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East Africa Dairy Development Project (EADD)Uganda Dairy Market Study
Presentation of FindingsFebruary 2015 | Tig Marketing Consults
Introduction
— EADD focuses on helping smallholder dairy farmers in East Africa to:— Enhance dairy production and market access
— Double their dairy-related incomes by increasing ownership of improved breeds, increasing milk
Market Study Overview
ownership of improved breeds, increasing milk production and improving access to markets
— EADD carried out a market study to:— Assist in the developing strategies to increase milk
consumption and expand dairy markets in Uganda
Objectives
• Identify and quantify types of milk and milk products consumed in Uganda
• Identify the different market segments and describe the key factors that drive the consumption of dairy products
• Assess each consumer segment’s perception and understanding of various milk products
Market Study Overview
of various milk products
• Determine the availability and prevalence of processed dairy products by competitive brand in Uganda retail outlets
• Assess the current marketing and distribution strategies employed by milk processors, traders, and producer organizations
• Identify the challenges affecting milk collection, processing, and marketing, and make recommendations
Scope
The scope of the market study assignment entailed the following five main components:
• Milk collection and processing and marketing Milk consumer segmentation
• Household milk consumption
Market Study Overview
• Household milk consumption• Milk retail study• Social impact on milk consumption
Methodology
— Both qualitative and quantitative approaches (the majority of the data was qualitative)
— Review of secondary data— Milk production volumes— Number of milk collection centers
— Meetings with stakeholders/key informants— Regional level
Market Study Overview
— Regional level— National level
— Focus group discussions— District Veterinary Officers (DVOs)— Dairy farmers— Processed and raw milk dealers— Dairy processors
— Household survey interviews on milk consumption
Milk Value ChainFindings: Milk Collection and Marketing
Milk Production(1.9 billion litres per
year)
Milk Marketed
Milk Processing(into liquid milk & milk products)
Milk Marketing
(distributed to
consumers)
70% 20% 90%
year)
Consumed on Farm
products)
Sold as Raw Milk
consumers)
30% 80%
Exported
10%
Collection centers: Rural vs. Urban
Milk Collection Centers (MCCs)
Milk OutletsMilk Capacity
per Day (Litres)
Milk Collection and Marketing
The number of urban installed coolers and outlets is more than the number of rural collection centers. The trend for milk chilling is now shifting from
rural to urban areas.
Centers (MCCs)(Litres)
Rural 308 Not Applicable 1,009,934
Urban/Peri-Urban
929 657 1,234,478
Note: MCCs are used by farmers to bulk milk, while milk outlets are used by traders to sell raw milk mostly in urban centers - both use milk coolers.
Rural Milk Collection Centers by regionMilk Collection and Marketing
• There are 308 rural milk collection centers countrywide
• The South- western region is leading with 67%, the central region has 21%, mid-western region has 21%, mid-western has 7%, northern region has 4% and eastern has the least with 1%
• There is a large imbalance in the rural milk collection regional infrastructure
Milk Processing
— Currently there are about 45 large, medium and small scale processing plants registered with DDA, producing mainly pasteurized milk, UHT milk, yoghurt, powdered milk,
Milk Collection and Marketing
Installed Capacity1,353,700
litres
720,190 yoghurt, powdered milk, cheese, ghee and ice-cream.
— Their utilization processing capacity was at 53% in 2014. This is mainly due to inadequate marketing strategies and low milk supply during dry season.
Utilization Capacity720,190
litres (53%)
Level of Inefficiency47%
Source: DDA Reporting, 2014
Milk consumer Segmentation
Unprocessed Milk Segment
• Milk sold in cups, bottles, polythene bags
Processed Liquid Milk Segment
• Pasteurized milk, UHT milk and flavored milk
Processed Milk Products Segment
• Yoghurt, Ghee, Ice cream, Butter Cheese, Powdered Milk, Bongo, etc
Segmentation
Milk, Bongo, etc
— The initial segments identified were: Unprocessed & Processed milk
— Processed milk is further sub-divided into: liquid milk & milk products
Note: Attempts were made to profile milk consumer segments based on geographic, demographic, socio economic and psychographic profiles because the initial two segments did not present significant differences in consumption behavior.
