Korean dairy groups turn to formula and protein exports as domestic milk demand falls

Domestic milk consumption loses ground

South Korean dairy companies are increasing overseas sales as lower birth rates and changing consumption patterns reduce domestic demand for white milk. According to the Korea Dairy Committee, per-capita white milk consumption fell 9.5% from 25.3 kg to 22.9 kg last year. It was 13.9% below the 26.6 kg recorded in 2021. Demand for fermented milk and cheese has held up, but the drinking-milk segment that traditionally supported local producers is contracting.

Import competition is also intensifying. Under the South Korea-US free trade agreement, the tariff on US milk fell from 2.4% to zero this year, while the tariff on EU milk was abolished this month. Imported UHT milk combines a long shelf life with comparatively low prices and is expanding beyond households into cafés, confectionery and bakery businesses.

Maeil builds separate strategies for China and the US

Maeil Dairy now sells in more than 10 countries, including China, the United States, Japan and markets in Southeast Asia, and plans to expand into Central Asia and the Middle East. Its portfolio combines infant formula with adult nutrition, juice, plant-based drinks and coffee beverages. In China, it is differentiating itself from global formula suppliers such as Abbott and Nestlé through specialized products for children with congenital metabolic disorders.

Maeil began supplying stages 1 and 2 of Absolute MPA in China in May 2024 after signing an agreement with Alibaba Group healthcare subsidiary AliHealth. In August 2024, it expanded the program to 12 products across eight specialized formula categories. The company also listed four products, including Selex Protein Lactose Free Plus, on JD Health in February. Maeil says the platform has more than 200 million annual users and plans to add sports-nutrition products in the second half of this year.

Plant-based drinks provide another route into China. Maeil launched Almond Breeze and Maeil Soy Milk there in 2020 and has supplied Amazing Oat and Almond Breeze to Starbucks stores in China since April 2023. In the United States, it is emphasizing Korean drinks and wellness products: eight soy milk, Picnic and Selex collagen products entered Olive Young's Pasadena store and local online shop on the 22nd.

Namyang and smaller producers widen their reach

Namyang Dairy Products estimates that its brands account for 80-90% of Korean formula distributed in Cambodia. In Vietnam, it sells Imperial XO, I Am Mother, functional formula and baby cheese. An agreement signed with Phu Thai Holdings in April targets 70 billion won of expanded exports over three years and broadens cooperation from formula to French Café coffee and Takefit protein products. Takefit has also entered Circle K in Hong Kong, major Mongolian supermarkets and CU stores in Kazakhstan.

The overseas contribution is already rising. Maeil's exports represented 5.5% of first-quarter revenue, up 1.3 percentage points year on year. Annual export sales increased from 38 billion won in 2021 to more than 90 billion won last year. Namyang's first-quarter export share reached 7.3%, more than 3 percentage points higher; formula exports led by Vietnam and Cambodia grew 54%, while exports of other products, including coffee and protein drinks, rose 136%.

Seoul Milk exports to about 17 countries and recorded 7.5 billion won in overseas sales last year, an increase of more than 20%. It is tailoring products by market, including Biyott ice cream for Japan, processed UHT milk for Kazakhstan and bar ice cream for Taiwan. Yonsei Dairy exports to 15 countries and varies its range among UHT flavored milk, white milk, soy drinks and confectionery. Across the sector, shelf-stable formula, UHT milk, coffee mixes and protein drinks are overcoming some of the shelf-life and refrigerated-logistics constraints that limit long-distance sales of fresh dairy products.