Drinking Milk Products in Ecuador

DRINKING MILK PRODUCTS IN
ECUADOR
Euromonitor International
November 2015
DRINKING MILK PRODUCTS IN ECUADOR
LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Trends .......................................................................................................................................... 1
Competitive Landscape ................................................................................................................ 2
Prospects ..................................................................................................................................... 2
Category Data .............................................................................................................................. 3
Table 1
Table 2
Table 3
Table 4
Table 5
Table 6
Table 7
Table 8
Table 9
Table 10
Table 11
Sales of Drinking Milk Products by Category: Volume 2010-2015 ............... 3

Sales of Drinking Milk Products by Category: Value 2010-2015 .................. 3
Sales of Drinking Milk Products by Category: % Volume Growth 20102015 ............................................................................................................. 4
Sales of Drinking Milk Products by Category: % Value Growth 20102015 ............................................................................................................. 4
NBO Company Shares of Drinking Milk Products: % Value 2011-2015 ....... 4
LBN Brand Shares of Drinking Milk Products: % Value 2012-2015 ............. 5
Distribution of Drinking Milk Products by Format: % Value 2010-2015 ........ 5
Forecast Sales of Drinking Milk Products Products by Category:
Volume 2015-2020 ....................................................................................... 6
Forecast Sales of Drinking Milk Products Products by Category:
Value 2015-2020 .......................................................................................... 7
Forecast Sales of Drinking Milk Products Products by Category: %
Volume Growth 2015-2020 .......................................................................... 7
Forecast Sales of Drinking Milk Products Products by Category: %
Value Growth 2015-2020 ............................................................................. 7
Passport
DRINKING MILK PRODUCTS IN

