Whey and Lactose Exporter's Sourcebook

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2 This source book is a compilation and crossreference of market studies conducted for the U.S. Dairy Export Council. Additional tools luere used: official and industry statistics, trade con tacts, new product databases and other primary and secondary data sources. Statistics 011 lu/7ey and lactose obtained from 7. l ariolls sources tend to differ. For this reason, analyses were conducted, luhcl7c7ier possible, within onc data set, as referenced, unless othenuise noted. This Sourcebook is intended to be used as a quick reference guide only. Additional information on i ndi7.lidual marke ts is mlailable from the U.S. Dain) Export Council (see reference list in each section). U.S. DAIRY EXPORT COUNCIL 2101 Wilson Blvd. Suite 400 Arlington. V A 2220 I United States Tel: Fax: ~.: : u.s. D~ir\ bpon COlillcil. i\pril Whey and Lactose Exporter's Sourcebook Table of Contents Product Universe 2 World Production 4 Whey 4 Lactose 5 World Trade 6 Exports Whey 6 Lactose 7 Imports Whey 8 Lactose 10 Profiles - Major Markets 13 Brazil 15 China 19 Colombia 22 Indonesia 24 Japan 28 Malaysia 33 Mexico 36 Philippines 40 South Korea 44 Taiwan 49 Thailand 53

3 Product Universe Whey is generally produced as a co-product of casein or cheese manufacture. Fluid, or concentrated, whey is typically used domestically and rarely enters international commerce (with the exception of some limited intra-europe trade, for example). A wide variety of whey products The most common whey products are: dried sweet whey, dried acid whey, whey permeate, whey protein concentrates (WPC), whey protein isolates (WPI), reduced-lactose whey and reduced-minerals whey (demineralized whey). Food or feed grades are available for lower-value whey products such as sweet whey or permeate, whose value is typically less than $0.50/kg. WPCs, isolates and modified whey products generally range in value between $1/kg and $1 O/kg, depending upon the chemical, physical and bacteriological characteristics of the product. Higher-value whey derivatives From the "protein stream" a wide variety of products are now available. They include, for example: hydrolyzed whey proteins, alpha-lactalbumin and lactoferrin. The value of these products is high and can reach over $500/kg for some whey fractions or derivatives. Minerals, often marketed as calcium-rich products, are also extracted from whey and sold commercially. Prices range as a function of purity and physical characteristics and are generally in the $5-$10/kg range. Few statistics exist on the production or world trade of these highly differentiated products. A potential market exists for materials extracted from whey lipids but commercial production remains extremely small. The value of such lipids is also very high, $500/kg and up. With the exception of the United States, there are virtually no published statistics on the production of whey protein concentrates and higher-value whey products. Individual country import statistics are needed to assess the importance of this trade, trends and detailed market studies provide insights on market potential. A small retail market exists in developed countries for higher value whey products that are used as nutritional supplements. The vast majority of whey products are used as an ingredient in feed, food and pharmaceutical preparations. Dry and wet blends, dairy preparations, bakery mixes (marketed as ingredients for further processing) and infant formula can contain high levels of whey ingredients. When entering international trade in that form, whey products are not accounted for in trade statistics. As a result, whey trade data may be underestimated by 10-20%. u.s. DAIRY ExrORTCOUNCIL, April 2000 Page 2

4 Demand drivers Demand for whey products is driven by: population growth (infant formula, dairy products consumption), income (derived impact from domestic meat production and resulting feed consumption, demand for processed foods) and sophistication of the food industry (domestic production of infant formula, dairy and bakery products). Sweet whey and WPC34 are sometimes used as a costefficient substitute for skim milk solids. Whey protein concentrates compete with other protein products (egg, soy) or additives (gelling, foaming, textural agents) from plant and animal origins. Modified whey products and whey fractions, which deliver unique nutritional or nutraceutical benefits, have few substitutes. Calcium from whey competes with many other sources of calcium, from animal (eggshell, oyster, coral) or organic sources. Lactose is obtained from permeate after the production of cheese and/or caseinates. Several basic types of lactose are available which are known as edible, refined, anhydrous (beta), pharmaceutical a~d technical lactose. Lactose is the raw material used for the production of lactulose, lactitol and lacto-oligosaccharides, known as lactose derivatives. If the production of derivatives is sizable in some markets (such as North Asia), international trade of such products remains marginal. Lactose is a unique carbohydrate only available commercially from milk products. Yet, it has a number of substitutes (other low-sweetness carbohydrates) in most food products. The issue of human lactose intolerance, particularly prevalent in Asian and African populations, remains an important barrier (real or perceived) to increased, wide scale usage in many food and beverage products. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 3

5 World Production Whey Annual global world whey production is in excess of 80 million metric tonnes. The U.S. is the single largest producer and it accounts for over 20% of this volume. This is almost double the annual production of the next largest producer, France. Whey production, by major country 1996* 1997** 1998** Country Volume Share Volume Volume (mt) (%) (mt) (mt) United States 16,728, % 515, ,790 France 9,288, % 516, ,409 Germany 8,210, % 199, ,706 Italy 5,943, % Netherlands 5,008, % 269, ,044 Canada 70,892 58,108 Argentina 3,196, % Australia 1,520, % New Zealand 1,329, % Total 81,455,458 (including others) Sources: *FAOSTAT Data, ** Agra Europe/ ZMP (whey powder production), ***USDAIFAS Bonn, Dec *** Volume (mt) 205,000 As an agricultural resource, whey is increasingly being perceived as the most important of the food industry's remaining under-utilized protein reservoirs. Global whey production, at current rates, amounts to approximately 500,000 mt of high quality protein. Overall, the FAO estimates that about 85% of total whey production (in liquid equivalent) is used for feed. The percentage of whey processed for further uses and not used for feed varies from producer to producer. New Zealand uses over 60% of its output for high-value uses; Australia and most European countries are in the 20-35% range and the U.S. uses less than 10% of its production for such uses. i This indicates the great potential from available liquid whey for alternate and higher value-added commercial exploitation. 1 1 Information presented for comparison purposes Data is available in "1998 Whey Products Utilization and Production Trends," American Dairy Products Institute, Chicago, IL. USA. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 4

6 World Production Lactose Lactose production, by major region (1998) Country Volume (mt) Share (%) Europe 290, % United States L 180, % New Zealand 40, % Others 10, % Source: European Whey Products Association Global lactose production is estimated at 520, ,000 mt for 1998, with output steadily increasing by just over 10% annually from 1993 to 1996, and an 18% increase to New Zealand 8% United States 35% Others Europe 55% Global output data for lactose varies according to the source, but the European Whey Producers Association cites a volume of 525,000 mt in European producers account for over half of total production but the bulk of this is consumed within the EU, less than 30% being exported to other regions. The U.S. accounts for over a third of production (180,000 mt, 34.3%), and New Zealand is also a significant producer (40-45,000 mt).ii 2 I nformation presented for comparison purposes 1998 Data is available in "1998 Whey Products Utilization and Production Trends," American Dairy Products Institute, Chicago, IL. USA US DAIRY EXPORT COUNCIL, April 2000 Page 5

7 World Trade Exports Whey Exports Over 950,000 mt of dried whey entered international trade in 1997 (including intra-euro trade), and over 400,000 mt when excluding intra-europe trade. Exports of whey have increased 56% since In 1997, the major net exporters of dried whey and related products were: Whey Exports, 1997 Country France United States Netherlands Germany Ireland Australia Belgium/Luxemburg Canada Denmark New Zealand UK Total (including others) *Total exports - Imports Source: FAOSTAT Data Exports Net Exports* 324,300 mt 263,400 mt 116,900 mt 109,400 mt 112,900 mt 105,200 mt 136,900 mt 91,000 mt 39,600 mt 30,200 mt 32,400 mt 29,800 mt 40,000 mt 15,800 mt 33,100 mt 11,500 mt 14,500 mt 4,900 mt 5,600 mt 4,800 mt 24,200 mt 800 mt 951,800 mt EU us o ci If) ~ Australia Other EU Canada New Zealand Other Asia Latin America If) 0 ~ N Together the top four suppliers accounted for around 670,000 mt of product, or over 70% of the world trade in dried whey. Excluding intra-europe trade, in1997 the major exporters of whey where the European Union, the United States, Australia, Other Europe/FSU and Canada. World Trade for Whey, 1997: Exporters Country Volume (mt) European Union ,200 United States 116,100 Australia 41,300 Other Europe/FSU 38,300 Canada 37,700 New Zealand 10,300 Other Asia Pacific 6,100 Other Latin America 3,000 Other 700 Total 401,700 Source: NMPF, UN/FAO u.s. DAIRY EXPORT COUNCIL, April 2000 Page 6

