Lausanne, Switzerland, June 1, 2009 ?§C Global consumption of milk and other liquid dairy products* is expected to increase by a compound annual growth rate (CAGR) of 2.2% over the next three years, according to research released today from Tetra Pak, the world leader in food processing and packaging solutions.

The forecast is contained in the Tetra Pak Dairy Index, a new biannual report on consumption trends in the dairy industry that is designed to help dairy producers identify opportunities for growth.

According to the Tetra Pak Dairy Index, in 2008, global consumption of liquid dairy products, excluding soy and dairy alternatives, reached a record high of 258 billion litres. This marks a worldwide increase of 1.6% over 2007 ?a an additional four billion litres. Over the past four years, global consumption of milk and other liquid dairy products has grown by a CAGR of 2.4%, despite a sharp spike in prices over the past two years, which saw milk prices increase by up to 75% in some markets before stabilising in late 2008.

Dennis Jonsson, President and CEO of the Tetra Pak Group, said: "Milk is a basic food staple, which is considered part of a healthy and nutritious diet for all ages all around the world. We expect two trends to continue to drive global milk consumption over the next three years: continued growth in emerging markets and a shift toward consuming more packaged milk. Packaged milk continues to grow, based primarily on health and safety concerns and also a desire for more convenience to suit busier, more mobile lifestyles."

Emerging markets account for nearly 96% of global consumption growth

Leading much of the growth in the global dairy industry - 95.8% over the past four years - are emerging markets, such as India, Pakistan, China and the Middle East. These markets are experiencing fast growth in the consumption of milk and other liquid dairy products based on growing populations, rising household incomes, new dietary trends and increased awareness and availability of dairy products. For example, from 2005 though 2008, consumption of liquid dairy products in China has grown by CAGR of 13.4%, reaching a record high of 27 billion litres in 2008. This number increases to 39.4 billion litres when including soy and dairy alternatives such as rice, nut, grain and seed-based milks.

Packaged milk expected to reach 72% of global consumption by 2012

Another factor driving growth, particularly in emerging markets, is a fundamental shift in the way liquid dairy products are packaged and consumed. From 2005 to 2008 the global market share of unpackaged milk declined by 1.8%. During the same time period, the global market share of Ultra High Temperature (UHT) milk (milk which can be shipped and stored before opening without requiring either refrigeration or preservatives) increased by 3.2%

Tetra Pak estimates that global consumption of UHT milk will grow at a CAGR of 5.2% between now and 2012, reaching more than 70 billion litres by 2012. In fact, consumption of packaged milk and other liquid dairy products is growing faster than the entire liquid dairy category, and is expected to reach more than 72% of total global consumption by 2012.

Consumers economise and stick to basics in current economic climate

More than 31% of consumers are concerned about having enough money to live well and pay their bills, according to recent research from GfK Roper Consulting. This is prompting consumers of dairy products to increasingly buy budget or private label brands when available, For example, in Western Europe, sales of private label products now represent nearly 36% of total white milk sales.

"In today's economic climate, we would anticipate that many consumers will go back to basics," said Jönsson. "For example, they may substitute white milk for higher priced, more value-added products like yogurt drinks or they may buy budget brands rather than premium brands. Even so, we expect the global dairy market to experience steady growth for the foreseeable future."