Oct, 2014     

Demand- Supply Gap in China Dairy Industry


Diary is a very essential everyday consumable throughout the world. Dairy is a business established for the harvesting or processing of animal milk, mostly cows, buffaloes or goats, but also from sheep or camels for human consumption. It supplies milk to industries which make milk products. A dairy is typically located on a dairy farm or in a section of a multi-purpose farm that is associated with the harvesting of milk. New Zealand has been into dairy farming since colonial times and has become a market leader in this field. A major part of New Zealand's economy depends on dairy farming. China also had a booming business in dairy, but a series of food safety scandals have led the Chinese dairy industry to move towards the large integrated farms run by a handful of mega-producers. This led the dairy industries to find ways to import dairy products in China. To analyse whether producing dairy products in New Zealand and exporting to China is feasible and profitable, we are helping the client understand whether New Zealand is poised to fill the demand-supply gap in China dairy industry.

Our team did a detailed study to understand the dairy industry in New Zealand and China and then a sector overview deck was created on the China Dairy Industry. The analysts did the research with a special focus on Demand-Supply Gap in China. After understanding the entire demand-supply gap, our team spoke to many industry experts with more than 5 years of experience in the industry to design an expense plan. Then a complete 'cost-chain' model was created to understand the costs at each step from procurement of milk in New Zealand to transporting it and to delivering the milk to the retailer in China. All possible models were designed while taking different products and different scenarios into account to find the most profitable combination. All the industry standards were maintained throughout the process, keeping the rules and regulations of each nation in mind.

Key information regarding the China Dairy industry was collected from secondary resources and Investment Banks' research reports by our team. A group of analysts were assigned to find the key financial information which was extracted for existing businesses to understand current business models. Industry experts' interviews were done to understand the costs involved in the process.

A clear picture of the current scenario of New Zealand and China was obtained by the team and a report containing the demand-supply gap along with cost models was presented to the client. The report helped the client get an in-depth understanding of the China and New Zealand industry. It also helped the client present his proposal to potential investors and partners.