Higher protein, lower sugar

Q. What are the key trends shaping the yogurt market? And why?

Firstly, the market is leaning towards healthier and more nutritious yogurt products. As consumers attach greater importance to the nutritional value of yogurt, demands for nutrition have also evolved. Consumers are not merely satisfied with traditional fortified yogurts with protein and calcium supplements. They now have more advanced and specific demands regarding high concentrations of calcium and protein, the content of the original raw milk, clean labels, as well as fortification with dietary fibers and vitamins. We also see a rapid growth in the market penetration of yogurt products featuring low fat content, zero sucrose, and more balanced taste and texture.

Secondly, yogurts are becoming more delicious overall. Good taste and texture are key to attracting long-term consumers who are increasingly interested in product innovations in taste and texture. Through satisfying consumers’ taste buds and boosting their mood, tasty yogurt products are delivering emotional value to consumers.

Thirdly, more functional yogurts have emerged in the market. Since the Covid-19 pandemic, health issues related to immunity, digestion, sleep and physical ability have been attracting more public attention, with mental stress and weight management as main concerns of younger consumers between 16 to 24 years old. In addition to growing consumer recognition of the importance of

digestive functions, consumers have also become increasingly attentive towards the types and viable counts of stains in yogurt products.

Fourthly, yogurt products are becoming more accessible and more convenient to consume. A more diversified distribution network has come into play where, in addition to such traditional distributors as supermarkets and convenient stores, emerging warehouse membership clubs, new forms of retail business models including online purchase and doorstep delivery services, e-commerce platforms and community group buying have greatly enhanced the accessibility of yogurt products. In terms of packaging, consumers are now provided with a variety of options. For example, medium-sized (about 400g) yogurt products are value-for-money and fit in a breakfast or meal replacement scenario, while portable small PET packages and stand-up pouches are useful when consumers are on the go.

Q. What is driving the demand for yogurt products?

As living standards health awareness improve, consumers are attaching greater importance to the health and nutritional values of food. Meanwhile, as China’s aging population grows, there is a steady demand for dairy products, especially those that enhance nutrition intake and digestion promotion. Furthermore, Gen Z consumers, who are becoming China’s main driver of consumption, value not only nutrition and health, but also the overall sensory experience, especially taste and texture.

Yogurt products tend to be consumed at breakfast, as afternoon snacks or after meals, addressing various consumer needs. For instance, they make perfect nutrition supplements, reduce hunger, satisfy the appetite, and improve gut digestion. Furthermore, the refreshing taste and healthy product image help meet consumers’ emotional needs for health meanwhile boosting their mood.

Benefiting from the improvement of cold-chain-based supply chains, the development of logistics, and emerging commercial models like Online-to-Offline (O2O) commerce, yogurt products now can be distributed to low-tier markets across China and reach more consumers through diversified distribution channels. This has in turn spurred consumer demand for yogurt products.

Also, the growing popularity of ready-made yogurt in recent years has promoted the visibility of the entire yogurt product category among more consumers, and reinforced consumers’ habits of yogurt consumption in new consumption scenarios.

Q. What trends do you believe will continue to emerge in 2024?

One of the trends that will continue is that Yili will strive to better serve consumers’ demands for nutritious food. A good example is the increased

popularity of high-protein yogurt products. In 2024, the Chinese market will see more new yogurt products featuring higher protein and raw milk content, as well as more diversified yogurt products adopting innovative production technologies.

Another hot trend is sugar reduction in yogurt products to cater to the demand of a large group of consumers. On top of zero sucrose, more yogurt products boasting both health benefits and taste are expected to appear in 2024. Clean labels will also continue to be emphasized. Chinese consumers appreciate the “zero additives” label, as it both addresses their concerns over food additives, and also preserve more original flavours. According to a survey conducted by Mintel in 2023, safety of ingredients and formulas has become the primary consideration of Chinese consumers when they purchase food and beverages.