ECUADOR
HEADLINES
Drinking milk products grows by 2% in current value terms to reach sales of US$685 million in
2015
Retail volume growth stagnates after declining by two percentage points from 2% due to
unhealthy perceptions derived from the labelling law
Fresh milk continues to decline while flavoured milk drinks falls dramatically as perceptions
change among consumers both in volume and value
Unit prices for staple products remain relatively stable, cows milk especially rises by 2%
Nestl Ecuador SA maintains its leading position with a 23% value share in drinking milk
products in 2015
Drinking milk products is set to register a 2% value CAGR at constant 2015 prices over the
forecast period, with sales of US$765 million in 2020
TRENDS
Volume sales were heavily impacted in drinking milk products and grew more slowly than the
review period average. This was caused by several reasons. One is the import barriers that
the government, through the COMEX (External Commerce Committee in Spanish) created
since December 2013, supposedly to improve quality control with the intention of favouring
local manufacturing, is also having as a consequence the increase of different raw material
costs and therefore unit prices to consumers. Another more direct consequence is the traffic
light labels implemented in August 2014 which impacts those products that are high in sugar,
like flavoured milk drinks.
Flavoured milk drinks was the most affected category as parents had previously thought these
products were healthy. Following changes to labelling, these products were seen to be less
healthy than previously thought by many, prompting a decline in purchases. Flavoured milk
drinks retail value declined by 8% while retail volume decreased by 11%, impacting the
overall growth of drinking milk products as a consequence.
The health and wellness trend triggered growing demand for healthier products, such as
reduced fat products, lactose-free products and dairy alternatives such as soy milk and
various non-dairy drinks, such as rice drinks in higher-income groups. This trend was
underpinned by a multitude of new product launches during the review period.
The average unit price rose moderately below inflation in 2015, explained mostly by the
decrease in the demand for flavoured milk drinks, but also due to higher production costs.
Since unit prices are controlled mainly for cows milk by the government in order to ensure
affordable prices for lower-income groups, prices remained stable in 2014.
Government programmes provide free milk. CRECER, for example is a project in the province
of Azuay, which gives free milk to very low-income families, who would not normally have
access to the product. The impact is positive for retailing of milk as it is hoped that families
who benefit from the programme understand the importance of consuming milk for nutrition
and, therefore, will demand the product later on.
Passport
Long-life/UHT holds the largest share of milk as it is generally perceived as being healthier
and better than fresh milk, because it has a longer shelf life. It is also considered to be more
convenient, as it does not need to be refrigerated. Fresh/pasteurised milk suffers a lack of
demand and is less attractive to sell for producers due to the transport logistics, which are
expensive as cold storage is needed.
There is a growing offer of non-dairy milk alternatives, mainly witnessed at supermarkets and
hypermarkets that target middle-high and high-income groups. The offer ranges from local to
imported products and includes soy, rice and almond milk. They are mainly purchased due to
health-related needs. However, in the case of soy milk, demand is growing as it is considered
healthy and is becoming more popular.
Drinking milk products are mainly sold through traditional grocery retailers (with a 79% value
share in 2015) and more specifically through independent small grocers, which represented a
61% value share. Consumers frequently purchase this type of product, which is why they
tend to buy it more from a distribution channel that is closer to their homes.
COMPETITIVE LANDSCAPE
Nestl Ecuador SA remained the leading player in 2015 with a 23% value share. The
companys brands La Lechera, La Vaquita, Nesquik, Milo and Ricacao are renowned and
highly positioned among consumers. This is due to the companys efforts to constantly
innovate its products and its marketing campaigns, in which it invests greatly. In addition, the
company was not affected by import barriers, as it produces most of its products locally, but it
also signed a cooperation agreement with the Industry and Productivity Ministry (MIPRO in
Spanish), which cancelled the restrictions for Nestls products.
Local players brands lead sales and perform better. The majority of the main brands are local
such as Toni, Reyleche, Nutrileche and Vita. Their strong national distribution network plus its
offer of high-quality affordable prices mean that these brands are quite accepted. Combining
all the local brands together, they reach all income groups. Among foreign companies, the
only large one present is Nestl, which has a good performance, but only targets middle-high
and high-income groups.
The Ecuadorian government launched a campaign to promote consumption of dairy products.
The campaign, called three dairy products per day, aims to inform consumers about the
importance of a daily intake of dairy products. It also strives for consumers to prefer dairy
products over less nutritious options. The campaign runs on the TV, radio and in the press.
Premium products tend to compete for sales by offering highly specific options such as added
vitamin K, organically processed and added collagen. Standard products offer fewer specific
added benefits but high- quality products and various fat content options. Economy products
offer low prices but are usually full fat only. Private label is likely to continue increasing
demand, as players like Corporacin Favorita CA already have two Supermaxi and La
Original.
PROSPECTS
After the decline in 2015, it is expected that volume growth will resume during the next five
years, although not as strong as before, hence a rebound in 2016 is expected after the
stagnation in 2015. It is also expected that families will choose cows milk instead of flavoured
alternatives. In order to prevent this, companies are also expected to modify their formulas in
order to make their products healthier, therefore fortification with vitamins, calcium or protein
could be one option.
Passport
Passport
Consumers are expected to expect and gravitate towards products that are convenient for
them in terms of distribution, consumption, price and storage. This is why it is likely that
fresh/pasteurised milk will tend to disappear, as it is not convenient in these ways.
Due to the strong marketing campaign to promote consumption of dairy products, drinking
milk products is expected to become better positioned as extremely healthy.
As demand for UHT milk increases, traditional grocery retailers are likely to increase
distribution, as they will no longer need to refrigerate the products. Still, retail distribution will
continue to modernise, which is likely to increase the amount of supermarkets and
hypermarkets, which would increase sales of drinking milk products as they have a wider
product offer.
Companies are predicted to strengthen their communication campaigns, in order to
encourage greater demand from the expected increase in consumption resulting from the
governments marketing campaign to eat more dairy products. Players are likely to offer more
promotions and discounts to increase frequency of purchase.
CATEGORY DATA
Table 1
Sales of Drinking Milk Products by Category: Volume 2010-2015
tonnes
Flavoured Milk Drinks

- Dairy Only Flavoured
Milk Drinks
- Flavoured Milk Drinks
with Fruit Juice
Milk
- Cow's Milk
- Goat Milk
Powder Milk
Non-Dairy Milk
Alternatives
- Soy Drinks
- Soy Milk
- Other Non-Dairy Milk
Alternatives
Drinking Milk Products
Source:
2010
2011
2012
2013
2014
2015
24,175.7
24,175.7
24,853.7
24,853.7
25,117.1
25,117.1
26,509.4
26,509.4
26,744.1
26,744.1
23,715.2
23,715.2
391,496.6
391,496.6
12,910.0
453.7
379,724.2
379,724.2
13,290.0
470.0
381,988.4
381,988.4
13,622.3
485.5
388,131.6
388,131.6
13,938.2
506.1
395,816.2
395,816.2
14,309.1
530.6
398,912.5
398,912.5
14,738.0
542.5
103.7
350.0
-
110.0
360.0
-
113.2
372.3
-
115.9
390.2
-
119.8
410.8
-
122.2
420.3
-
429,036.0
418,337.9
421,213.2
429,085.3
437,400.0
437,908.2
Euromonitor International from official statistics, trade associations, trade press, company research,
store checks, trade interviews, trade sources
Table 2
Sales of Drinking Milk Products by Category: Value 2010-2015
USD '000