Unprocessed Milk Processed Liquid Milk Processed Products
GE
OG
RA
PH
ICA
L • Rural areas (especially cattle keeping regions), urban areas, towns and town suburbs
• Buy directly from farmers, bicycle sellers, coolers and shops that have fridges and stock milk in cans, buckets and other
• Urban areas, towns and city suburbs
• Buy from supermarkets and shops
• High end parts of town and urban dwellers
• Buy from supermarkets and shops
Geographic & Demographic ProfilesSegmentation
GE
OG
RA
PH
ICA
L
cans, buckets and other containers
shopsshops
DE
MO
GR
AP
HIC
Large families, children, expectant mothers, elderly and the sick
All ages but specifically for young, youth and the
elderly
• All ages for ghee, butter and cheese
• Ice cream and yoghurt is mainly for the young and the youth
Socioeconomic & Psychographic ProfilesSegmentation
Unprocessed Milk Processed Liquid Milk Processed Products
SO
CIO
EC
ON
OM
IC
• Low, middle income earnersand farmers themselves
• Most consume milk as a tradition
• Taken as liquid plain milk, in tea/coffee or added in porridge and sometimes in foodSpend less on milk and buy
• Working class, middle and high income earners and expatriate community
• Spend more money on milk purchases and buy larger
• High income families for: cheese and butter
• People with high disposable income
• Have travelled and lived in the western world
• Expatriate familiesFor bongo, they are rural
SO
CIO
EC
ON
OM
IC
and sometimes in food• Spend less on milk and buy
fewer quantities
on milk purchases and buy larger quantities
Expatriate families• For bongo, they are rural
traditional families
PS
YC
HO
GR
AP
HIC
• Raw milk is believed to be nutritious, fresh, pure and better in quality than processed milk
• The taste attribute is considered more in this profile
• Quality as a major attribute to milk consumption
• Processing of the milk increases milk quality
• High quality, luxurious consumers
• For bongo they are rural and traditional families
Influencing Factors
UnprocessedMilk
Processed Liquid MilkProcessed Milk
Products
1. Affordability
2. Availability andconvenience
3. Traditions and
1. Quality
2. Promotion/branding
3. Convenience
• Yoghurt: Health
• Ice cream: Indulgence
• Ghee: Flavor
Segmentation
3. Traditions and occasions
4. Perceptions (+ and -)
3. Convenience
4. Occasions
Ghee: Flavor
• Butter: With bread
• Cheese: Food
— Influencing factors affecting buying of unprocessed and processed liquid milk were analyzed and later ranked based on the most mentioned
— For milk products, the factors indicated are the most mentioned on each product
JM52
Slide 13
JM52 Are there any main insights / takeaways for this slide from the data?Jennifer Mok, 2/8/2015
Consumer NeedsSegmentation
Nutrition Refreshment Luxury
ü üUnprocessed Milk
Elite & high income: nutrition
Consumed by all ages in all regions of Uganda
Consumer Breakdown
ü ü
ü ü
Processed Liquid Milk
Processed Milk Products
Yoghurt, Cheese, & Butter: NutritionIce Cream: Luxury (e.g. an outing)
Elite & high income: nutritionLow income: refreshment (e.g.
drinking directly from pack)
Household penetration Milk Consumption per Capita
— Uganda’s per capita milk consumption is growing at an estimated average rate of 7% per annum
— In Uganda, approximately 30% of the milk produced annually is consumed on farm while 70% is marketed (DDA Databases, 150
200
250
Per Capita Consumption
WHO Recommendation: 200 L
marketed (DDA Databases, 2013)
— Of the 70% marketed milk, only 20% is processed
— The household study shows that majority households (54.7%) consumed unprocessed milk compared to processed liquid milk in Kampala city
100
5440 43
0
50
100
Kenya Uganda Tanzania Rwanda
Type of Dairy ProductAverage Monthly
Consumption
Unprocessed milk (N=1047) 25.2 litres
Pasteurized liquid milk (N=721) 20.6 litres
UHT milk (N=321) 14.9 litres
Flavored milk ((N=136) 14.5 litres
Consumption by Volume
— For milk products the averages seem to be on a higher side if you look at it from the national average
— The majority of the respondents were from Kampala (85%); therefore it reflects more of Kampala city consumers
Household Penetration
Bongo (N=193) 9.6 litres
Yoghurt (N=821) 6.7 litres
Ice cream (N=592) 4.3 litres
Powdered milk (N=218) 3.8 kg
Cheese (N=53) 2.2 kg
Butter (N=138) 2.0 kg
Ghee (N=591) 1.8 kg
Kampala city consumers
Note: Average consumption is per month for a household of about 6 people.