In addition, we see a continuing growth in the demand for food that satisfies consumers’ emotional needs, including yogurt products. In 2024, in parallel with trends in other beverages, especially beverages consumed on the go such as milk tea, consumers are expected to welcome innovation on taste and textures of yogurt products, such as layered yogurt, yogurt with toppings and various trendy flavours.

Q. Which flavours and styles of yogurt product are proving to be particularly popular with consumers? And why?

Classical flavours including strawberry, peach, jujube and oatmeal are consumers’ all-time favorites. Meanwhile, a series of composite-flavour products, such as fruits + grains or mixed fruits are also popular in China. This high consumer acceptance can be explained by the fact that these combinations are not new additions to the market.

Packaging preferences are determined based on consumer habits in different regions. Instead of the eating yogurt with a spoon commonly seen in Europe and North America, Chinese consumers prefer yogurt drinks in packs of small bottles, bags or larger bottles, as these types of yogurt drinks are considered to be value-for-money in China. At the same time, we have also observed a growth in spoon-eating yogurt products in the Chinese market, which can be attributed to the increase of consumption during breakfast time as a nutrition supplement, and as meal replacements.

Q. What are some of the latest innovations you have seen?

The yogurt market is showing diversified innovations. In terms of nutrition and function related innovation, fortification with vitamins (such as Vitamin C, D, and B6) and dietary fibres has become a popular trend. Meanwhile, proprietary probiotics or special types of probiotics are also introduced to more innovative products for promoting easy digestion, intestinal health and immunity. Examples are yogurt products with active probiotics, edible probiotic

crystals and Yili’s “space probiotic strains.” Ambient yogurt products have also seen breakthroughs in terms of probiotics. For example, each package of the newly launched AMBPOMIAL probiotic yogurt contains one billion CFU active probiotics.

New yogurt products also tend to cater to consumer demands for innovative texture and taste. A wide range of innovative textures are now available, such as layered yogurt, yogurt with toppings, plant-based yogurt, fruit yogurt, yogurt with succulent popping boba, and sparkling yogurt. In terms of taste, besides new fruit and grain flavours, new yogurt products also feature innovative combinations of fruit and vegetables, and even salty or spicy flavours.

On top of being portable and convenient, innovative yogurt packaging can improve consumer experience with interesting designs and enhanced digital features that allow consumers to acquire product information and participate in interactive activities. Examples include canned yogurt, inkless eco-packages, plant-based eco-packages, portable DIY yogurt cups with multiple packs of toppings, scented packages, and smart packages with unique traceable product codes.

Q. How is the yogurt category changing?

Yogurt products are playing more roles in our diets. As dairy products with high nutritional and functional values, yogurt products promote digestion and a healthy balance in intestinal flora, catering to the concepts of a balanced diet and weight management. Delicious yogurt can be a quick fix to relieve stress and offer emotional value in daily life. A pack of thick and creamy yogurt with lots of toppings is more filling, offering a quick energy boost that suits fast-paced lifestyles.

From the perspective of product development, the taste, texture, and packaging of yogurt are getting more innovative and diversified. More advanced manufacturing processes and technologies are introduced in market continuously, as well as shelf-life extension technologies were continuously expanded to extend selling time.

Finally, distribution channels have become increasingly important to product innovation in the yogurt category, and to the improvement of the market influence of various yogurt makers. E-commerce, WeChat, TikTok and other online distribution channels have greatly expanded the online customer base. The emergence of new retail, warehouse membership clubs and snack shops has intensified the competition at the end market, giving retailers more bargaining power and enabling them to develop their own brands. All these changes have imposed new challenges to the yogurt category as the industry tries to restructure its value chain.

Q. How can technology enhance the future of yogurt?

Innovation in product formulation, functional ingredients, manufacturing technology, packaging technology, smart production and “Internet+” will continue driving future development of the industry in response to consumer demands.

