In the second installment of the 'Regional Milk' series, we turn our attention to various niche milks that frequently break into the mainstream. Labeled as 'rare milk sources, high nutrition, rich taste,' niche milks emerged in an era of diversified consumption, boosted by social commerce and livestream selling, becoming a unique landscape in the dairy industry. Currently, what is the penetration rate of niche milks among the public? Can niche milks become a propeller for local economies? What pain points and challenges must niche milks overcome to truly reach the mass market? Can the viral breakout model of niche milks serve as a valuable reference for regional dairy enterprises? Niche Milks Go Viral, Each Making Its Own Debut In general perception, animal milk other than cow's milk can be called 'niche milk.' In reality, in terms of production and sales, awareness, and number of enterprises, the niche milks that truly receive attention in China are none other than goat milk, buffalo milk, yak milk, and camel milk.
From a Consumer Demand Perspective: Niche Milks Gain Popularity by Taking a Differentiated Route to Outflank Ordinary Milk
Many young people favor niche milks because they retain characteristics that ordinary milk lacks, such as 'richer taste,' 'better flavor,' and 'less fishy smell.' Buffalo milk is a typical niche milk that broke out due to its flavor. Buffalo milk has a lighter fishy and gamey taste, higher fat content than pure milk, and higher protein and calcium content than ordinary milk, thus presenting a richer and more mellow flavor. In terms of main nutritional components, the differences between goat milk, camel milk, and cow's milk are not significant. However, in terms of nutritional diversity and absorption rate, they have greater advantages. Compared with cow's milk, goat milk has lower casein content and a higher protein digestibility than cow's milk. At the same time, the fat globules in goat milk are one-third the size of those in cow's milk, making it easier to digest and absorb, and less allergenic. Camel milk, with its slightly salty taste, naturally contains richer vitamins, amino acids, and unsaturated fatty acids, with higher concentrations of anti-inflammatory components such as lactoferrin and lysozyme than cow's milk. While niche milks have gained fame for their differentiated nutrition and taste, controversies over impure content and 'nutrition IQ tax' have also arisen. On one hand, the content of niche milks varies. Although many niche milks tout camel milk or goat milk, their ingredient lists show that they still incorporate cow's milk, sometimes with cow's milk exceeding the niche milk content. On the other hand, many niche milk merchants exaggerate their products, overclaiming nutritional value and even falsely advertising health benefits. These industry malpractices have had a very negative impact on the development of niche milks.
From an Industry Development Perspective: Niche Milk Players Bloom, but Not Yet at Full Maturity
Currently, each niche milk category is primarily regional, with numerous brand players, no stable competitive landscape, and no absolute leading brand yet. Goat milk has small molecules, poor stability, and a heavy gamey taste; camel milk is also constrained by technical factors such as sterilization, preservation, and cold chain, so both are primarily available in powdered form, with liquid milk as a supplement; yogurt and cheese are relatively rare. (1) Goat Milk For a long time, goat milk served mainly as a supplementary category to cow's milk supply, developing very slowly. With the advancement of deodorization technology and market education, goat milk powder has gradually become known and accepted. After multiple adjustments and regulations in the infant formula industry, coupled with the upgrade of mass dairy consumption, goat milk powder has experienced rapid growth. According to the 'China Goat Milk Powder Industry Development Status Analysis and Investment Prospect Forecast Report (2022-2029)' released by Guanyan Report, from 2015 to 2020, China's goat milk powder market size grew from 5.98 billion yuan to 10.4 billion yuan. The distribution of goat milk production areas in China shows obvious regional characteristics. The regions that process goat milk into various products are mainly concentrated in Shaanxi, a major dairy goat province. As the 'Hometown of Chinese Dairy Goats,' Shaanxi