.6 4.7 5.0 5.25.7

5.35.8

8.28.6

9.49.8

10.9

9.2

12.613.2 13.1

15.4 15.2

13.9 14.2 14.5

15.8

0.0

3.6

7.2

10.8

14.4

18.0

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18*

TO

TA

L M

ILK

SO

LID

S,

% O

F U

.S.

PR

OD

UC

TIO

N

* Year-end estimate based on 11 months of data. Source: U.S. Dairy Export Council, USDA.

18Source: USDEC, U.S. Bureau of Census

0

160

320

480

640

800

NDM/SMP Cheese Whey products Lactose Butterfat

000

MT

2015 2016 2017 2018

2018: A Record Year for U.S. Exports

4/24/2019


2018: Gains Led by Mexico, Southeast Asia

19Source: USDEC, U.S. Bureau of Census

0

112

224

336

448

560

Mexico SE Asia China So. Korea Japan Canada MENA

000

MT

U.S. Exports(SMP, WMP, cheese, butterfat, whey)

2015 2016 2017 2018

U.S. Missing Out on Global Cheese Growth


-39

-26

-13

0

13

26

39

52

65

Japan China SE Asia Middle East CentAm/Caribb.

Chile Oceania Mexico So. Korea

000

MT

Incremental cheese imports, 2014-2018

TOTAL U.S.

4/24/2019


Last 5 Years: Less Than 20% of ‘New’ Milk Exported

21Source: USDEC, USDA, U.S. Bureau of Census

0.0

1.0

2.0

3.0

4.0

5.0

04 05 06 07 08 09 10 11 12 13

(bill

ion

lbs.

, to

tal m

ilk s

olid

s)

Incremental growth in U.S. production and exports, 2003-2013

Incremental production growth Incremental export growth

-1.0

0.0

1.0

2.0

3.0

14 15 16 17 18(bill

ion

lbs.

, to

tal m

ilk s

olid

s)

Incremental growth in U.S. production and exports, 2013-2018

incremental production growth Incremental export growth

65% of new milk to export

Just 19% of new milk to export

U.S. Missing Out on SMP Growth in Asia, Middle East


-40

0

40

80

120

160

Mexico SE Asia China Pakistan Middle East CentAm/Caribb.

Bangladesh Oceania So. Amer.

000

MT

Incremental SMP imports, 2014-2018

TOTAL U.S.

4/24/2019


2021 Export Projections: Competitive Outlook

23Source: USDEC Ingredients Database

USA: 1,911,380 MT

EU-28: 2,233,187 MT

Oceania 2,275,005 MT

Export Volume USA

SMP/NDM 643,786

WMP 30,852

WPC/WPI 193,407

Whey Powder/ Permeate

645,876

Lactose 383,191

MPC/MPI 14,268

Export Volume EU-28

SMP/NDM 760,542

WMP 435,772

WPC/WPI 46,740


705,248

Lactose 272,819

MPC/MPI 12,066

Export Volume

NZ Australia

SMP/NDM 409,080 170,229

WMP 1,397,531 114,058

WPC/WPI 22,700 18,564


12,686 20,000

Lactose 23,449 4,100

MPC/MPI 82,208 400

24

Market Opportunities

4/24/2019


Mexico728,000

46%

S America556,000

36%

Centram287,000

18%

LATAM Region Dairy Imports: 1.6MMT (2017e)

25Source GTIS

US Share | 77% | 565,000MT

Main Imports SMP Cheese

US Share | 18% | 100,000MT

Main Imports Lactose Cheese

US Share | 13% | 42,000MT

Main Imports Cheese

US Share 44%

80%

14%

6%

Mexico S America

Centram

285,

631

126,

095

323,

945

128,

693

43,499 42,877 51,697

21,861

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

SMP/NDM CHEESE MILK & CREAM LACTOSE WHEY POWDER ICE CREAM

2016 2017(e)

Mexico Dairy Imports: 728,000MT (2017)

26Source GTIS

US Share: 77%

4/24/2019


Latin America Potential By End-Use Categories

27

Category Retail Sales (Million US$)

Projected CAGR

Ingredients

2016 2021F 2016-21

Baked Goods 54,621 76,893 7.1% Permeate, Milk powder

Chocolate 7,717 10,254 5.9% Permeate

Yogurt 8,741 11,825 6.2% Dairy proteins

Flavored Milk Beverages 2,219 3,007 6.2% Dairy proteins, Milk powder

Milk Formula (Infant, FOF, GUM) 2,771 4,113 8.2% Dairy proteins, Milk powder

H&W Foods and Beverages 63,439 95,873 8.6% All ingredients

Source: Euromonitor

28

674,104

280,967

45,713

166,711

117,66394,129

9,362

923,455

321,984

59,907

205,304

159,691115,636

11,475

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

SMP/NDM WMP WPC/WPI Sweet Whey Whey+MilkPermeate

Lactose Milk Proteins

2016 2021FSource: USDEC Dairy Ingredient Database

Met

ric T

ons

SEA/Vietnam Ingredient Volume Forecast Cheese

14%

Milk Powders

32%

Whey/Permeates20%

Lactose14%

WPC/WPI2%

Blends, FFMP17%

MPC/MPI's1%

4/24/2019


SE Asia: Consumer Dairy Perceptions by Origin

29Source: USDEC, 2017; Points out of a value of 5; U.S. average 3.6, slightly lower than 3.7 average.