Milk Drinks
with Fruit Juice
Milk
- Cow's Milk
2010
2011
2012
2013
2014
2015
63,891.5
63,891.5
72,324.2
72,324.2
72,914.9
72,914.9
77,277.7
77,277.7
81,484.0
81,484.0
75,332.0
75,332.0
369,923.8
369,923.8
392,067.7
392,067.7
411,037.1
411,037.1
427,350.5
427,350.5
447,326.9
447,326.9
460,397.0
460,397.0
- Goat Milk
Powder Milk
Non-Dairy Milk
Alternatives
- Soy Drinks
- Soy Milk
Alternatives
Source:
Passport
107,464.4
496.7
115,224.3
554.7
124,151.8
602.8
131,583.6
647.9
140,986.1
704.5
148,115.8
745.1
241.2
255.5
-
273.9
280.8
-
297.0
305.8
-
315.9
332.0
-
341.5
363.0
-
361.2
384.0
-
541,776.4
580,170.9
608,706.6
636,859.7
670,501.6
684,590.0
Table 3
Sales of Drinking Milk Products by Category: % Volume Growth 2010-2015
% volume growth

- Dairy Only Flavoured Milk Drinks
- Flavoured Milk Drinks with Fruit Juice
Milk
- Cow's Milk
- Goat Milk
Powder Milk
Non-Dairy Milk Alternatives
- Soy Drinks
- Soy Milk
- Other Non-Dairy Milk Alternatives
Source:
2014/15
2010-15 CAGR
2010/15 Total
-11.3
-11.3
0.8
0.8
3.0
2.2
2.0
2.3
0.1
-0.4
-0.4
0.4
0.4
2.7
3.6
3.3
3.7
0.4
-1.9
-1.9
1.9
1.9
14.2
19.6
17.8
20.1
2.1
Table 4
Sales of Drinking Milk Products by Category: % Value Growth 2010-2015
% current value growth

Milk
- Cow's Milk
- Goat Milk
Powder Milk
- Soy Drinks
- Soy Milk
Source:
2014/15
2010-15 CAGR
2010/15 Total
-7.5
-7.5
2.9
2.9
5.1
5.8
5.7
5.8
2.1
3.3
3.3
4.5
4.5
6.6
8.4
8.4
8.5
4.8
17.9
17.9
24.5
24.5
37.8
50.0
49.7
50.3
26.4
Table 5
NBO Company Shares of Drinking Milk Products: % Value 2011-2015
% retail value rsp
Passport
Company
2011
2012
2013
2014
2015
Nestl Ecuador SA
Industrias Lcteas Toni
SA
Reybanpac CA
Pasteurizadora Quito SA
Industrias Lcteas, SA
Lcteos San Antonio CA
Lechera Andina SA Leansa
Alpina Productos
Alimenticios
Alpiecuador SA
Parmalat Group
Agrcola Ganadera
Reysahiwal SA
Private Label
Others
Total
23.3
12.0
23.3
11.4
22.5
11.0
22.3
10.8
23.0
10.0
8.0
7.8
6.6
5.8
3.9
0.4
8.2
7.5
6.6
6.1
3.7
0.4
7.7
6.9
6.1
5.9
3.4
0.5
7.3
6.7
5.8
5.9
2.9
0.5
7.0
6.2
5.9
5.9
2.8
0.5
2.0
30.2
100.0
2.1
30.8
100.0
2.0
33.9
100.0
1.9
35.8
100.0
1.8
36.9
100.0
Source:
Table 6
LBN Brand Shares of Drinking Milk Products: % Value 2012-2015
% retail value rsp