has 1.7 million dairy goats in stock, with goat milk production of 500,000 tons, both ranking first in the country. Shandong produces and sells liquid milk locally, while Yunnan mainly processes it into milk cakes. The goat milk market has formed a category pattern dominated by infant goat milk powder, supplemented by liquid goat milk (accounting for about 4.5% of the total market), with goat cheese and other derivative foods almost negligible. In the goat milk powder market, Ausnutria's Kabrita has captured one-third, followed by Red Star Meiling and Blue River. In addition, leading dairy companies such as Feihe, Yili, and Junlebao, as well as regional dairy companies like Wandashan, Hershey Dairy, and Yiyi Dairy, have begun to enter the goat milk market. In March this year, Danone, the largest foreign formula brand, also launched a new national standard goat milk powder product to enter the race. After summarizing the main goat milk products on the market, Foodaily found that most products highlight selling points such as small molecule protein for easy absorption and rare milk sources; or use differentiated raw material formulas as core competitiveness. Brands at the top or near the top mostly have advantages in milk source pastures, raw material formulas, production technology, and channels, and possess a certain brand awareness. (2) Buffalo Milk Due to their living habits being more suitable for southern climates, domestic buffalo are mainly distributed in Guangxi, Guangdong, and other places. Today, buffalo milk has developed into a regional specialty industry in the Guangdong-Guangxi area, also giving rise to new products such as ginger milk curd and double-skin milk. Image source: Baifeiluo Buffalo milk's online sales performance is also very impressive. In 2021, sales of buffalo milk products on Tmall Supermarket increased by over 30% year-on-year; during the 618 shopping festival last year, sales of ten representative buffalo milk brands, including Royal Dairy and Nanguo Dairy, on Tmall Supermarket increased by over 200% year-on-year; on JD.com during the same period, total sales of buffalo milk increased by 74.5% year-on-year, with overall growth higher than the category average. Currently, players in the buffalo milk category include not only 'the first buffalo milk stock' Huang's Group and Baifeiluo, but also emerging brands such as Nanguo Dairy, Ruying, Zuojiang, Geli Liunainai, and Yixiaoping, as well as new consumer brands like Lecong that have launched buffalo milk to enrich their product matrix. Mainstream buffalo milk products on the market not only highlight the nutritional value and scarcity of buffalo milk but also develop more differentiated positioning, such as emphasizing cheese texture and focusing on the baby segment, gradually catering to consumers' diversified needs for quality and pleasurable experiences. (3) Camel Milk Camels mostly grow in high-temperature and arid regions, so camel milk is mainly produced in Xinjiang and Inner Mongolia. Domestic camel milk is mainly in powder form, with the market in the early stages of rapid development, primarily adult milk powder. Most camel milk powder players are mainly small and medium-sized brands, such as Yuanshi Huangjin, Zhipin Tuoru, Alita, Hanmutang, Nalasi醇, Yibate, Paliyaduo, and Erfeng Tuowang. As consumers increasingly recognize and favor niche milks, in recent years, a number of well-known dairy companies have launched camel milk powder. In October last year, Yili launched a desert organic whole camel milk powder claiming to use 100% pure camel milk; previously, Mengniu launched a probiotic formula camel milk powder with its self-developed M8 breast milk probiotic. Image source: Yili, Mengniu Compared with the more mature goat milk and buffalo milk, the homogenization problem in the camel milk market is more prominent, mainly using Xinjiang, Alxa, and other characteristic regions and healthy nutritious milk sources as selling points, with no representative brands or products yet. Success and Constraint Both Stem from Scarcity From the development paths of goat milk, buffalo milk, and camel milk categories, having a certain consumption history locally and relatively single categories are common characteristics of niche milks. And their viral rise online, all 'promoting' to industry focus, seems to have occurred in the past two years. What factors have made niche milks so hot?