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
Perc
enta
ges
ofR
espo
nden
ts (%
)
Purchasing FrequencyHousehold Penetration
Daily Weekly Once in 2 weeks Monthly
Unprocessed milk (N=1034) 68.7 23.8 6.4 1.2Processed liquid milk (N=397) 49.6 37.0 10.3 3.0Processed Milk products (N=329) 12.8 29.8 26.7 30.7
0.0
10.0
— Most households purchase both unprocessed (68.7%) and processed liquid (49.6%) milk daily
— Processed milk products were the least purchased on a daily (12.8%) or weekly (29.8%) basis but mostly purchased on a monthly basis (30.7%)
Grocery market0.0
10.0
20.0
30.0
40.0
50.0
60.0
Perc
enta
ge o
f R
espo
nden
ts (%
)
Point of PurchaseHousehold Penetration
Grocery market
Dairy Farmer
Bicycle seller
Milk Cooler Shop/ Super Kiosk Others
Unprocessed milk(N=1065) 22.5 30.8 33.1 7.7 0.0 2.3 3.7Processed liquid milk (N=401) 0.0 0.0 0.0 53.4 45.4 1.2 0.0Processed milk products (N=455) 18.0 3.1 6.8 24.2 43.3 2.0 2.6
— Majority respondents get unprocessed milk from coolers (33.1%), followed by persons on bicycles with cans (30.8%), and dairy farmers (22.5%)
— Note: The processed milk products under dairy farmers, bicycle sellers and milk coolers are mainly ghee and locally processed yoghurt
<15,000 15,000- 30,001- 75,001- Above 0.05.0
10.015.020.025.030.035.040.0
Perc
enta
ge o
f R
espo
nden
ts (%
)
Amount Spent on Dairy
Dairy Expenditures (Absolute)Household Penetration
<15,000 15,000-30,000
30,001-75,000
75,001-150,000
Above 150,000
Unprocessed milk (N=1023) 27.4 32.4 32.6 6.8 0.8Processed liquid milk (N=393) 28.8 23.9 36.6 8.9 1.8Processed milk products (N=436) 37.6 27.5 26.4 6.2 2.3
— About the same proportion of households (32.4% and 32.6%) spend 15,000 –30,000 UGX and 30,000 – 75,000 UGX per month on unprocessed milk
— Most households (36.6%) spend 30,000 – 75,000 UGX per month on processed liquid milk
— Expenditure on milk products is less than 15,000 UGX per month
1 – 5% 5 – 10% 10 – 20%Above
0.010.020.030.040.050.060.0
Perc
enta
ge o
f R
espo
nden
ts (%
)
Proportion of Income Spent on Dairy
Dairy Expenditures (Relative)Household Penetration
1 – 5% 5 – 10% 10 – 20%Above 20%
Unprocessed milk (N=1011) 53.4 35.8 8.5 2.3
Processed liquid milk (N=390) 55.1 30.8 9.2 4.9
Majority of respondents spend less than 5% of their income on milk in all product segments.
Influencing FactorsHousehold Penetration
Level of income / economic class
Availability of milk & milk products
Lack of effective marketing
1
2
3 Lack of effective marketing
Cultural & traditions
Nutritional value
Health reasons
Factors affecting milk consumption at household level were ranked based on most mentioned.