8 World Trade Exports (cont.) Lactose Lactose The lactose trade (excluding intra-europe trade) totaled just above 190,00 mt in It has grown by 48% since When intra-europe trade is excluded, the United States is the world's largest exporter of lactose: (note: export figures may differ from other tables as different years and sources are reported). The bulk of EU lactose production is used internally, with exports to third countries of only around 90,000 mt in In 1998, the top five non-eu markets for Dutch lactose were: Japan (20,539 ml), South Africa, India, South Korea and Brazil. The Netherlands as a lactose exporter. There are two major lactose producers in the Netherlands.' DMV and Borculo. Dutch exports of lactose have increased by 30% during the 1995 to 1998 period. Most of the volume gains have been achieved in Japan and S. Korea where exports have doubled and tripled, respectively, during the period. New Zealand's lactose exports go to Japan, Australia, Thailand, Indonesia and Singapore (top five markets. 1998/99) Australia is a minor lactose exporter, with exports of less than mt. 7 Its top market is Japan. Lactose Exporters, 1997 (excluding intra-europe trade) Country United States I European Union - 15 I New Zealand Other Asia Pacific Canada Other Europe/ FSU Australia Others Total Source: NMPF, UNIFAO Exports 82,200 mt 68,800 mt 28,600 mt 3,900 mt 3,700 mt 2,600 mt 2,300 mt 1,700 mt 193,800 mt In 1998, the major lactose exporters, including intra Europe trade, were as follows: I. Lactose Exporters, 1998 (estimates, including intra-europe trade) I Country Exports Netherlands 106,000 mt I United States 75,500 mt Germany 39,000 mt New Zealand 30,000 mt France 12,000 mt Australia 4,200 mt Sources: Productschap ZUlvel. us DOC, MJichlndustne Verband EV, Statistics New Zealand, and Australia Bureau of Statistics u.s. DAIRY EXPORT COUNCIL, April 2000 Page 7

9 World Trade Imports Whey Imports Whey In 1997 (excluding intra-europe imports that were close to 1 million mt), the world whey trade totaled 503,900 mt. The largest importing region was, by far, the Asia-Pacific group (including Japan), that imported 57% of this volume. Imports of whey have increased by 109% since Top Whey Importing Regions, 1997 (excluding intra-europe trade) Country Imports Other Asia Pacific* 241,300 mt Mexico 49,100 mt Japan 46,200 mt Canada 41,300 mt Other Latin America 31,100 mt European Union 29,900 mt United States 27,700 mt Middle East, N. Africa 9,900 mt Other Europe/ FSU 8,100 mt Australia 3,400 mt New Zealand 900 mt Others 15,000 mt Total 503,900 mt Source. NMPF. UN/FAO See table below for detail Whey Importers: Asia Pacific and Japan Per individual country Country Imports China and Hong Kong 100,400 mt I Japan 46,200 mt South Korea 23,200 mt Philippines 21,100 mt Thailand 16,600 mt Malaysia 12,000 mt Indonesia 11,200 mt Taiwan 31,769 mt Source. FAOSTAT Data. reported by Landell Mills u.s. DAIRY EXPORT COUNCIL, April 2000 Page 8

10 World Trade Imports (cont.) Whey World Trade for Whey - Outlook and Projections Imports of whey are expected to grow at a yearly 4.5% rate through The largest volume gains will be seen in Asia, although the rate of growth of the region is expected to be below 4%. A prompt recovery from the economic crisis may result in faster increases in meat production, dairy consumption and higher milk powder prices, all of these factors will positively impact whey products consumption. South America, North Africa and the Middle East will all grow at faster than average rates. Together, these three regions will represent about 25% of the world's whey imports. WPC markets Rarked by size of US. WPC exports (1999) - WPC Exports (mt) Japan 4,031 Mexico 2,812 China 1,425 Philippines 1,415 Taiwan 958 Canada 911 Thailand 863 S Korea 614 Vietnam 426 Cent. Am. 332 Indonesia 332 Brazil 132 Colombia 21 Caribbean 9 World 15,708 Source USDOCI USDEC World Imports of Whey: Projections and Annual Growth Rates per Region Annual Growth Imports ( ) Asia 253, , , , , , % South America 81,618 87,129 92,206 96, , , % North America 63,968 65,526 69,648 73,653 77,566 81, % EU 23,516 24,129 24,694 25,220 25,713 26, % N. Africa 9,774 10, ,765 12,372 12, % Mid.East 6,928 7,557 8,145 8,704 9,242 9, % Central 6,392 6,850 7,237 7,572 7,868 8, % America Oceania 5,006 5,076 5,159 5,250 5,346 5, % Other Europe 4,699 5,104 5,447 5,743 6,005 6, % EFTA 1,142 1,124 1,106 1,088 1,053 1, % E. Europe 1,202 1,155 1,118 1,086 1,059 1, % FSU % Other Africa % Caribbean % Total (including 459, , , , , , % others) Source: NMPF. World Dairy Oullook - Supply, Demand and Trade. Section V. See page V-5 for deflnllion of regions. Whey protein concentrates exports The United States is one of a few countries that reports whey protein concentrates exports separately and on a consistent basis. The U.S.'s major WPC export markets in 1999 are presented in the adjacent table.! l us DAIRY EXPORT COUNCIL, April 2000 Page 9

11 World Trade Imports (cont.) Lactose Imports Lactose In 1997, world imports in lactose (excluding intra-europe trade at 106,700 mt) totaled 210,500 mt. This figure was up 60% from Top Lactose Importing Regions, 1997 (excluding intra-europe trade) Country Imports Japan 95,600 mt Other Asia Pacific 41,800mt Other Europe/ FSU 20,100mt Other Latin America 17,800 mt Mexico 8,100 mt Australia 4,300 mt Middle East, North Africa 4,100mt Canada 3,200 mt Total, including others 210,500 mt Source: NMPF. UN/FAO Lactose Importers, 1998 Per individual country Country Imports Asia Pacific and Japan Japan 89,925 mt South Korea 10,740 mt Taiwan 5,740 mt Thailand 5,422 mt India... 5,413 mt Indonesia I 5,067 mt Philippines 4,286 mt Malaysia 2,563 mt China 2,485 mt Singapore... 2,586 mt Latin America Mexico'" 8,072 mt Colombia** 2,682 mt Brazil** 2,607 mt *1997, 1996 Source: 1998 data Landell Mills estimates based on official statistics sources. Other data FAO/STAT u.s. D AIR Y EXPORT COUNCIL, April 2000 Page 10

12 World Trade Imports (cont.) Lactose World Trade for Lactose - Outlook and Projections World imports of lactose should increase at a 4% yearly rate through Asia will continue to represent more than half of the market. Growth in Asia will be slightly below average, a result of the economic crisis and stagnant demand in Japan. Changes brought up by WTO negotiations which would reduce the tariff into China could result in fast import growth in that country. The Middle East, South and Central America are all predicted to grow faster than the average. Yet, these three regions will represent just 11 % of total imports in Imports Asia South America E. Europe FSU Oceania North Africa EFTA Caribbean North America EU Middle East Other Europe Central America Total (including others) I Annual Growth ( ) , , %! 21,558 23,065 24,494 25,862 27,180 28, % , ,165 17, % 10,668 12,018 13,155 14, , % ,522 7,947 8,339 8, % 5,633 5,638 5, , % 5,921 5,912 5, , % 5,000 5,000 5,000 5,000 5,000 5,000 0% 3,188 3,172 3,237 3,299 3,360 3, % 2,222 2, ,398 2, % 1,804 1,954 2,099 2, % ,000 1, , % % 229, , , % Source: NMPF. World Dairy Outlook - Supply. Demand and Trade. Section V. See page V-5 for definition of regions. U.s. Lactose Exports 1999 US Exports (mt) Japan 39,581 Mexico Canada 4,863 S. Korea 4,054 China Taiwan Indonesia 2,575 I EU 2,459 Thailand 1,924 Brazil 1,534 Philippines 1,378 Colombia 868 S Africa 840 Malaysia 507 WORLD' 80,143 u.s. DAIRY EXPORT COUNCIL, Apri.l2000 Page 11

13 us DAIRY EXPORT COUNCIL, April 2000 Page 12

14 Major Markets Profiles u.s. DAIRY E XPORT COUNCIL, April 2000 Page 13

15 U.s. DAIRY EXrORTCOUNCIL, April 2000 Page 14

16 Brazil Whey Products t.:=~ ~ Cergel;1II Toast Van Mill loasl range made wilh whey. Launched in 2(}()(} For more in/orlllation on tllis lilarkel, please consult tire following USOEC puhlications: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. Whey Seminar in Brazil. June 99. Food Ingredients South America Report May 99. Whey Users Profile: Brazil. July 98. Market for Dairy Products in South America. Dec. 98. Market for Dairy Products in Brazil. April 98 USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certincation and Inspeclion Requirements World Dairy Trade Trends Please contact USOEC for copies of recent trade show and mission reports. one-on-one consultations, applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. Total whey and WPC imports and U.S. exports to Brazil Year Total WPC U.S. share U.S. Exports** Imports Imports of Total (mt) * (mt) * (mt) Imports* Sweet WPC whey % 4 NA ,138-22% 1,400 NA , % 2, ,507 1,322 27% 1, ,038 3,637 10% ,282 2,900 11% ,477 13,737 36% 2, Source. Domestic statistics. USDOCI USDEC Total whey and WPC imports and U.S. exports to Brazil , o Tariff rates (non Mercosur countries): Whey 17%, WPC: 17% Whey imports by key source country (1999) Country Sweet whey % (mt) United States 10,096 35% Netherlands 4,888 17% France 3,883 14% Argentina 3,457 12% Canada 2,924 10% Total, including 28,771 others Source: Domestic Statistics u.s. DAIRY EXPORT COUNCIL, April 2000 Page 15