Vietnam Potential By End-Use Categories

30


Projected CAGR

Ingredients

2016 2021F 2016-21

Baked Goods 696 1,023 8.0% Permeate, Milk powder

Chocolate 85 129 8.8% Permeate

Yogurt 512 869 11.2% Dairy proteins

Flavored Milk Beverages 428 699 10.3% Dairy proteins, Milk powder

Milk Formula (Infant, FOF, GUM) 1,182 1,535 5.4% WPC, SMP, Lactose


Source: Euromonitor

4/24/2019


Philippines Potential By End-Use Categories

31


Projected CAGR

Ingredients

2016 2021F 2016-21

Baked Goods 906 1,228 6.3% Permeate, Milk powder

Chocolate 350 487 6.8% Permeate


Flavored Milk Beverages 82 108 5.8% Dairy proteins, Milk powder

Milk Formula (Infant, FOF, GUM) 777 1,047 6.1% WPC, SMP, Lactose


Source: Euromonitor

Indonesia Potential By End-Use Categories

32


Projected CAGR

Ingredients

2016 2021F 2016-21


Chocolate 934 1,527 10.3% Permeate


Flavored Milk Beverages 687 1,298 13.6% Dairy proteins, Milk powder

Milk Formula (Infant, FOF, GUM) 2,557 3,892 8.8% WPC, SMP, Lactose


Source: Euromonitor

4/24/2019


China Forecast Import Volumes for 2021

33

0

100,000

200,000

300,000

400,000

500,000

600,000

2016 2021

China: 2016 WPC/WPI Usage Volumes by Sector

34Source: Orrani

4/24/2019


China: 2016 SMP/NDM Usage Volumes by Sector

35Source: Orrani

19%

18%

18%

13%

12%

9%

6%

3% 2% 0%

LAB Drinks

Infant Formula

Yogurt

Recombined Milk

Adult Formula

Ice Cream

Chocolate

Bakery

Sugar Confectionery

Other

Total: 197,812 MT

China Potential By End-Use Categories

36


Projected CAGR

Ingredients

2016 2021F 2016-21


Chocolate 2,907 3,891 6.0% Permeate

Yogurt 15,164 32,421 16.4% Dairy proteins

Flavored Milk Beverages 9,836 5,394 -11.3% Dairy proteins, Milk powder

Milk Formula (Infant, FOF, GUM) 17,465 25,211 7.6% WPC, WPH, SMP, Lactose


Source: Euromonitor

H&W: Japan 3.0%; Korea 3.9%

4/24/2019


Health and Nutrition Remains Strong in North Asia

370

50,000

100,000

150,000

200,000

2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F

Health and Wellness Packaged Food and Beverages (Million US$)

China Japan KoreaSource: Euromonitor

• China: #2 market globally (after USA); trend spreading from first to second/third tier cities

• Japan: #3 market globally; 3.0% CAGR projected for 2016-21, muted a bit by price sensitivity

• Korea: 3.9% CAGR projected for 2016-21; consumers seeking details on ingredients’ health, production process and origin in foods via online channels, including via smartphones

2021 MENA Ingredients Imports

38

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2016 2021

WMP SMP/NFDM Milkfat FFMP

Infant Form Whey Pwders Milk Proteins Others

Source: USDEC Global Cheese and Dairy Ingredients Databases

MT

WMP, 56,599

SMP, 41,183

FFMP, 38,457

Infant Formula, 11,123

Milkfat, 10,853

Other Ingredients, 3,841

Source of Growth (MT)

4/24/2019


Africa Rising: Is it the Next Frontier for U.S. Dairy?

39

• By 2025 Africa will account for 19% of global population

• Growth driven by rise of middle class and vast bottom-of-pyramid population

• Nigeria + S. Africa account for ~50% of continent’s GDP (2017)

• Positioned as “the next big” consumer market, but not without risk/complexities

Source: Euromonitor; BOP = Bottom of Pyramid

South Africa: Strong Middle Class and Developed InfrastructureAfrica’s Income Groups (2017)

Africa Rising: Dairy’s Rising Potential

40Source: Euromonitor Note: Egypt’s high growth for 2017 not true market growth but due to high inflation caused by the devaluation of the Egyptian pound.However, Egypt is expected to register the highest packaged food CAGR for the region of 6% over the forecast period due to the strong packaged food industry.

• Dairy drives Africa’s packaged food sales‒ In 2017, dairy accounted for 29% of packaged food in Africa with 15% retail value growth

‒ Egypt, South Africa and Algeria account for 55% of value share (2017)

Africa’s Packaged Food Retail Value Sales by Country 2017/2022

4/24/2019


Closing Thoughts• Markets will be more balanced in 2019, but this is an ongoing process, and it will take a little

longer to flip from over-supplied to under-supplied.

• U.S. suppliers are favorably positioned to increase share in 2019, though retaliatory tariffs in China remain a big problem.

• However, U.S. suppliers are missing out on much of the growth in world trade. How are we going to do better?

• Ample volume/value opportunities, but not without significant competition from other-origins– Between positive perceptions of NZ and non-level playing fields due to tariff differentials, stepping up our game

is critical in terms of visibility, customer centricity, value-added product portfolio, etc.

– Competition from non-dairy proteins could also heat up

• Strong health and wellness prospects, especially Asia, but growth not organic… have to seize and fight for it

41

Questions, Comments…

42

4/24/2019


Thank you

Vikki Nicholson-West

43

[email protected]

www.usdec.orgThinkUSAdairy.org

Managed by Dairy Management Inc.™

adpi - american dairy products institute > home - global ......4/24/2019 global markets landscape...

Documents