3
4
5
6
Neighbours’ Milk Collection Centre (MCC)
Traders who have coolers
Dairy Farmer
Bicycle Traders who mount milk
Distribution Network: Raw MilkMilk Retail market dynamics
have coolers in rural areas
Milk Processors
Traders in urban centres who wholesale or retail to final consumers’
mount milk cans on bicycles /motorcycles
Final consumer
— The raw milk distribution network is more complex as seen in the chart compared to the processed milk network
— The raw milk operations are expanding more in the urban areas with more milk outlets and coolers in urban areas
Distributors
Milk processors
Distribution Network: Processed MilkMilk Retail Market dynamics
Milk Agent Milk Agent
Final Consumer
Retailer
The processors use this type of distribution system of three levels, which brings in efficiency in distribution.
Retailer Retailer
Market Share by Processed Milk Packs
Product Market SharePasteurized Milk
1000ml 25%500ml 75%
UHT Milk500ml 33%
Milk Retail Dynamics
500ml 33%250ml 67%
Yoghurt(Sachets) 400ml 70%
(Cups) 250ml 30%
The data suggests that smaller packs are preferred in the market.
Shelf Space Share of Primary Products
Product Shelf Space Share (%)Pasteurised milk 64%
UHT Milk 26%
Milk Retail Market Dynamics
Yoghurt 10%
TOTAL 100%The assessment is for pasteurized milk, UHT and yoghurt - the main products
on the market - for the main brands i.e. Fresh Dairy, Jesa, GBK, Highland, Hillside, Rainbow, Mama
Omulungi, Mega, Brookside (Dairy Fresh).
Milk ATM - New Retailing Trends
Case of ‘Moo Milky Bar’ Wandegeya, Kampala
Milk Retail Market Dynamics
• Moo Milk Bar uses a milk vending machine (Milk ATM) to dispense milk using coins or cards
• Customers load money on their cards, which they use whenever they come to buy milk from Moo Milk Bar
• The milk bar receives pasteurised milk from milk processor• The plan of the proprietor is to have more milk vending machines in
Kampala and other urban centres in Uganda
Social Trends
— Consumption of yoghurt as a form of food in all regions of Uganda.
— Parents taking their children out for ice cream mostly in urban centres.
— “Bongo” (local yoghurt) is coming up as a serious item on local restaurants in urban centres.
Social Factors Study
centres. — Increasing consumption of cheese in first
foods restaurants e.g. pizzas, sandwiches and buggers mostly in Kampala
— Ghee (eshabwe) consumption of ghee is no longer a cultural issue, it has become a serious business especially in the South-west, Mid-west and Kampala city. This call for regulation and offering extension services to ensabwe micro processors.
Beliefs and Perceptions
— Milk and milk products cause weight problems
— Drinking too much milk causes laziness
— Milk mixed with cow urine cures skin and stomach diseases e.g. in Karamoja
— Processed milk has less nutrients (losses them during processing) has chemicals and has a funny tastes
— Taking yoghurt or bongo gives a good skin
Social Factors Study
— Taking yoghurt or bongo gives a good skin
— Yoghurt and ice cream are a healthy snacks and better than carbonated drinks
— Yoghurt helps people with stomach ulcers
— Yoghurt is believed to be a complete meal, easily digested
— Yoghurt boosts immunity in patients and fighting genital- urinary infections
— Women take milk and yoghurt to boost their sexual health and treat candida
— Ghee is a medication for fractured limbs and also used in massages when mixed with local herbs. It believed to give one a smooth skin
Challenges
Milk Collection
• Lack of strong and organised milk marketing structures and bulking centres
• Low milk collections during dry season
Milk Processing
• Low utilizationcapacity by processors
• 18% VAT on processed milk and milk products
Milk Marketing and Retailing
• Limited milk markets during the wet season
• Lack of adequate milk consumer education and campaign to increase milk
Milk Markets Challenges
during dry season• Inadequate chilling
facilities and milk tankers for transportation
• Low quality milk• Undeveloped road
infrastructure and unstable power
milk products increase milk consumption
Recommendations
Milk Collection
• Organizing, Forming and Strengthening Dairy Farmers Co-operatives
• Formation of a dairy cooperative at each district level
• Dairy farmers should belong to a dairy cooperative society
Milk Processing
• Encouraging Business Partnerships
• Milk Processors to Undertake Product diversification
Milk Marketing & Retailing
• Farmers’ cooperatives should be used as vehicle to promoting milk drinking in rural areas
Market Study Recommendations
dairy cooperative society• Cooperatives should address
quantity, quality and hygiene of milk• Government and development
partners to champion dairy cooperatives
• Address the imbalance and increase the milk collection and cooling infrastructure in regions with less collection capabilities
• Undertake a campaign for households to own cows
Undertake Product diversification
• Promoting a cheese eating segment
• Promoting yoghurt processing at local level
• Financial support
milk drinking in rural areas
• Promoting a strong school milk campaign in the country
• Consumer education on the usefulness of milk and campaigns to increase milk consumption
General Recommendations• Organizing a National Dairy Conference• Creating and updating dairy sector data
Strategy Direction & Outcomes
To increase consumption of milk / milk products among groups, areas, institutio
GO
AL
O u t c o m e s
ü Increased Affordability / Lower price of milk/milk products
ü Create Awareness of Health Benefits from milk/milk products
ü Change peoples perceptions / Attitudesgroups, areas, institutions, markets, or peoples who currently exhibit stagnant or nonexistent dairy consumption patterns.