17 Brazil Whey Products (cont.) For more infonllatlon on t!/is IJ/arket, please consult t!le following USDEC punlicntions: Whey Usage in the World Infant Formula Market. Asia Latin America. US DEC. Dec. 99. Whey Seminar in Brazil. June 99. Food Ingredients South America Report May 99. Whey Users Profile Brazil. July 98. Market for Dairy ProduC1s in South America. Dec. 98. Market for Dairy ProduC1s in Brazil. April 98. USDEC Reference Manuals: (updated yearly) Estimated whey consumption by sector and key users (1998) Sector % User I Applications Feed 53% 33% Avesul 13% Sadia 7% Agroceres Food 47% industry 14% Quaker Chocolate beverages 10% Nutrilatina Health and sports foods 8% Garoto Confectionery, chocolate 6% Nestle Baby food, dairy 4% Bauducco Bakery, cakes 2% Vigor Dairy products The major single user is the feed sector, which utilizes non-hygroscopic, low protein whey powder and permeate. Important uses for whey powder in Brazil include beverages, dairy drinks, baked goods, nutritional formulations, low calorie yogurts, requeijao (cheese spread), ice cream and other food products. A growing competitor in Brazil is Argentina. Whey producers such as Milkaut offer whey protein concentrates (34 and 80%) which can enter Brazil dutyfree. The best opportunities for increased WPC usage are in higher-value meat products, nutritional health products and low-fat foods. WPC is still viewed as an expensive alternative source of protein, especially when compared to locally available options such as soy protein. Formulations and some technical support are needed by new potential end-users. Biscuits by Parma/at colitailllllg whey pole,der. Laullched 1999 Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Please contact USDEC for copies of recent trade show and mission reports, one-on-one consultations, applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. US DAIRY EXPORT COUNCIL, April 2000 Page 16

18 Brazil Lactose Total lactose imports and U.S. exports to Brazil Year Imports* U_S. Share of U.S. Exports** (mt) Imports* (mt) % % ,998 5% ,730 14% ,262 21% ,659 45% 1, ,666 23% 1,534..., Source. Domestic statistics, USDOC Baby food produced hy,".'estle Bra=i!, \I)/Ich use's lactose' as an II1gredient. Launched 1999 For 1Il0rc ill/ormation on this lilarket, plcasc consult the /allml'illg U5DEC publications: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec, 99, Whey Seminar In Brazil. June 99, Food Ingredients South America Report May 99. Whey Users Profile: Brazil. July 98. Market for Dairy Products in South America. Dec, 98, Market for Dairy Products in Brazil. April 98. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Plcasc contact U5DEC for copies of recent trade show and mission reports, one-on-one consultations. applications research reports and any other country-specific question, Copies of educational and promotional materials developed for this market are available upon simple request. Tariff rate for lactose: 19% Lactose imports by key source countries (1999) Country Netherlands 29% 1,365 USA 20% 950 Argentina 12% 544 Source: Domestic statistics ~ o ~ Estimated lactose consumption by sector (1999) Sector % User Applications Feed 60% Avesul Feed Food 40% Pharmaceutical NA 10% 30% Nestle Vepe Infant formula Low calorie products Boehringer, Mase, Farmos US DAIRY EXPORT COUNCIL, April 2000 Page 17

19 Brazil Lactose Lactose is not very commonly used by the food industry. Other sweeteners, such as glucose, are often available at a lower cost and are viewed as a suitable alternative in many food products. Yet, lactose imports should increase to over 4,000 mt by For more informntion on tliis II/nrket, plense consult the fallowing USDEC publlcntions: Whey Usage in the World Infant Formula Markel. Asia Latin America. USDEC. Dec. 99. Whey Seminar in BraziL June 99. Food Ingredients South America Report. May 99. Whey Users Profile BraziL July 98. USDEC Reference Manuals: (updated yearly) Labeling and Produd Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Plense contnct USDEC for copies of recent trade show and mission reports. one-on-one consultations. applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. u.s. DAIRY EXPORT COUNCIL. April 2000 Page 18

20 China Whey Products According to China's statistics, China imported over 221,000 mt of dairy products in 1999, with a total value of $242 million. Whey was the largest import item in volume (83,200 mt), representing 38% of total imports. Total whey imports and U.S. exports to China Year Imports* U.S. share U.S. Exports** (mt) (mt) of Imports* Sweet whey WPC ,489 55% 13, ,089 38% 12, ,510 34% 15,365 1, ,805 30% 14,430 3, ,200 36% 16,537 1, Source. Domestic statistics. US DOC I USDEC _ o+-----~ _----~ _----~ Tariffs: Sweet whey: 6% (MFN) - HS Code Total consumption is estimated at 100,000 mt ($55 million). Imports represent virtually 100% of total consumption and 60% of the imported sweet whey is feed grade. Whey imports by key source countries (1999) Country Volume % United states France Canada Australia Finland Netherlands Total including 30,029 20,283 8,974 8,390 5,372 4,119 83,200 36% 24% 11% 10% 6% 5% others Source: China Custom Statistics I U.5. DAIRY EXPORT COUNCIL, April 2000 Page 19

21 Shanghai Dairy's milk powder lor the aged is enriched with WPC80 as a source 0/ extra protein ~~..",,,,. f'iii 1:;:1~1! ~ U ~.~"!-.:.& U.S. suppliers lead the feed sector due to price and quality. Usage of whey and WPC has increased in the food sector, particularly in ice cream and dairy beverages. Demand for demineralized whey is growing, a result of increased usage in premium infant formulas. Whey protein concentrates usage remains underdeveloped, with the dairy and beverage sectors being the largest users to date. Opportunities exist in the ice cream, beverage, yogurt, meat processing and infant formula segments. Estimated whey consumption by sector (1998) Sector % Volume User Feed 60% 10,000 mt CP Feed Group 9,000 mt Hope Feed Group 5,000 mt Ping Shan Feed Mills 4,500 mt Da Jiang Feed Group Food 40% I Dairy 4,500 mt San Lu Dairy Group 3,000 mt Yili Dairy Group Others 4,000 mt Wan Da Shan Food Group Source. USDEC China, trade sources For /JIore IIljorl1lntion all this I1lnrket, plense cons1llt the jollowing USDEC pllhlientions: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. Biscuits: Lecithin rich. crispvand sweet assorted hiscuits with added calcium and free from SlIgar. containing whey They are especial/v suitable lor diabetics. 1,00lnched January ](){){) The Whey Products Market in China. May 96. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Plense colltnet USDEC for recent copies of trade show and mission reports. one-on-one consultations. applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 20

22 China Lactose The new trade agreement reached in November 1999 between the U.S. and China has the potential to greatly increase U.S. dairy exports, in particular lactose to China. Once China enters wro, the import tariff for lactose, currently set at 35%, will drop to 10%. High tariffs have effectively hindered increased use of lactose by Chinese manufacturers by making this carbohydrate uncompetitive against other alternative ingredients Confectionery. Chocolate confectionery by Melji containing lactose. Launched in 2nnn Total lactose imports and U.S. exports to China Year Imports U.S. U.S. * (mt) share* Exports* * (mt) % 1, ,149 18% 1, ,108 31% 1,480 I ,484 55% 2, ,325 66% 3,214 Source: Domestic statistics, USDOC I US DEC For 11l0rc inforl1lntion on tllis I1lnrket, plense consult the following USDEC publicntions: World Markets for Lactose: Asia. Dec. 99. Whey Usage In the World Infant Formula Markel. Asia. Latin America. USDEC. Dec. 99. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Plcnse contnct USDEC for recent copies of trade show and mission reports, one-on-one consultations, applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. Lactose imports by key source countries (1999) Country % share on a value basis United States 66% New Zealand 14% Australia 3% Source: Domestic Data Estimated lactose consumption by top end-users (1998) Sector/ Application Volume Company Confectionery 1,200 mt Milkyway Tech. Dev. Ltd. 200 mt Mars 180 mt Cadbury 100 mt Shenfeng Chocolates Source. Landell Mills from Industry sources. The high tariff for lactose currently prevents wide usage by the Chinese industry, particularly in feed products, China offers an excellent opportunity for increased use in feed when the tariff is reduced and manufacturers become more familiar with lactose-based feed formulations. US DAIRY EXPORT COUNCIL, April 2000 Page 21

23 Colombia Whey Products Confectionery: Wafer bar with caramel. crullchy puffed rice and peanuts and covered li'ilh chocolole. Launclled in Ilprtl 2()()() Ihis I'roducl contains,,.111'." Colombia does currently produce some whey and commercial production of dried sweet whey is expected to continue to grow, to reach 3,500 mt by To date, imports represent about 77% of total consumption (which totaled 4,800 mt in 1997, $2.6 million). Total whey imports, U.S. share and U.S. exports to Colombia Year Imports* U.S Share U.S. Exports** (mt) (mt) of Imports* Sweet whey WPC ,652 36% 576 NA ,588 45% 606 NA ,513 65% 1,112 NA ,162 45% ,659 46% , Sources. Domestic Import data. USDOC/USDEC For l1lore illforl1lntion 011 this IIInrket, plense consult tile foi/07l'illg USOEC puhlicntiol1s: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. Food Ingredients South America Report May 99. Market for Dairy Products in South America. Dec. 98. Market for Dairy Products in Colombia. Dec. 98 USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Plense contnct USOEC for copies of recent trade show and mission reports, one-on-one consultations, applications research reports and any olher country-specific question. Copies of educational and promotional' malerials developed for Ihis markel are available upon simple request. A large portion of the whey is used by the food sector, in infant and baby food, frozen desserts, baked goods as well as in the production of processed meats. Whey protein concentrates are used in confectionery products. Tariff for whey: 20%, WPC: 20% Best opportunities for growth of WPC usage are in the ice cream and yogurt segments, and in nutritional and health products. Estimated whey consumption by sector (1998) Sector Volume User Applications Food 1,245 Feed Whey imports by key source countries (1996) Country United States Canada Poland/Czech Source. FAO. 445 Alpina Dairy 338 Wyeth Infant formula 330 Nestle Infant formula, dairy 124 Cia. Nac. De Confectionery Chocolates NA % 54% I 40% 6% US DAIRY EXPORT COUNCIL, April 2000 Page 22

