Korea's dairy industry is speeding up efforts to overhaul its structure to move away from a business centered on white milk. As white milk consumption declines due to low birthrates and changing eating habits, imported UHT milk, which touts price competitiveness and storage convenience, is rapidly expanding its market. Dairy companies are expanding high value-added products such as protein drinks, fermented milk, and plant-based beverages, while seeking new growth engines in dining and overseas markets.
◇ After the U.S., EU UHT milk tariff also abolished
According to the Korea Dairy Committee on the 14th, per-capita white milk consumption in Korea last year was 22.9 kilograms, down 9.5% from 25.3 kilograms a year earlier. It is the lowest level since related statistics began to be compiled in the late 1980s. Per-capita consumption, which was 26.6 kilograms in 2021, has continued to decline since. The drop reflects a decrease in the child and teen population and a wider range of substitutes such as coffee, soft drinks, protein drinks, and plant-based beverages.
In contrast, imported UHT milk is growing quickly on the strength of price competitiveness and the ability to store it at room temperature for long periods. According to Korea Customs Service trade statistics, Korea's UHT milk imports last year were 50,740 tons, about 42 times more than 1,214 tons in 2016. Imports for January–May this year totaled 21,643 tons, and if the current trend continues, annual imports are expected to surpass last year's level.
The tariff barrier has effectively disappeared. Under the Korea-U.S. Free Trade Agreement (FTA), the tariff on U.S. milk fell to 0% starting in January this year, and the tariff on European Union (EU) milk was fully abolished this month. In fact, Lotte Mart's online mall is selling a 1L carton of Poland's "Mlekovita Good Milk" UHT milk for 1,900 won. Considering that 1L cartons of white milk from major domestic dairy companies generally sell for around 3,000 won, it is about 35% cheaper.
It is also burdensome that it is difficult to immediately cut raw milk purchases in line with falling white milk sales. An industry official said, "It is hard to adjust raw milk production in a short period, and the volumes that dairy companies purchase for drinking milk and processed milk are set through negotiations," and added, "When demand for white milk falls, the secured raw milk must be used for fermented milk, cheese, and powdered milk, but the processed dairy market faces fierce competition from cheaper imports."
◇ Maeil diversifies, Namyang restores profitability
Maeil Dairies has long expanded its business scope to plant-based beverages, cup coffee, adult nutrition, and patient diets. Last year's consolidation-based sales were 1.8435 trillion won, up 1.8% from a year earlier, but operating profit was 60 billion won, down 10.3 billion won. Sales in segments other than the dairy processing institutional sector rose 8.7% from 686 billion won in 2023 to 745.6 billion won last year, and their share of total sales increased from 38.5% to 40.4%.
This year, the company is also expanding its product lineup and overseas distribution channels, focusing on high-protein, unsweetened fermented milk and the adult nutrition line Selex. It is also strengthening synergies in business-to-business (B2B) and dining by using its own milk, cheese, and fresh cream through dining brands such as Paul Bassett, operated by affiliate M's Seed.
Namyang Dairy Products is reorganizing its business structure with a priority on restoring profitability. Last year's consolidation-based sales were 914.1 billion won, down 4% from a year earlier, but operating profit reached 5.2 billion won, returning to the black for the first time in five years since 2020. The company shed low-margin products and focused investment on core brands such as Bulgaris, Choco Emong, and Take Fit.
In particular, it is making protein drinks, B2B, and exports pillars of growth. In the first quarter this year, Take Fit sales rose 72% from a year earlier, and exports increased 81%. The company currently sells infant formula, coffee, protein drinks, and more in about 20 countries.
An industry official said, "As it has become difficult to expect sustained growth from white milk sales alone, domestic raw milk must be shifted to higher value-added products such as protein drinks, fermented milk, and premium dairy," and added, "We need to broaden sales channels to cafes, catering, and dining companies and to overseas markets to respond simultaneously to the expansion of imported UHT milk and the contraction of the domestic market."