Brand (GBO)
La Lechera (Nestl
SA)
Toni
La Vaquita (Nestl
SA)
Reyleche
Vita
Indulac
Nutrileche
Svelty (Nestl SA)
Andina (Grupo Gloria)
Alpina (Alpina
Productos
Alimenticios SA)
Leche Andina
Pasteurizada (Grupo
Gloria)
Nesquik (Nestl SA)
Huesitos (Nestl SA)
Reyleche
Parmalat
Private label
Others
Total
Source:
Table 7
Company (NBO)
2012
2013
2014
2015
Nestl Ecuador SA
13.6
12.7
12.1
12.2
Industrias Lcteas Toni SA

Nestl Ecuador SA
11.4
6.4
11.0
6.5
10.8
7.0
10.0
7.4
Reybanpac CA
Pasteurizadora Quito SA
Industrias Lcteas, SA
Lcteos San Antonio CA
Nestl Ecuador SA
Alpina Productos
Alimenticios
Alpiecuador SA
8.2
7.5
6.6
6.1
2.7
3.0
0.4
7.7
6.9
6.1
5.9
2.7
2.7
0.5
7.3
6.7
5.8
5.9
2.7
2.3
0.5
7.0
6.2
5.9
5.9
2.9
2.3
0.5
0.7
0.7
0.6
0.5
Nestl Ecuador SA
Nestl Ecuador SA
Agrcola Ganadera
Reysahiwal SA
Parmalat Group
Private Label
Others
Total
0.5
0.1
-
0.5
0.1
-
0.5
0.1
-
0.4
0.1
-
2.1
30.8
100.0
2.0
33.9
100.0
1.9
35.8
100.0
1.8
36.9
100.0
Distribution of Drinking Milk Products by Format: % Value 2010-2015
Passport
% retail value rsp
Store-Based Retailing
- Grocery Retailers
-- Modern Grocery
Retailers
--- Convenience Stores
--- Discounters
--- Forecourt Retailers
--- Hypermarkets
--- Supermarkets
-- Traditional Grocery
Retailers
--- Food/drink/tobacco
specialists
--- Independent Small
Grocers
--- Other Grocery
Retailers
- Non-Grocery Specialists
-- Health and Beauty
Specialist Retailers
-- Other Foods NonGrocery Specialists
- Mixed Retailers
Non-Store Retailing
- Vending
- Homeshopping
- Internet Retailing
- Direct Selling
Total
Source:
Table 8
2010
2011
2012
2013
2014
2015
100.0
98.8
19.3
100.0
98.5
19.0
100.0
98.0
18.9
100.0
98.0
18.8
100.0
98.0
18.7
100.0
98.0
18.6
1.0
4.0
14.3
79.5
1.0
3.8
14.2
79.5
1.0
3.8
14.1
79.1
1.0
3.7
14.1
79.2
1.0
3.7
14.0
79.3
1.0
3.6
14.0
79.4
61.0
61.0
61.1
61.2
61.3
61.4
18.5
18.5
18.0
18.0
18.0
18.0
1.3
100.0
1.5
100.0
2.0
100.0
2.0
100.0
2.0
100.0
2.0
100.0
Forecast Sales of Drinking Milk Products Products by Category: Volume

2015-2020
tonnes

Milk Drinks
with Fruit Juice
Milk
- Cow's Milk
- Goat Milk
Powder Milk
Non-Dairy Milk
Alternatives
- Soy Drinks
- Soy Milk
Alternatives
Source:
2015
2016
2017
2018
2019
2020
23,715.2
23,715.2
21,972.1
21,972.1
21,573.2
21,573.2
21,564.6
21,564.6
21,728.4
21,728.4
21,738.8
21,738.8
398,912.5
398,912.5
14,738.0
542.5
408,318.7
408,318.7
15,103.2
566.0
417,013.7
417,013.7
15,436.4
590.5
425,394.3
425,394.3
15,742.1
614.4
433,761.6
433,761.6
16,020.7
637.8
442,454.4
442,454.4
16,214.7
659.8
122.2
420.3
-
127.1
438.9
-
132.0
458.6
-
136.7
477.8
-
141.1
496.7
-
145.1
514.7
-
437,908.2
445,960.1
454,613.8
463,315.5
472,148.5
481,067.7
Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources
Table 9
Passport
Forecast Sales of Drinking Milk Products Products by Category: Value 20152020
USD '000