24 Colombia Lactose Total lactose consumption is in the 3,000-3,500 mt range. Imports represent 100% of consumption. Total lactose imports and U.S. exports to Colombia Year Imports* U.S. Share U.S. Exports** (mt) (mt) of Imports* ,716 17% ,760 28% ,344 32% ,683 54% 1, ,385 52% ,800P 45% 1, O ~----_r----_,----~ For more Information on this market, please consult the following USOEC publications: Whey Usage in the World Infant Formula Market. Asia Latin America. US DEC Dec. 99. Food Ingredients South America Report May 99. Market for Dairy Products in South America. Dec. 98. Market for Dairy Products in Colombia. Dec. 98. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Please contact USDEC for copies of trade show and mission reports. one-on-one consultations, applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. Lactose imports by key source countries (1998) Country % United States 55% Canada 31% EU 11% New Zealand 3% The U.S. is the largest supplier of lactose to Colombia, followed by Canada and the Netherlands. The major uses for lactose in Colombia appear to be infant formula and baby foods, desserts and bakery products. Estimated lactose consumption by sector and application (1997) Sector/ Application Volume Food 200 mt Nestle (infant formula) 160 mt Friesland (infant formula) 40 mt Pharmaceutical 76 mt Neoquimica, Wyeth N/A Other 300 mt Whey and lactose Exporter's Source Book u.s. DAIRY EXPORT COUNCIL, April 2000 Page 23

25 Indonesia Whey Products Hot beverage: Powdered inslanl hoi beverage containing li'hev powder. Lallnched in February 2000 Whey usage gained momentum in Indonesia following record prices for SMP in 1995 and whey usage increased 70% as a result, to stay in the 11-12,000 mt range until The economic crisis that deeply affected all sectors of the food industry caused a 30% decrease in whey imports. Whey usage is expected to recover gradually and reach pre-crisis levels after Total whey imports and U.S. exports to Indonesia Year Imports* (mt) U.S. U.S. Exports** (mt) Share of Imports* Sweet WPC whey ,295 mt 9% ,344 mt 9% 917 NA ,532 mt 12% 1, ,799 mt 19% 1, ,154 mt 18% 1, ,727 mt 12% , Source IndoneSian trade statistics 16000~ ~ O+-----~ r_----._--_,r_--~ Tariff: 0-5% + 10% VAT - HS Code: Australia has been a consistent leader as a supplier of whey products in Indonesia. The U.S. has slightly increased its share of the market over the years, from less than 10% in 1994 to current levels of 13.5%. U.S. whey is typically priced at 25 and 20% below Australian and European whey, respectively (C&F). The 45% duty compounded on the C&F value increases this advantage. u.s DAIRY EXPORT COUNCIL, April 2000 Page 24

26 Infant formula enriched with faclo/errin, fndonesia For more information on this 11/arket, please consult the following USDEC publications: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC Dec. 99. The Whey Market in Southeast Asia. Aug. 99. Database of Southeast Asian Dairy and Food Manufacturers. US DEC. May 97. Utilization of Whey Powder and WPC In Sweetened Condensed Milk. Dec. 97. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Please con/act USDEC for copies of trade show and mission reports, one-on-one consultations, applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. Whey imports by key source countries (1998) Country Volume % Australia 3,697 mt 48% I- New Zealand 1,105 mt 14% United States 1,047 mt 13.5% France 643 mt 8% Netherlands 607 mt 8% Total including 7,726 mt others Virtually all the whey imports are used by the food industry. Feed use is small, explained by the absence of any significant local pig industry. The canned milk industry, which represents over half of the whey usage, fell approximately 50% in 1998 over the previous year as a result of the economic crisis. A strong recovery is expected in 1999, although it may take longer to reach pre-crisis usage levels (depending upon economic recovery and prices for SMP), Approximately 40% of the infant formula market comprise of premium products that not only use whey and WPCs but also high-value ingredients such as lactoferrin, lactose derivatives, PUFAs and DHA. Domestic biscuit and cake manufacturers use extensive amounts of whey powder, whereas usage by multinationals and market leader Danone and Nabisco is largely underdeveloped. The use of whey products in seasonings and snacks remains underdeveloped, Estimated whey consumption by sector (1999) Sector Volume 1% Users Canned milk 6,500 mt 54% Nestle, Indomilk Infant formula 2,170 mt 18% Numico/Sari Husada Bakery 1,990 mt 17% Arnotts, United Biscuit Manuf, Confectionery 470 mt 4% Ceres/General Food Industries Ice cream 240 mt 2% Unilever, PT Diamond Total 11,910 mt* Source. Landell Mills, based on official statistics and trade sources Depending upon political and economic situation during the second half of u.s. DAIRY EXPORT COUNCIL, April 2000 Page 25

27 Indonesia Lactose Lactose imports have increased from over 4,000 mt in 1994 to peak in 1996 at over 6,000 mt. Since then imports have been in the 5,000 mt range. The tariff for lactose is 5% (plus 10% VAT). Total lactose imports and U.S. exports to Indonesia (1998) Year Imports* (mt) U.S. Share of U.S. Exports Imports (mt) ** ,112 mt 7% ,283 mt 12% ,469 mt 15% ,178 mt 27% 1, ,944 mt 42% 2, ,067 mt 42% 1, , Source. Import statistics. us DOC/USDEC 7000~ ~ o+-----~----~----~----._----._--~ The U.S. is the leading supplier to Indonesia and it is expected to provide over 50% of the supply in 1999 (vs. about 15% in 1994). This growth has been achieved at the expense of New Zealand and European suppliers. Lactose imports by key source countries (1998) Country Volume % United States 2,153 mt 42% New Zealand 1,093 mt 22% Netherlands 1,121 mt 22% Total including others Source. Import statistics 5,067 mt u.s. DAIRY EXPORT COUNCIL, April 2000 Page 26

28 Indonesia Lactose (cant.) For IllOre inforlllatioll on this liiarket, please col/siilt the following USDEC puhlications: World Markets for Lactose: Asia. Dec. 99. Whey Usage in the World Infant Formula Market. Asia Latin America. USDEG. Dec. 99. The Market for Lactose in Southeast Asia. Jan. 99. The food industry consumes about 70% of imports. The largest consumer is the infant formula sector (lead by Numico/Sari Husada, with 37% of total consumption), followed by the dairy industry (Nestle, Frieshlag, Indomilk). Infant formula consumption has been affected by the economic crisis and is expected to recover in 2000, leading to increased lactose imports. Premium formulas, containing for example whey fractions, PUFAs and DHA, represent about 30-40% of the market. Use in the confectionery and bakery sectors is largely underdeveloped. The pharmaceutical sector is moderately fragmented with over six companies mostly using lactose in tablet production. The feed sector is non-existent. Small amounts of lactose derivatives are used in infant formula and pharmaceuticals. Estimated lactose consumption by sector and application (1998) Sector/ Volume % Application Food 3,380mt 70% Infant formula 2,080 mt 42% Dairy 1,300 mt 27% Pharmaceutical 1,500 mt 31% Feed - - Total 4,900 mt 100% Source: Landell Mills from trade sources. PT Australia Indonesian Milk Industries. Formulated with lactosf? a SWf?!'tf?lIf?d condf'nsed creamer to he added 10 If?a. cojjf?e. cakes and Pllddings. Database of Southeast Asian Dairy and Food Manufacturers. USDEC. May 97. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Please conlacl USDEC for copies of trade show and mission reports. one-on-one consultations. applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 27

29 Japan Whey Products Imports of all dairy products are controlled through a combination of programs involving quotas, tariffs, special tenders, etc. The markets for whey and modified whey products for food applications were opened under the Uruguay-GATT Round negotiations. Under this agreement, Japan's ALiC administers a simultaneous-buy-sell (SBS) tender system. Quotas do not restrict imports of WPC80. Total whey imports, U.S. Share and U.S. exports to Japan Year Total WPC80 U.S U.S Exports** (mt)! I Imports* and share (mt) above of [ Imports imports *** (mt) * I Sweet WPC whey ,610 36% 9,416 NA ,971 59% 17, ,776 61% 17, ,961 1,552 50% 11, , % 10,903 5, , % 10,019 4, Source. Imporl statistics. us DOC/USDEC Included In left totallmporls ~ O+---~----._--_r----._--._--_.--~ Whey imports by key source countries (1998) - up to 80% protein concentration Country Volume (mt) % United States 14,901 40% Netherlands 6,439 17% Poland 5,514 15% Australia 4,016 10% Hungary 1,550 4% New Zealand 1,247 3% Total, including others 37,269 Source: Domestic Import data u.s. DAIRY EXPORT COUNCIL, April 2000 Page 28

