The Right Formula For Asia's Next Generations

03 Jun 2015

Global consumer demand for specific product properties, particularly in the food industry, has resulted in the development of a wide range of dry dairy products, ranging from instant whole milk powder to specialty food ingredients.

The infant formula sector is growing rapidly and, with the development of emerging markets such as those in Asia, the trend is set to continue. The need for production facilities to meet increasing demand has never been more acute.

More people, more milk

Market development is closely linked with the economic growth of countries, as well as factors including urbanization, increased income per capita, and the growing number of working women. One of the main drivers for growth is the development and expansion of the middle class in Asian countries as well as in Africa and the Middle East. Increasing demand for infant formula in Asia is being met by the main dairy-producing geographies, including the US, Europe and New Zealand. In these countries milk production is rising even though national demand remains static, and the excess milk is being converted into milk powder, which is sold all over the world, and mainly to Asia.

The Asian population is growing rapidly overall, as is a more affluent middle class. The willingness of milk-producing countries to sell their surplus milk powder to non-producing countries means that products that were once scarce and unaffordable for most people in Asian countries are now physically and financially within the reach of a much larger proportion of the population.

"We see the ongoing challenges, the increasing urbanization and the growing population; we recognize that more and more women are joining the workforce, earning a higher level of income and, as a result, now have the buying power to purchase nutritional supplements for their children. This, in turn, creates demand for high quality nutritional formula to meet the dietary requirements of these children.” Claus Siegaard, Business Unit Manager for GEA in Singapore.

In parallel with importing milk products from major milk-producers, Asia is also witnessing the development of new industries within its borders. Vietnam had virtually no dairy industry 20 years ago, but the country has seen annual milk production grow by approximately 20% year on year over two decades. This home grown dairy industry has resulted in major employment for dairy farmers, dairy plant operators, and the commercial and transportation workers who drive a nationwide distribution chain. A national industry also has a major impact at the social level, both locally and nationally.

The beneficial ripple effects of a new industry

Vietnam now supports successful large dairy farms (with cows imported from Australia/New Zealand/US). The country’s milk processing industry also promotes and supports family farming (5–50 cow herds). Some companies have even set up associated operations such as veterinary clinics, feed supplies or animal husbandry training, and utilize major distribution systems that involve local shops and local drivers, to help encourage and optimize milk production. The availability of home-produced and imported milk and formula products to a much higher proportion of populations has also driven up consumption. In Vietnam, people are now consuming 30 times more milk than their parents did back in 1990.

Demographic change spurs market growth

China represents another key market and driver for the nutritional formula industry. China is witnessing a huge population migration as increasing numbers of people move from rural to urban areas, more and more women are joining the workforce (which is also happening in other Asian nations), and disposable income levels are rising as salaries increase. These demographic changes are all leading to an increased demand for manufactured baby food products.

China’s industrial and social development and, to a greater or lesser degree, the local geopolitical situation, is therefore driving manufacturers to build new factories and increase production. It is obviously important for companies like GEA to follow this trend and to react quickly to ongoing developments. To achieve this GEA must have local representation and people who understand Chinese regulations, who know what can and can’t be done, and who can communicate fluently with the local companies.

“New, advanced production plants have become a necessity and we at GEA have taken on the burden of creating the most high-tech, state-of-the-art facilities — from turnkey plants and projects to individual components — to meet these needs.” Claus Siegaard, Business Unit Manager for GEA in Singapore.

Owning the responsibility

Ultimately, these regions of high growth need new, and advanced, high-efficiency production plants, which can achieve time-to-market and production efficiencies and meet the highest standards of quality nutritional formula, to meet the dietary requirements of children.

"So, where does GEA fit? We’re providers of world-class technologies that improve the economics of improving milk powder, such as spray drying plants. Further, we also provide the equipment to rehydrate imported milk powder back into milk for local consumption or a milk concentrate, which is then used to make ice cream, yoghurt or infant formula, for example. And, of course, dried milk powder is also much cheaper to transport, providing another commercial benefit. Our drive, and perhaps our role, is to continue to develop the best methods to process that milk for the benefit of both the suppliers and the end-users.” Eric Bryars, Managing Director at GEA in Singapore.

This puts a huge responsibility on the producers of nutritional formula and on the suppliers of production technology, plant and equipment. GEA, and other process and raw material suppliers need to own that responsibility and commit to providing state-of-the-art quality in our plants and equipment, and make available thoroughly tested technologies spanning every aspect of production, from milk and ingredients reception, standardization, evaporation and spray drying, to powder handling and packing. The overarching goal is to ensure safe, cost-effective, hygienic and environmentally sustainable production. This commitment from GEA means GEA really can claim to provide ‘engineering for a better world.’

Source: GEA