Behind the Scenes: The Drivers Bringing Niche Milks to the Forefront
Fundamentally, the frequent entry of niche milks into the public eye and their continuous favor from brands cannot be separated from the strong demand for differentiated products in the dairy market and the promotion of 'niche' consumption cognition through channel expansion. First, from the consumer side, the demand for dairy products has shifted from adequate supply of milk volume to the pursuit of quality, and the demand for quality has not been fully met. On one hand, based on public feedback on niche milks, the special flavor and regional characteristics of niche milks are more likely to arouse interest, bringing unique and novel consumption experiences. On the other hand, the differentiated nutritional value and functional components between niche milks and cow's milk meet consumers' expectations for diversified dairy functions. With the overall dairy market structure stabilizing and competition becoming increasingly fierce, various dairy brands are actively exploring opportunities in segmented markets, seeking development space for differentiated competition with industry giants, and opening up new incremental markets. Consumption upgrading has laid the foundation for the rise of niche milks, and in recent years, the improvement of online channels and supply chain systems has provided a fast track for their breakout. With the help of social media such as Douyin and Xiaohongshu, as well as livestream selling formats, the regional culture and nutritional components of niche milks are continuously attracting consumers to watch and 'plant grass' through storytelling content. Through reviews and recommendations of different niche milks, knowledge popularization by professional experts, and even telling the development history and pasture culture of niche milks, the public's awareness of niche milk categories is constantly refreshed and strengthened. Image source: Xiaohongshu_@皇氏水牛, Xiaohongshu_@桂牛乳业, Douyin search Regional fresh milk is very limited by milk source distribution and logistics delivery capabilities, with weak offline channels and low distribution rates. With the help of online channels and platform supply chains, warehousing, and stocking, niche milks can save a lot of channel development costs and transportation time, enabling products to reach consumers nationwide quickly while controlling costs. From Niche to Mainstream: What Challenges Do Regional Milks Still Face? According to data compiled by China Commercial Industry Research Institute, the market size of China's dairy industry reached over 460 billion yuan in 2021, and is expected to exceed 500 billion yuan in 2023. Although niche milks are developing rapidly, their market size is dwarfed by the hundred-billion-yuan dairy market: the goat milk market has just exceeded 10 billion yuan, and the buffalo milk market is only a few billion yuan. Foodaily believes that the long-term development of the niche milk market still faces the following challenges:
1. Insufficient Milk Source Supply and Inadequate Channel Penetration
Whether it is goat milk, camel milk, buffalo milk, or yak milk, these niche milks generally suffer from insufficient milk source supply. Unlike dairy cows that have been bred and raised for a long time, the quantity and yield of other niche milk sources are far lower than cow's milk, and the breeding environment and pasture resources are also very limited. Taking buffalo milk, which has a relatively high output among domestic niche milks, as an example, buffalo milk production has shown an increasing trend year by year. According to relevant data, China's buffalo milk production was 2.963 million tons in 2020, reaching approximately 3.056 million tons by 2022, a year-on-year increase of 1.2%. However, compared with domestic cow's milk production exceeding 39 million tons, the gap between cow's milk and Guangxi buffalo milk production remains significant. Other niche milks face the same problem. At the same time, most niche milk industries also have issues of slow development, small scale, and fragmentation. The high pricing caused by milk source supply and processing links also makes many consumers 'hesitate' when trying niche milk products. Secondly, although niche milks are being seen by more consumers with the help of online channels, to meet the high-frequency consumption habits of dairy products, the offline channels of niche milks are still very lacking. Taking buffalo milk as an example, even in the birthplace of buffalo milk, it is still difficult to see buffalo milk products in offline markets where cow's milk brands have strong penetration.
2. Lack of Industry Standards and Uneven Product Quality
Currently, the industry standard systems for cow's and goat's milk products are relatively complete, but for niche milks such as camel milk, buffalo milk, and yak milk, some categories only have local standards or enterprise standards, and some categories are still in a blank stage. The lack of standards brings two problems. First, there is no unified requirement for raw milk content, and a large number of niche dairy products mixed with cow's milk or other protein-containing raw materials flood the market, with uneven quality and taste, making it difficult to distinguish authenticity. *Note: Niche milks mainly refer to national standards related to cow's milk, and some merchants also take advantage of loopholes by producing according to the solid beverage standard (GB/T 29602-2013). Second, some relatively prominent nutritional components in niche milks are affected by multiple links such as processing, storage, and transportation. In the absence of standards, the content of nutritional components is difficult to maintain a stable range, which is also detrimental to product promotion and consumer awareness formation. At the same time, many merchants exaggerate the nutritional value or functions of niche milks when promoting products, and frequent false advertising incidents have eroded some consumers' goodwill and confidence in niche milks.
3. Single Product Forms and Shallow Consumer Awareness
Compared with cow's milk, which can be processed into various product forms such as yogurt and cheese, niche milks still have relatively single categories, mainly in the form of ambient liquid milk or milk powder. When consumers are 'planted' by the flavor or nutritional value of niche milks, the limited product forms make it difficult to meet further consumer needs, thus limiting the expansion of the niche milk market. In addition, although consumers have formed preliminary category awareness of niche milks, their perception of the value and quality recognition of niche milks mainly remains at the level of watching and trying, and the group with deeper understanding of niche milks is mainly young people who like to try new things, with a very limited group size. Breaking the Niche: Starting by 'Building Presence' In addition to addressing the challenges of milk source supply and industry standards, niche milk categories also need more diversified development and continue to strengthen public awareness of niche milk categories. Foodaily believes that niche milks may be able to deepen their greatest characteristics through the following aspects and explore more development space.