30 Japan Whey Products WPC80 imports by key source countries (1999) Country Volume (mt) % United States % Denmark 80 26% Germany 12 4% France 50 16% Total including 615 others Source Domestic Import data Feed whey represents about 60% of whey imports. The U.S. share of the feed market was 60% in Whey imports for infant formula are closely controlled. Domestic production of infant formula has decreased in recent years, and will continue to decrease, a result of birth rate leveling. Imports of mineral concentrated whey fail to equal more than a third of the 14,000 mt quota. There are few applications for reduced-lactose whey in Japan. Production of processed cheese is relatively limited and consumers prefer products with a lower salt content. It is estimated that about half of this type of whey is used as a source of milk calcium. Dairy and beverage products are the primary applications. Meiji's Insram milk powdered beverage for Infams II is forlified wilh lacralbllmin. DHA. nllcleolides and selenl/lm. Lallnched: Jllly 1998 Japan whey imports - per type and usage (1998) Sector Volume Quota (mt) (mt) Whey (ALlC) 3,677 3,900 WPC 1,639 Whey - feed 22,198 45,000 Whey for 4,573 25,000 infant formula* Mineral 5,094 14,000 concentrated whey WPC80 5,753* Open. Source. Domestic statistics data. Includes whey protein concentrates. Tariff Applications Rate 25% Dairy 0% Feed 10% Infant formula 25% Fortified dairy and beverages, 3.6% Yogurt, processed meats, infant formula I u.s. DAIRY EXPORT COUNCIL, April 2000 Page 29

31 Japan Whey Products ALiC Tenders for SBS Whey Bid categories are divided into four according to amount of milk protein. Category 1: Category 2: Category 3: Category 4: less than 15% milk protein 15-29% 30-44% 45-79% Estimated WPC34 consumption by sector (1997) Based on ALiC's food use SBS tender Sector Volume User Dairy 1,273 mt Snow Brand 210 mt Meiji Milk 180 mt Yotsuba Milk 70 mt Morinaga Milk Others 100 mt Takanashi 96 mt Asahi Chemical 80 mt Zen-Noh For 1Il0rt! injonllntion on this IIlnrket, plense consult the jollowing USOEC puhlicntiolls: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec '" International Lactoferrin Conference. Japan May 99. Whey Products and Whey Fractions in Japan and South Korea Markets. Dec. 98. Technical Support for U.S. Whey Products in Japan Nov. 96 USDEC Reference Manuats: (updated yearly) WPC80 and WPI are used as stabilizers or binding agents in high-value food products, To date, these ingredients cannot be listed in the ingredient statement as milk products, This factor restricts usage of these high-value protein products, Estimated WPC80 consumption by sector (1998) Sector Volume Applications Processed meats 1,900 mt Ham, sausages, and fish sunml Infant formula 1,500 mt Infant formula Processed foods 700 mt Seasonings, mayonnaise Dairy 300 mt Yogurt Others 600 mt Protein-fortified foods, beverages Source. USDEC Japan from trade sources Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Plense eolltnet USOEC for copies of trade show and mission reports, one-on-one consultations, applications research reports and any other country-specific question Copies of educational and promotional materials developed for this market are available upon simple request. us DAIRY EXPORT COUNCIL, Aprll 2000 Page 30

32 Japan Lactose (cont.) Net lactose imports have been fairly stable during the period, ranging from 85,000 to 95,000 mt. Decreased production of infant formula is mostly responsible for the recent imports decline. Opportunities for increased usage exist in the dairy, healthy foods and beverage sectors. In 1998, the average price for lactose imports (all grades) was approximately $0.66/kg CIF. Total lactose imports and U.S. exports to Japan Year Imports* U.S. U.S. Exports** (mt) Share of (mt) Imports * ,392 34% 23, ,895 34% 27, ,404 44% 34, ,406 50% 44, ,949 53% 41, ,323 53% 39, Source. Import statistics. us DOC/USDEC Tariff rate: 9% (no quota) The U.S. is the leading supplier and it has gained market share since 1995, mostly at the expense of European suppliers. Morinaga's ljijidlls Drink l'ogurl formllialed II'/lh laclulose (10 help Increase bljidobaclerlllm sllrvlval). Lallnched. IllIgusl 1998 Lactose imports by key source countries (1999) Country Volume % United 45,937 mt 53% States Netherlands 21,975mt 25% Canada 5,918 mt 7% New Zealand 5,657 mt 6% Germany 5,526 mt 6% Source: Domestic Data Lactose imports volume by grade (1998) Type Volume % Edible (food) 65,000 mt 76.5% Pharmaceutical 13,000 mt 15.3% Refined edible 4,000 mt 4.7% Technical 3,000 mt 3.5% Source: Estimates by Landell Mills from trade sources. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 31

33 Japan Lactose (cant.) Snow Brand Milk Products. Neo Milk TSllyoiko. a foiloll'-lip milk is fortified with calcillm and oligosaccharides. Estimated lactose consumption by sector and application (1998) Sector/ Application Volume % Food 75,000 mt 88% Confectionery 20,000 mt 23.5% Infant milk formula 15,000 mt 17.6% Powdered seasonings 15,000 mt 17.6% I Other dairy products 12,000 mt 14.1% Lactose derivatives 8,000 mt 9.4% Processed meats 3,000 mt 3.5% Pharmaceutical 7,000 mt 8% Feed, others 5,000 mt 6% Total 87,000 mt 100% Source: Estimates by Lande" Mills from trade sources, USDEC Japan. Lactose derivatives: Japan is a significant producer of lactose derivatives produced from imported lactose. Lactitol, lactulose and oligosaccharides are mostly used in confections, pharmaceuticals and infant! health products, respectively. For II/ore inforll/ntion on this I1lnrket, plense consult the following USDEC publicntio/1s: World Markets for Lactose Asia. Dec. 99. Japan Lactose Market. Nov. 99. Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global TariH Survey Health Certification and Inspection ReqUIrements World Dairy Trade Trends Plense contnct USDEC for copies of trade show and mission reports, one-on-one consultations, applications research reports and any other country-specific question Copies of educational and promotional materials developed for this market are available upon simple request. Food Sector: key users and estimated usage volume Company Volume Major applications (mt) Morinaga 7,000 Confectionery (edible, refined) Infant formula Lactulose (pharmaceutical) Ajinomoto 5-10,000 Seasonings, flavor enhancers Meiji Milk 5,000 Infant formula Yakult 4-5,000 Fermented milk products Oligosaccharides production Meiji Seika 2,000 Chocolate, confectionery (edible) Ensuiko 2,000 Lactosucrose for chilled desserts, milk products, biscuits, snacks, drinks, confectionery Snow Brand 1,000 Infant formula, milk drinks, fermented milks (edible, refined) Pharmaceutical sector: Typical applications are as diluent or tablet excipient as well as in Chinese medicine. The sector uses an estimated 7,000 mt of pharmaceutical grade lactose and comprises over 300 users. Major users include Tsumara, Eisai, Sankyo, Takeda, Shionogi and Fujisawa. The use of lactose in animal feed is small in Japan, estimated at a few hundred tonnes. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 32

34 Malaysia Whey products Malaysia's whey imports have increased by 50% since The fast rate of growth has been dampened by the regional economic crisis and reduced demand from the feed sector (related to the Government swine culling program). Total whey imports and U.S. exports to Malaysia Year Imports* (mt) U.S. Share of U.S. Imports* Exports** (mt) ,159 mt 1% ,613 mt 8% ,784 mt*** 6% ,844 mt 5% ,337 mt 3% I 80 Source: Jabatan Perangkaan Malaysia. Kuala Lumpur. US DOC. USDEC. Data for this year might be an abnormality.. Cheez Balls: Puffed cheese balls available In three varieties. cheddar & sour cream. willte Cheddar: and jalapeno cheese. All varieties contain whev. Launched In 2{){){) Tariff rate: 0% During the period Australia has remained the leading supplier, although France has eroded its market share in recent years. The United States has been and remains a small supplier in Malaysia with a less than 7% share of the market during the period and a 3% share of the whey market in Whey imports by key source countries (1998) Country Volume % Australia 6,016 mt 49% France 4,552 mt 37% Netherlands 994 mt 8% United States 355 mt 3% Total including 12,337 mt others Source... Jabatan Perangkaan Malaysia, Kuala Lumpur us DAIRY EXPORT COUNCIL, April 2000 Page 33

35 Malaysia Whey products (cant.) Hot Beverage: HOI malt beverage brand noil/eall/ring a vanery conlaltling twice as ml/ch calcium as milk Lal/nched in 2()()() lhis prodl/ci con/ains dried whey For IHore infonhation on tltis liiarket, please consult tire following USDEC puhlications: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. About 85% of whey imports are used by the food industry and utilized in a wide variety of products. The fastest growing sectors in terms of whey usage are the canned milk and ice cream sectors where sweet whey powder is used for cost reduction purposes. Suppliers such as New Zealand also market blends containing whey to the dairy sector. There is no domestic production of infant formula. WPCs and modified whey protein products are considered to have a good potential in the Malaysian market, particularly as the food industry becomes more sophisticated. Estimated whey consumption by sector (1999) Sector Volume % Key users Food 11,890 mt 85% Canned milk 9,600 mt F&N Dairies, Nestle Confectionery 1,000 mt Cadbury confectionery Ice cream 600 mt F&N Dairies, Unilever Bakery 400 mt Kian Guan Biscuit Other dairy, 380 mt Scan Dairy other Feed 2,120mt 15% Total 14,010 mt Source. Landell Mills from official statistics and trade sources The Whey Market in Southeast Asia. Aug. 99. Database of Southeast Asian Dairy and Food Manufacturers. USDEC. May 97. Utilization of Whey Powder and WPC In Sweetened Condensed Milk. Dec. 97. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection ReqUirements World Dairy Trade Trends Please col1tact USDEC for copies of trade show and mission reports. one-on-one consultations. applications research reports and any other country-specific question Copies of educational and promotional materials developed for this market are available upon simple request. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 34