Milk Drinks
with Fruit Juice
Milk
- Cow's Milk
- Goat Milk
Powder Milk
Non-Dairy Milk
Alternatives
- Soy Drinks
- Soy Milk
Alternatives
Source:
2015
2016
2017
2018
2019
2020
75,332.0
75,332.0
70,322.0
70,322.0
69,407.2
69,407.2
69,710.4
69,710.4
70,529.3
70,529.3
70,837.5
70,837.5
460,397.0
460,397.0
148,115.8
745.1
471,817.0
471,817.0
154,670.3
781.1
482,300.6
482,300.6
161,242.2
819.0
492,373.6
492,373.6
167,928.4
857.1
502,389.1
502,389.1
174,682.0
894.6
512,362.6
512,362.6
181,067.0
930.8
361.2
384.0
-
378.4
402.6
-
396.2
422.7
-
414.1
442.9
-
431.8
462.8
-
448.6
482.2
-
684,590.0
697,590.3
713,769.0
730,869.4
748,495.1
765,197.9
trade sources
Table 10
Forecast Sales of Drinking Milk Products Products by Category: % Volume

Growth 2015-2020
% volume growth

Milk
- Cow's Milk
- Goat Milk
Powder Milk
- Soy Drinks
- Soy Milk
Source:
Table 11
2015/16
2015-20 CAGR
2015/20 Total
-7.3
-7.3
2.4
2.4
2.5
4.3
4.0
4.4
1.8
-1.7
-1.7
2.1
2.1
1.9
4.0
3.5
4.1
1.9
-8.3
-8.3
10.9
10.9
10.0
21.6
18.7
22.5
9.9
trade sources
Forecast Sales of Drinking Milk Products Products by Category: % Value

Growth 2015-2020
% constant value growth

2015/2016
2015-20 CAGR
2015/20 TOTAL
-6.7
-6.7
-1.2
-1.2
-6.0
-6.0

Milk
- Cow's Milk
- Goat Milk
Powder Milk
- Soy Drinks
- Soy Milk
Source:
Passport
2.5
2.5
4.4
4.8
4.8
4.9
1.9
2.2
2.2
4.1
4.6
4.4
4.7
2.3
trade sources
11.3
11.3
22.2
24.9
24.2
25.6
11.8

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DRINKING MILK PRODUCTS IN

DRINKING MILK PRODUCTS IN ECUADOR

LIST OF CONTENTS AND TABLES

Sales of Drinking Milk Products by Category: Volume 2010-2015 ............... 3

DRINKING MILK PRODUCTS IN ECUADOR

DRINKING MILK PRODUCTS IN

DRINKING MILK PRODUCTS IN ECUADOR

DRINKING MILK PRODUCTS IN ECUADOR

Sales of Drinking Milk Products by Category: Volume 2010-2015

Flavoured Milk Drinks

Sales of Drinking Milk Products by Category: Value 2010-2015

Flavoured Milk Drinks

DRINKING MILK PRODUCTS IN ECUADOR

Sales of Drinking Milk Products by Category: % Volume Growth 2010-2015

Flavoured Milk Drinks

Sales of Drinking Milk Products by Category: % Value Growth 2010-2015

% current value growth

Flavoured Milk Drinks

NBO Company Shares of Drinking Milk Products: % Value 2011-2015

% retail value rsp

DRINKING MILK PRODUCTS IN ECUADOR

LBN Brand Shares of Drinking Milk Products: % Value 2012-2015

% retail value rsp

Industrias Lcteas Toni SA

Distribution of Drinking Milk Products by Format: % Value 2010-2015

DRINKING MILK PRODUCTS IN ECUADOR

% retail value rsp

Forecast Sales of Drinking Milk Products Products by Category: Volume

Flavoured Milk Drinks

DRINKING MILK PRODUCTS IN ECUADOR

Forecast Sales of Drinking Milk Products Products by Category: Value 20152020

Flavoured Milk Drinks

Forecast Sales of Drinking Milk Products Products by Category: % Volume

Flavoured Milk Drinks

Forecast Sales of Drinking Milk Products Products by Category: % Value

% constant value growth

Flavoured Milk Drinks

DRINKING MILK PRODUCTS IN ECUADOR

- Flavoured Milk Drinks with Fruit Juice

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