Southeast Asian Dairy Markets: In Transition to Better Times

Beyond the short-term headwinds at play across Southeast Asia, better times lay ahead for the dairy markets of Indonesia, the Philippines, Malaysia, Thailand, Singapore, and Vietnam. These dairy markets are in a time of transition as they cycle out of a period of channel disruption, sluggish consumer demand for dairy products, and downstream margin pressure that culminated in a slowdown in trade growth between 2020 and 2022.

Consumer market conditions are improving, with more meaningful recovery expected from 2024 as inflation eases, foodservice demand improves, and marketing and investment activities increase to support demand growth. The region will also be an economic bright spot amid growing global concern, though an economic slowdown in China is a key risk for these economies. Medium-term demand (to 2030) has runway for volume and value growth through the premiumization of key categories. 

Collectively, the Southeast Asian market is a large milk-deficit region with a combined regional self-sufficiency rate of 74%. Based on Rabobank modeling, the combined import deficit stood at 9.9bn liters liquid milk equivalent in 2022 and is forecast to surpass 11.5bn liters in 2023. 

The region will remain a fierce battleground with room for local brands and traditional export players to expand volumes in a growing market. However, remaining price competitive, executing product development, expanding channels, and marketing sustainability credentials will be critical for long-term success.