36 Malaysia Lactose Lactose usage in Malaysia has doubled in 10 years but the regional crisis has dampened this strong growth. In addition, the 1998 Encephalitis outbreak, resulting in the culling of 50% of the domestic swine herd, has severely reduced the growth for use of lactose by the feed sector. Total lactose imports and U.S. exports to Malaysia Year Imports* (mt) U.S. share of U.S. Imports Exports** (mt) ,616 mt NA ,423 mt NA I 2,749 mt 11% ,563 mt 13.5% Sources. Statistics Department. U.S DOC. USDEC New Zealand is the leading supplier of lactose in Malaysia. Beverage: Il1slal1l collee lalle powdered mix.,.. hich coi1lgin.\' lac lose. ProduCl launched in ]()(}() For 1II0rc injorlllntion on tlris IIInrkcl, plensc consult tire jol/oll'illg USOEC pllblicntions: World Markets for Lactose Asia. Dec. 99. Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. The Market for Lactose In Southeast Asia. Jan. 99. Database of Southeast Asian Dairy and Food Manufacturers. USDEC. May 97 USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Plense eontnet USOEC for copies of trade show and mission reports. one-on-one consultations, applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. Lactose imports by key source countries (1998) Country Volume % New Zealand 1,399 mt 55% China* 390 mt 15% United States 347 mt 13.5% Netherlands Total, including others Source. Department of Statistics Possibly re-exports 214 mt 8% 2,563 mt Tariff rate: 0% + 5% VAT Most of the lactose imported is used by the food industry for the production of sweetened condensed milk, creamer products and flavored milk drinks. Usage in the feed sector is minor. There are emerging uses for lactulose. Estimated consumption by sector (1999) Sector/ Volume % Users subsector (mt) Food 1,860 74% F&N, Nestle, Dutch Baby Milk*, Scan Dairy Pharmaceuticals % Ho Yan, Pharmamalaysia, Camden, Upha Feed 120 5% Bayer Total 2,500 Source. Landell Mills, from trade sources. Malaysian subsidiary of Friesland Coberco (Netherlands) u.s. DAIRY EXPORT COUNCIL, April 2000 Page 35

37 Mexico Whey products Dairy Beverage for young children. Many of these dairy beverages contain sweet whey as a source of dairy solids and nutrition. Mexico imports represent an estimated 65-70% of total whey products consumption, a market valued at about $50 million. Approximately 65% of imports are edible grade. Total whey imports and U.S. exports to Mexico Year Total WPC U.S. U.S. Exports** (mt) Imports Imports Share of * (mt) * (mt) Total Imports* I Sweet whey I ,994 93% 7, ,123 3,955 98% 13, ,026 3,680 92% 14, ,491 5,500 92% 15, ,518 12,898 90% 12,028 I 2002P 69,228 6, Sources. The World Trade Atlas Import data. USDOC/USDEC WPC 199 1,176 1,855 2,699 2,812 Tariff rate for sweet whey products: NAFTA % (decreasing by 1 % yearly to reach 0% in 2003) Tariff rate for WPCs: WPC34: NAFTA % (decreasing by 2% yearly to reach 0% in 2003) WPC80, WPI: 0% The United States maintains a dominant position in Mexico. In recent years its market share has been eroded by European suppliers offering "heatresistant" whey and demineralized whey. Whey imports by key source countries (1999) I Country % United 90% States Others 10% ~ o _--~----._--~----,_--~ u.s. DAIRY EXPORT COUNCIL, ApriJ 2000 Page 36

38 Mexico Whey products (cont.) Dog food in Mexico containing milk and whey. For IlIOre illforlllntioll 011 this I1lnrket, plense eol1suli the following USDEC publientions: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. Trade show reports: AFIA AGRA. ExpoTecno Alimentaria. Spring 99. Opportunities and Strategies for U.S Whey in Mexico. Sept. 98. Market Potential for U.S Dairy Products. June 97. Application of WPC's in Mexican breads Applications for WPC's in Tortillas USDEC Reference Manuals: (updated yearly) Labeling and Product Standards The feed sector, large and growing, represents an estimated 30-35% of imports. The top 20 end-users represent about 50% of total consumption. Major consumers of whey are in the dairy sector. Estimated whey consumption by sector and major user in the food industry (1999) Sector Volume Major users Dairy 15,550 mt Evamex 750 mt Nestle 550 mt Gota Blanca 540 mt I Helados Holanda 500 mt La Pureza 200 mt La Laguna Prepared Foods 375 mt Anderson Clayton 275 mt Kraft Foods 275 mt Sigma AI. 250 mt Nabisco Whey Protein Concentrates The United States supplies about 90% of the WPC market (approximately 12,000 mt in 1999). WPC80 imports were approximately 2,500 mt in The largest WPC users are: Evamex, Gota Blanca, La Mesa (approx. 1,000 mt), infant formula manufacturers Mead Johnson and Wyeth (approx. 450 mt), Danone, Nabisco, Bimbo (bakery) and Kraft Foods. Usage will continue to grow in the dairy beverage and bakery sectors. Many other food segments remain underdeveloped, Total demineralized whey consumption is estimated at 7,900 mt, of which over 6,000 mt is imported. Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Plense eontnet USDEC for copies of trade show and mission reports, one-on-one consultations, applicallons research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 37

39 Mexico Lactose Total lactose imports and U.S. exports to Mexico Year Imports* U.S. share U.S. Exports** (mt) of Imports* (mt) ,116 72% 2, ,105 87% 5, ,133 87% 5, ,293 91% 7, ,627 85% 7, ,055 86% 8, ,265 88% 7,518 Source: The World Trade Atlas Import data, USDOC/USDEC 18000~ , O ~--~----._--~ Lactose imports by key source countries (1999)* Country Volume % United States Netherlands New Zealand 3,365 1, % 7% 5% The World Trade Atlas Import Data Tariff rate for lactose: NAFTA*2000: 3% (decreasing by 1% yearly to reach 0% in 2003) (* Also applicable for Canada under Chapter 17). u.s. DAIRY EXPORT COUNCIL, April 2000 Page 38

40 Mexico Lactose (cant.) The major sectors using lactose are the infant formula, dairy, bakery and pharmaceutical sectors. The confectionery segment remains underdeveloped. Estimated lactose consumption by sector (1998) Sector Volume Users Infant formula 1,450 mt 850 mt 480 mt Nestle Mead Johnson Wyeth Prepared food 480 mt Nabisco and bakery Dairy, other I 200 mt 140 mt Anderson Clayton Nestle, Alpura For more informntion on this mnrket, plense consult the following USDEC pllhlicntions: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Plense contnct USDEC for copies of trade show and mission reports. one-on-one consultations. applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 39

41 Philippines Whey products Gerber Moms: II l'itamin and mineral nutrition supplement /01' pregnant and breast/eeding mothers conrail1lllg whey. The current market for whey is estimated at over 20,000 mt. A summary of projected whey powder offtake sees the market reverting back to its pre-crisis levels of around 22,500 mt within Total whey imports and U.S. exports to the Philippines Year Imports* U.S. Share U.S. Exports** (mt) (mt) of Imports* Sweet WPC whey ,418*** 50% 5,367 NA ,754*** 39% 5,651 NA ,871*** 50% 5, ,175 43% 5, ,789 42% 7, ,144 31% 6, ,355 1, , Sources. Domestic statistics, USDOCI USDEC. FAO ~ O ~----~----~----~ Tariff: 3 HS Code: 0404,10.00 The United States has a leading share of the Philippines market. Whey imports by key source countries (1998) Country Volume % USA 4,458 mt 33% France 3,376 mt 25% Australia 2,215 mt 16% Canada 1,467 mt 11% Netherlands 1,190 mt 9% Total including others Source. Philippines Customs Department 21,144 mt US D A IRY EXPO RT COUNCIL, April 2000 Page 40