Amplifying 'Flavor' Characteristics: Perhaps Gaining Familiarity from Popular Tea and Coffee
High-fat, high-protein buffalo milk presents a rich and smooth taste and flavor, which is very suitable for tea and coffee scenarios. Some brands have also noticed the application potential of buffalo milk in the tea and coffee track and have begun to try adding buffalo milk to provide a more novel and silky experience. Heytea launched a Kung Fu Red Bean Double-Skin Milk made with buffalo milk in 2021, and in March this year launched Buffalo Milk Double Bobo; in the second half of 2022, Manner Coffee launched Buffalo Milk Cheese Dirty, and Lelecha launched a Buffalo Milk Dirty Tea series, combining buffalo milk with coffee and tea respectively. A barista said that from a sweetness perspective, buffalo milk is more suitable for Dirty, being sweet, smooth, and easy to drink. Image source: Heytea, Lelecha, MANNER It is not difficult to see that tea and coffee brands have begun to explore application scenarios for the buffalo milk category, but currently few buffalo milk brands actively expand the consumption scenario of tea and coffee companions. When developing the Chinese market, OATLY focused on Shanghai's specialty coffee market with its Barista Oat Milk product, conveying oat milk's nutritional value, Nordic culture, and environmental sustainability through baristas, gradually building the user mindset of 'new coffee companion,' achieving efficient aggregation of channels, scenarios, and people. Similarly, with shallow public awareness and suitability for coffee blending, niche milk categories represented by buffalo milk may be able to learn from OATLY's breakout path and solidify their category awareness education.
Cheese, Ice Cream... Emerging Category Forms Empower Traditional Forms
With the development of processing technology, niche milks can gradually break through the inherent traditional forms of fresh milk and milk powder and launch more product forms. The rapidly emerging cheese and ice cream in recent years are very ideal breakthrough points. Data from the China Dairy Data Center shows that 100 kilograms of ordinary cow's milk can only produce 12.5 kilograms of cheese, but the same amount of buffalo milk can double to produce 25 kilograms of cheese. As the raw material for traditional Italian mozzarella cheese, buffalo milk itself has natural advantages. With the characteristics of 'stronger milk flavor' and 'naturally sweet,' buffalo milk can also explore more development space in cheese, ice cream, and even desserts, showcasing its flavor characteristics in different categories. Goat milk, which has long been in the infant formula market, may be able to 'dimensionally reduce' in the cheese stick track focused on children. Previously, Dr. Cheese launched a goat cheese platinum cheese stick, featuring selling points such as 'adding ≥66% goat cheese,' 'small molecules more friendly,' and '8.9 times goat milk calcium,' injecting fresh vitality into the highly homogenized cheese stick market with differentiated nutritional characteristics. Image source: Dr. Cheese India's well-known dairy brand Amul has launched a series of deep-processed camel milk foods such as camel milk chocolate and camel milk ice cream. Among them, Amul camel milk ice cream is made from 100% camel milk, with a fat content of only 4.4%, and no added colors or flavorings, suitable for health-conscious consumers. With the development of the domestic high-end ice cream market, ice cream made from niche milks may usher in new opportunities. Image source: Amul
Deepening 'Nutritional' Value: Functional Buffs Deepen Category Advantages
Niche milks that focus on differentiated nutrition can also further strengthen their health function labels by continuing to deepen nutritional value and explore consumer groups. Take goat milk powder as an example. Goat milk powder is mainly targeted at infants and young children. Now, as post-90s and post-95s mothers become the main consumer group in maternal and infant consumption, they pay more attention to formula and ingredients. As a sub-category close to milk powder, goat milk powder can further strengthen its nutritional attributes by adding probiotics and natural breast milk-like ingredients. Image source: Kabrita For example, Kabrita Yuebai Infant Formula Goat Milk Powder Stage 3 adds probiotics, prebiotics, and multiple vitamins and minerals on the basis of goat milk powder, with the core selling point of 'breaking through 10 golden feeding effects.' Image source: Iceland At the end of last year, Iceland launched a women's nutritional formula goat milk powder that starts from the needs of the female group. The product, based on a probiotic + dietary fiber combination to improve intestinal health, additionally adds rose pollen and cranberry powder, and emphasizes nutrients such as high iron and vitamin C that focus on women's physiological needs. Summary