Focus has been placed on research and application of new ingredients and formulas, such as the addition of fruit and vegetable fiber, prebiotics or protein fortification, to improve the nutritional value and functionality ingredients. With functional ingredients, research efforts have been placed on the development of probiotics, vitamins, minerals, functional raw materials, and other healthy ingredients to meet the demands of consumers for healthy and functional products. In terms of process innovation, researchers seek to improve the traditional yogurt manufacturing process by improving the selection of probiotic strains, controlling fermentation conditions and processing procedures, to help develop innovative and market-leading products.

Looking at packaging innovation, efforts have been made on new packaging materials and packaging designs to help the industry develop sustainably and enhance product image and consumer experience.

The Internet of Things (IoT) and AI technologies are also being utilised to realise intelligent monitoring, data analysis and automation of the yogurt production process. Furthermore, digital technologies are being applied to online sales of yogurt products, logistics and distribution, and consumer surveys to satisfy the personalized purchasing needs of consumers, expand sales channels and improve consumer loyalty.

Q. What are you doing to innovate in this area?

Research on probiotic strains with IIPR: After years of extensive research, Yili’s proprietary probiotic strain BL-99 has been applied in the Yili Yixiao yogurt. Another proprietary probiotic strain K56 has been applied in Meiyitian active lactobacillus drinks, helping promote intestinal health.

Research on sugar reduction technology: The Changqing zero-sucrose series flavoured probiotic drinking yogurt is a product that benefits from the sweetness toolkit of Yili Group’s digital management system. Through research on the characteristics and combination of various sugar substitutes, and scientific experimental design and data evaluation, the R&D team managed to develop a combination of maltitol and steviol glycosides to achieve zero sucrose in the products while achieving a sweet-sour balance and removing the usual unnatural taste of sugar substitutes. At the same time, the product formula uses seasonal fresh fruits such as strawberries from Dandong, Liaoning Province, yellow peaches from Shiqiao, Jiangsu Province and raw oats harvested near 41°N latitude, striking a balance between health benefits and taste.

Research on encapsulation technologies: The Joyday Heart Fun Multi Fruit Yughurt series of flavoured fermented milk products have achieved a technological breakthrough that allows an even distribution of fruit toppings and chocolate in the product. The R&D team conducted research on water-insoluble encapsulation of three-layered chocolate beans and developed a “three-step” technique to produce a chocolate jam with chocolate beans. Packaged in a portable cup with a large-diameter straw, consumers can enjoy three kinds of delicious topping in every single sip of the yogurt.

The Changqing popping boba series of flavoured fermented milk products utilises encapsulation technology to coat grains such as purple rice and oatmeal to make popping boba. By processing raw materials and promoting the processing technology, the R&D team managed to enhance the texture and taste of the popping boba and ensure their stability in yogurt. The product features purple rice from Xishuangbanna, Yunnan Province, blueberries from Changbai Mountain, raw oats harvested at 41° north latitude, aloe vera, and grain popping boba with large fruit cubes.

Research on layered filling techniques: Through the combination of a three-step layered filling technique and traditional fermentation techniques, the R&D team managed to tackle the issues of scattered jam, low visibility of jam in yogurt, and insufficient fermentation of yogurt in the bottom of jam of curdled yogurt products. The entire production process takes 21 steps. Upon completion of filling, the yogurt is fermented inside each cup for four hours. At the bottom of the yogurt cup, blueberries and strawberries which are clearly visible through the transparent PP cups, making the product more appealing to consumers.

High protein: The Changqing premium protein artisan yogurt is a sugar-controlled yogurt product featuring high protein content. It adopts the RO membrane technology to concentrate milk to achieve a protein content of 5g/135g, which is 1.6 times higher than that of ordinary yogurt, without adding extra protein powder and other ingredients. The product contains 0 sucrose and 0 sugar substitute, emphasising the natural sweetness of raw milk. While controlling the sugar content, the product is rich in nutrients. The coconut flavoured Changqing yogurt contains only 4% sucrose, which is half of the level of ordinary yogurt.

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