42 Philippines Whey products (cont.) For I//Ore inforl1/(ltion on this l1/(lrke t, plense can suit the following USOEC publicntions' Whey Usage in the World Infant Formula MarJ<et. Asia Latin America. USDEC. Dec. 99. The Whey Market in Southeast Asia. Aug. 99. Food Ingredient Asia. Show Report. April 99. Technical Consultations on U.S. Whey Products. March 98. Database of Southeast Asian Dairy and Food Manufacturers. USDEC. May 97. Utilization of Whey Powder and WPC in Sweetened Condensed Milk. Dec. 97. The major whey user in the Philippines is the feed sector (67% of imports in 1999). The dairy sector is the second largest sector. Whey imports consist mostly of sweet whey (about 90%) and demineralized whey. Some whey protein concentrates are used, including in the form of readymade blends out of Europe. Several large bakeries do use whey powder but the bakery and confectionery sectors remain largely underdeveloped and are estimated to represent a 1,000 mt potential. Wyeth is the second largest whey user in the Philippines by virtue of its dominance of the formula market and it mostly uses whey protein concentrates. Estimated whey consumption by sector (1999) Sector Volume % I Applications Users (mt) Feed 11,880 67% Pig feed General Milling Corp., Agribrands, Purina Phils Food 5,820 38% Dairy 3,360 Canned Nestle, Alaska milk Milk Corporation products Infant 1,500 Formula Wyeth, Mead formula Johnson, Nestle Bakery, 960 Biscuits, Nestle, confectio chocolate Commonwealth nery Foods I Total 17,700 Source. Landell Mills estimates based on official statistics and trade sources. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Gtobal Tariff Survey Heatth Certification and Inspection Requirements World Dairy Trade Trends Plense contnct USOEC for copies of trade show and mission reports, one-on-one consultations, applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 41

43 Philippines Lactose Alaska's condellsed milk/rom Ihe Pllllippine~. It is /ormllialed wilh \t'hel' and laci()se. The overall market size and rate of growth has been adversely affected by the regional economic crisis. Consumption is expected to recover to 1997 levels by 2000, fueled by the 2.3% annual population growth and increases in income. Total lactose imports and U.S. exports to the Philippines Year Imports* (mt) U.S. Share U.S. Exports** (mt) of Imports* ,527 44% ,167 52% ,631 76% ,384 46% ,485 40% ,286 20% 1999 Source: National statistics office. National Dairy Authollty. U.S DOC/USDEC 2,122 3,669 3,069 2,903 2, , ~ ~ O ,,----~ Tariff: 3% New Zealand has a leading market share that has been achieved at the expense of the United States and Dutch suppliers. Lactose imports by key source countries (1998) Country Volume % New Zealand United States Singapore* Netherlands I Australia Total including others Source. National Dairy Authority re-exports from third countries 2,117 mt 50% 893 mt 20% 439 mt 10% 295 mt 7% 274 mt 6.5% I 4,286 mt u.s. DAIRY EXPOI{T COUNCIL, April 2000 Page 42

44 Philippines Lactose (cont.) The food sector is the leading lactose end-user, strongly dominated by the infant formula industry. In 1998, Wyeth alone represented 58% of imports. Lactose usage in the dairy sector, lead by Nestle and Alaska Milk Corp., is virtually non-existent. There is limited usage in the snack sector. The confectionery and bakery sectors are underdeveloped. There is virtually no usage of lactose derivatives. Many opportunities exist for increased usage in these categories. Feed use is in pig starter formulations. Lactose should find a developing market in this sector as feeding practices improve. Demand in the pharmaceutical sector is driven by the requirements of locally manufactured drugs, particularly for tablets. For more inforl1lation on this J1larke t, please consult the following USDEC publications: World Markets for Lactose: Asia. Dec. 99. Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. Food Ingredient Asia. Show Report. April 99. Estimated consumption by sector (1999) Sector/ subsector Volume % Users Food 2,640 mt >50% Infant formula 2,620 mt Wyeth, Mead Johnson, Nestle, Abbott Dairy, other 20 mt URC, Nestle Feed 2,250 mt 43% Robina, Monterey, Pharmagro Pharmaceutical 360 mt 7% Warner Lambert, United Labs. Total 5,250 mt 100% Source: Landell Mills from Industry sources The Market for Lactose in Southeast ASia. Jan. 99. Technical Consultations on U.S Whey Products March 98. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Please contact USDEC for copies of trade show and mission reports. one-on-one consultations. applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. US. DAIRY EXPORT COUNCIL, April 2000 Page 43

45 South Korea Whey prod ucts On January 1995, Korea implemented the Uruguay Round GAD Accord that shifted controls from reliance on licenses to tariff rate quotas. The initial 23,000 mt quota increases at an annual rate of 10% through 2004, when it reaches 54,233 mt. It is divided between food and feed uses. Total estimated consumption of whey products is over 20,000 mt. Imports represent 2/3 of consumption. Total whey imports and U.S. exports to South Korea Year Total WPC U.S. share U.S. Exports** (mt) Imports* Imports of Imports (mt) * (mt) I. Sweet WPC I i whey , , , , % 6, ,633 1,323 74% 9, ,477 15% 10,799 1, ,473 11% 11, Sources. Domestic Import data. USDOC. USDEC. PrOJections. Trade sources Quota= 32,352 mt. Tariff rate: 40% unless a "special exemption" is issued by the Korean Dairy Industry, in which case a 20% rate applies ~ O+---~----._--~--~----,_--~--~ Whey imports by key source countries (1999) Country % France 33% Netherlands 37% United States 11% New Zealand 6% u.s. DAIRY EXPORT COUNCIL, A pril 2000 Page 44

46 South Korea Whey products (cont.) Half of the imported whey is used for feed, and 29% for food. Approximately 35% of the whey imported under the food quota is used in infant formula. The remainder is used in a variety of dairy, bakery and confectionery goods. The top twenty end-users of whey represent 70-80% of total usage Use of whey quota in 1997 Note: Metric tonnes in parentheses. Total Quota (29,411) Feed 51% Food 29% Unused 20% Feed stuff Pet food Ice cream premix (700) Processed Food Dairy (1.343) Ice cream (645) 65% Weaning (3,223) Health food (165) Beverage (23) Confectionery (172) Processed milk I Processed milk powders (601) powder products (735) Soup (38) Infant formula Coffee creamer (25) 35% Bakery (15) Feed (540) Others (56) Food (5,656) Estimated consumption by sector, food (1998) Sector Volume User Infant formula, dairy 3,000 mt Namyang Dairy 2,700 mt Maeil Dairy 864 mt Binggrae 330 mt Pasteur Milk I Dairy, confectionery 545 mt Samik Dairy & Food Bakery 100 mt Crown 180 mt Samlip GF Source. USDEC Korea from trade sources. us. DAIRY EXPORT COUNCIL, April 2000 Page 45

47 South Korea Whey products (cant.) Coffee beverage by Maeil Dairy. The company uses a variery 0/ whey ingredients and is. Wilh A'amyang Dairy. a major user 0/ whey /raclions. For more information 011 this market, please consult the following USDEC publications: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. One-on-one Whey Consultations. Seminar report. March 99. Oct. 98. Whey Products and Whey Fractions in Japan and South Korea Markets. Dec. 98. Opportunities for U.S. Whey Products in Korea: A technical analysis. Sept. 96. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Many Korean food manufacturers import milk preparations (blends described as having beneficial functional properties). Most contain both milk powders and whey solids. It has been suggested that these blends are used to circumvent quotas and tariffs on milk powders, or food laws relative to whey products labeling. When whey products are added to existing formulas one should be aware of the fact that formulas may already contain high levels of whey solids introduced through milk preparations. Korea is also a major importer of lactoferrin, with Namyang Dairy and Maeil Dairy being the largest single consumers for infant formula production (total consumption is estimated at mt). Other endusers such as Pulmuone are in the health foods business. The U.S. has become a leading supplier to this market. Demineralized whey is increasingly used by infant formula manufacturers. There are additional opportunities for increased usage of whey protein concentrates in the processed meats and fermented milk segments. Infant formula Korean dairies have been among the world's most progressive manufacturers of infant formulas. They have been quick to adapt research that suggested better potential formulas and use large amounts of high value whey products. Whey products imported for infant formula (1997 estimates) Demineralized whey and WPC 3,000 mt WPC mt Alpha-lactalbumin 85 mt Hydrolyzed WPC80 20 mt Lactoferrin 11 mt Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Please contact USDEC for copies of trade show and mission reports. one-on-one consultations. applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request u.s DAIRY EXPORT COUNCIL, April 2000 Page 46

48 South Korea Lactose Lactose imports to Korea are determined by quota applications and have been fairly stable for the past five years, in the 10-12,000 mt range. The 1999 lactose quota was set at 12,000 mt (20% tariff). It is estimated that demand for lactose now exceeds the quota by 10-20% due to increased consumption, a trend that is expected to continue. Total lactose imports and U.S. exports to Korea Year Imports* U.S. share U.S. Exports** (mt) of imports (mt) , ,691 48% 3, ,643 65% 7, ,763 59% 6, ,740 67% 3, ,000 71% 4, Source.. Import statlslics. u.s DOC/USDEC Tariff rate: 20% The United States is the leading supplier of lactose to Korea, providing about two thirds of the country's imports. Apple Drink yogurt produced by Pasleur milk conrains Oligosaccharide and laclase 14000~ ~ O+-----~------~----~----~~----~ Lactose imports by key source countries (1999) Country Volume (mt) % United States 8,520 71% Netherlands 1,524 13% New Zealand 924 8% Germany 576 5% Total (including others) Source. Import statistics. 12,000 u.s. DAIRY EXPORT COUNCIL, April 2000 Page 47

