Price Increases, Consumer Decline, and Imported Milk Offensive... Dairy Industry Faces 'Triple Hardship'

Increase in Last Year's Imported Sterilized Milk from Overseas
Up 33% Compared to Previous Year...19% Growth by Weight
Longer Shelf Life and Lower Price Drive Demand Expansion

As the price of raw milk rises every year and factors such as low birth rates impact consumption, the consumption of white milk is decreasing, while the import volume of cheaper foreign milk has significantly increased. This is because it has advantages such as a long shelf life and cost-effectiveness, leading to increased demand not only in households but also in the food and dining industries.

CU Overseas Direct Sourcing Sterilized Milk
Photo by BGF Retail

According to export-import trade statistics from the Korea Customs Service on the 23rd, South Korea's milk import value last year was $30.94 million (approximately 41.3 billion KRW), an increase of about 33% compared to the previous year. In terms of weight, it was 37,361 tons, up 19% from a year earlier. Compared to 2019, before the outbreak of COVID-19, the import value and weight have increased about fourfold.

Imported milk is mainly classified as sterilized milk, which is heated at 135 to 150 degrees Celsius for 2 to 5 seconds to completely eliminate microorganisms that can grow at room temperature. Polish milk accounts for more than 80% of the total share, the highest proportion, and it is also imported from Australia, Germany, Italy, and France. Sterilized milk has no significant difference in nutritional content compared to white milk produced by domestic manufacturers and is characterized by the use of aseptic packaging containers that allow it to be stored at room temperature for more than one month. If the packaging is unopened, the shelf life is nearly one year.

The product price is about 70% of domestic milk, which is around 3,000 KRW per liter, making it cheaper. Recently, CU convenience store, the first in the convenience store industry to directly import and sell Polish milk, priced 1-liter regular and low-fat milk at 2,100 KRW. This is up to 46% cheaper compared to manufacturer brand (NB) white milk. An industry insider explained, "Sterilized milk demand was high mainly among manufacturers and franchises that make bread, cheese, and coffee, but since the ingredients and taste are not much different from established brand white milk and the price is low, general consumers' interest is increasing."

Conversely, sales volume of domestic manufacturers' milk products is declining. According to market research firm Market Link, total retail sales of major manufacturers' milk decreased from 2.4652 trillion KRW in 2020 to 2.1841 trillion KRW in 2021, and 2.1766 trillion KRW in 2022, with 1.9589 trillion KRW recorded up to November last year. The continuous rise in product prices also had an impact. According to the Korea Consumer Agency, among 39 essential daily items in the fourth quarter of last year, milk prices rose 10.3% compared to the same period the previous year and 4.3% compared to the previous quarter.

An industry official said, "In the case of white milk, the consumer base is shrinking, and relatively cheaper products such as private brand (PB) products from distribution channels and imported milk are increasing, making competition difficult. Because of this, major manufacturers are diversifying their businesses into processed milk, plant-based alternative beverages, and health functional foods to find new opportunities."

This content was produced with the assistance of AI translation services.