ü Change peoples perceptions / Attitudestowards milk/milk products
ü Increased Availability of milk/milk products
ü Increased access to milk/milk productsü Improved Quality of milk/milk productsü Milk / Marketing Structures
Strengthened ü Policy / Governance systems in the
dairy industry Strengthened
Outcome Indicators Overview
Outcome Indicators Description / Rationale
Affordability / Lower Price
• According to 2015 dairy market study, affordability / price was the highest driver of household milk consumption
• Majority of Ugandans spend less than 5% of their income on milk / milk products• In relation to other drinks (soda, juice, etc.), milk / milk products are one of the highest prices• Prices are driven by a milieu of factors, including high production costs and availability
Awareness of Health Benefits / Usage
• Due to the lack of education, most people do not understand fully the nutritional benefits of milk / milk products, especially in comparison with alternative drinks
• Most Ugandans take milk in the same forms and do not practice other milk usages, such as milk products, cooking / baking with milk, eating with cereal, etc.
Increased Promotions / • In the past, not much emphasis and resources have been devoted to the marketing of milk and milk
products, on all levels of the value chain
S T R AT E G I C P R I O R I T I E S
Increased Promotions / Campaigns
• In the past, not much emphasis and resources have been devoted to the marketing of milk and milk products, on all levels of the value chain
• Children grow up seeing advertisements and campaigns on alternatives (sodas, juice, etc.)• There are little / no campaigns that promote milk drinking, especially among leaders
Positive Perceptions / Attitudes
• Many think milk is only for the young or elderly, or that processed milk is unclean• Negative perceptions of milk start at the household level and are pervasive in many communities
Increased Availability • Poor infrastructure, lack of distribution / retail outlets, and high transportation costs for the cold
chain are factors that limit the availability of milk, especially in rural areas• Most consumers buy milk from wherever is most convenient and / or closest
Higher & Trusted Quality
• Milk is adulterated at all levels of the value chain, including farmers, traders, processors, retailers, and consumers due to poor milk handling
• Many Ugandans trust imported milk and certain brands only due to the quality perceptions
Strengthened Milk / Marketing Structures
• There are currently many potential marketing structures that are not built or utilized to its capacity (e.g. producer organizations or member associations marketing their own milk)
• Poor governance, mistrust, and informal trade all contribute to inefficient structures
Strengthened Policy / Governance
• Policy and standards are often not implemented (e.g. quality) due to lack of resources• Poor governance often causes marketing structures and milk quality to crumble
W1
Slide 32
W1 I think we should end our presentation on Slide 20WALEKHWA, 4/14/2015
Strategic PrioritiesS T R AT E G I C P R I O R I T I E S
ASTRENGTHEN VALUE
CHAIN GRASSROOT/APEX ASSOCIATIONS
BPROMOTE THE
Increased consumption of milk / milk products
among BPROMOTE THE
CONSUMPTION OF MILK & MILK PRODUCTS
CCREATE A SUSTAINABLE & INFORMAL PLATFORM FOR
DECISION MAKING, DISCUSSIONS, A
ND COOPERATION
among groups, areas, institutions, markets, or peoples
who currently exhibit stagnant or nonexistent
dairy consumption patterns.