Less refrigeration space is making UHT milk the best alternative of preservation. Fresh milk needs refrigeration to prevent it from being spoiled by bacteria. Even under refrigeration, fresh milk can be preserved for only a few days. Cold chains or chill chains are required throughout the procurement of milk from dairy farms until it is stored, processed, packed and delivered to the customers. India and China, two of the largest consumers of milk globally, lack chill chains or refrigeration chains. Poor road infrastructure in India remains another restraint in the development of chill chains in the country.
Increasing influence of western culture is also escalating the demand for UHT milk market globally. The changing consumer habits in favor of packaged food products in the populous Asian countries are increasing the consumption of UHT milk in the region. This has also resulted in rise in the apartment culture in these countries, where people generally stock packaged food and beverage items. In the western countries, consumer prefer to stock packaged and processed food items due to their longevity and ease of use.
The degree of competition is quite high in the UHT milk market. Companies in the market are engaged in price wars as reduction in price of UHT milk by one company forces other market players to reduce their prices. Moreover, supermarkets and hypermarkets are the major distribution channels for UTH milk. These retail chains prefer products with the lowest price on offer, thus increasing the competitiveness in the market. Some retail chains have developed their own brands, known as private labels, in partnership with small dairy processors. They keep their prices low, though the quality of their products is not as good as the branded products in the market. Private label companies have a large share in the European market. As the region is undergoing an economic downturn, people are willing to compromise on quality for price, thus increasing the market share of private labels. Product differentiation is low among the branded products as every company in the market offers a range of products with comparable nutritional inputs. This decreases the switching cost for the consumer, resulting in increased competition among industry players.
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