49 South Korea Lactose (cant.) Baby food produced by Namyang daily wilh added dairy producis including whey prole ins. laciulose and lacloferrin Three slep aclive ingredienls are added 10 help baby's brain developmenl. For IllOre il1for/llntiol1 all this II1nri<ct, plense consult the following USDEC publientions: Food industry applications represent over half of lactose usage, with infant formula and chocolate production accounting for the bulk of the volume. Lactose usage in the feed sector is fairly stable but consumption is expected to reduce gradually over the next 5 years (domestic meat production is not forecast to grow). The use of lactose derivatives remains small, mostly restricted to the infant formula sector. Oligosaccharides and lactulose are produced domestically, the latter from food grade lactose. Estimated consumption by sector (1999) Sector/ subsector Volume % Key users Food 4,000 mt 54% Infant formula 2,750 mt Namyang, l\i1aed, Iidong Confectionery 1,800 mt Lotte, Crown, Other < 200 mt Pulmuone, Chell Jedang, others Pharmaceutical 3,360 mt 28% Han Guk Drug, Kwang Jeon, others Feed 2,000 mt 17% Agribrands Total 9,360 mt Source. Landell Mills, based on trade sources Purina, other World Markets for Lactose: Asia. Dec. 99 Whey Usage In the World Infant Formula Market. ASia Latin America. USDEC. Dec. 99. Whey Products and Whey Fractions in Japan and South Korea Markets Dec. 98 USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff SUNey Health Certification and Inspection ReqUirements World Dairy Trade Trends Plense contnet USDEC for copies of trade show and mission reports, one-on-one consultations, applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. u.s. DAIRY EXPORT COUNCIL, April 2000 Page 48

50 Taiwan Whey prod uets In 1999 whey imports totaled over 16,000 mt ($9.8 million). Imports represent 100% of consumption. Demand has decreased since 1994/1996 as whey shipments were found to contain benzoic acid and authorities have rejected whey products. Imports of whey proteins have been dynamic in recent years, driven by demand from the dairy and bakery sectors. Total whey imports and U.S. exports to Taiwan Year Total WPC U.S. U.S. Exports** imports Imports share of (mt) * (mt) * (mt) Imports* Sweet WPC whey , % 7,443 NA , % 6,356 NA , % 10, , % 10, , % 7, ,679 59% 4, ,523 14,465 65% 5, Source: Domestic statistics. USDOC/USDEC , , O+--~-~-_r-~-~--~~ Tariff: Sweet whey: 10%, HS Code Feed Grade: 0%, HS Code The United States is the third largest dairy ingredient supplier to Taiwan, and largest whey and lactose supplier. Whey imports by key source countries (non-feed type) (1998) Country % United States 59% Canada 15% Australia 18% Other 8% US DAIRY EXPORT COUNCIL, April 2000 Page 49

51 Taiwan Whey products Estimated whey and WPC consumption by end-user (1998) Product Volume Users Sweet 1,200 Charoen Pokhand Enterprise Co. whey 1,000 Great Wall Enterprise Co. Ltd. 800 Foremost Foods Ltd. 500 President Farm Co. Ltd. WPC 20 President Enterprise Co. Ltd. 10 Kuan Chuen Group 5 I-Mei Foods Co. Ltd. Lactoferrin N/A Wei Chuan's For II/Ore inforll/ation on this II/arket, please consult tile foll07uing USDEC publicntions: Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. Taiwan Dairy Ingredient Market. Aug. 99. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Please contacl USDEC for copies of trade show and mission reports. one-on-one consultations. applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. Estimated whey consumption by sector (1999) Sector Volume % User Applications Food 55% Dairy 4,500 Wei Chuan Dairy Foods beverages, yogurt 800 Nestle Taiwan Dairy Bakery, 500 President Baked Dairy Enterprise products, dairy 500 I-Mei Foods Ice cream, beverages, cookies Feed >1,000 45% Great Wall Animal feed Enterprise Charoen Animal feed Pokphand Enterprise Best opportunities for increased whey usage in the food sector are in yogurt and yogurt drinks, ice cream and protein beverages. Lactoferrin usage is expected to increase in the health food and drink markets. u.s. DAIRY E XPORT COUNCIL, April 2000 Page 50

52 Taiwan Lactose Total lactose imports and U.S. exports to Taiwan Year Imports* (mt) U.S. Share U.S. Exports** of Imports* (mt) ,057 29% 1, ,088 61% 1, ,101 70% 3, ,781 77% 5, ,586 62% 3, ,744 60% 2, ,938 59% 3, Source. Import statistics, u.s. DOC/USDEC Lactose imports have declined significantly since 1995 but managed to rebound to nearly 8,000 mt in This is assumed to be the result of the economic crisis. Taiwan's agriculture sector keeps declining in the face of continual industrial development. Usage by the feed sector is not forecast to grow strongly in the long-term. Tariff: 16% The U.S, remains the largest supplier to this market, although it has lost market share (in value) to New Zealand and other suppliers in recent years. 12,000., , 10,000 8,000 6,000 4,000 2,000 O+--~--~-_r--r_-_r--r_-~ u.s. DAIRY EXPORT COUNCIL, Apri Page 51

53 Taiwan Lactose (cont.) Lactose imports by key source countries (1999) Country Volume (mt) % United States 4,646 59% New Zealand 1,184 15% Netherlands 1,024 13% Canada I 421 5% Total including others 7,938 Source. Domestic Import statistics Animal feed is the main application for lactose in Taiwan, accounting for half of total consumption. There are about companies operating in the feed sector, with a large number of smaller companies using small quantities of lactose. Demand is not expected to grow strongly in the future. Food uses include infant formula and chocolate confectionery. The bakery and snack markets remain underdeveloped in terms of lactose usage and present good opportunities. Awareness and usage of lactose derivatives is still small. A small domestic production of derivatives exists and interest in growing. For II/Ore information on this market, please consult the following USOEC publications: World Markets for Lactose: Asia. Dec. 99. Whey Usage in the World Infant Formula Market. Asia Latin America. USDEC. Dec. 99. Taiwan Dairy Ingredients Market. Aug. 99. US DEC Reference Manuals: (updated yearly) Estimated consumption by sector (1999) Sector/ Volume % Users subsector (mt) Feed* 3,000 50% Cargill, Tai Aqua, Great Wall, President Food 2,000 33% Wei Chuan, President, Chen Hsiang, I-Mei, Hunya Pharmaceutical 1,000 17% China Chemical, Sintong, U-Liang Total 6,000 Source. Landell Mills, based on trade sources Labeling and Product Standards Global Tariff Survey Health Certification and Inspection Requirements World Dairy Trade Trends Please contact USOEC for copies of trade show and mission reports, one-on-one consultations, applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. u.s. DArRY EXPORT COUNCIL, April 2000 Page 52

54 Thailand Whey products I n the period Thailand's whey imports nearly tripled to exceed 25,000 mt. The regional economic crisis strongly affected imports in 1998/99 and the market should reach 20,000 mt by A large proportion of the whey imported in Thailand is used for feed applications. Total whey imports and U.S. exports to Thailand Year Imports U.S. Share U.S. Exports** (mt) * (mt) of Imports* Sweet whey WPC ,519 15% 1,707 NA ,790 12% 640 NA ,774 49% 2, ,715 34% 2, ,539 27% 4, ,180 27% 4, , Source. Country Statistics. FAO. USDECO/ USDEC 30000, , O+---r_-~--~--._--r_-~ Tariff: 5% - HS Code: The United States has been the leading supplier of whey to Thailand since 1995 and its market share has grown from 25-35% to over 50% in Other suppliers such as Australia and France have increased their presence in recent years, mostly at the expense of other European suppliers or Canada. Whey imports by key source countries (1998) Country Volume % United States 5,814 mt 58% Netherlands 3,737 mt 24% France 2,306 mt 14% Australia 2,281 mt 14% Total including others 16,180 mt u.s. DAIRY EXPORT COUNCIL, April 2000 Page 53

55 Thailand Whey products (cant.) For /I/Or/! ill/ormatioll 011 this market, please consult the /ol/oluillg U5DEC puhlicatlons: World Markets for Lactose: Asia. Dec. 99. Whey Usage in the World Infant Formula Market. Asia Latin America. USDEG. Dec. 99. The Whey Market in Southeast Asia. Aug. 99. The Market for Lactose in Southeast Asia. Jan. 99. Whey Products and Whey Fractions in Japan and South Korea MarKets. Dec. 98 Database of Southeast Asian Dairy and Food Manufacturers. USDEC. May 97. Utilizalion of Whey Powder and WPC in Sweetened Condensed Milk. Dec. 97. USDEC Reference Manuals: (updated yearly) Labeling and Product Standards The whey market in Thailand is predominantly an animal feed market. The commercial animal feed sector will continue to grow as producers make increased use of commercially blended feed. In the food sector, usage in canned milks remains small. Many other segments (ice cream, bakery, confectionery, snacks) are largely underdeveloped for whey usage and offer good growth opportunities. Additional growth could occur from increased usage in infant formula and canned milk products. There is a large market for skim milk replacers, estimated at about 6,000 mt, that is met by exports from the Netherlands and Germany. Estimated whey consumption by sector (1999) Sector Volume % Users Applications Animal 15,200 81% Charoen Pokphand, Lee Feed feed* Mill, Centrico Food 19% 1,500 United Foods Bakery, confectionery 1,285 Nestle Canned milk, other dairy 675 ** Nestle, Unilever Ice cream N/A - Infant formula Source. Landell Mills based on Industry sources and official statistics. *Thailand has a small local supply of whey, which is used for feed purposes. ** Some of this usage is in the form of blendsl SMP replacers formulated with WPCs. WPC usage in Thailand WPC usage remains largely underdeveloped in Thailand. Foremost Friesland (Thailand) Ltd., is one of the few major users of WPC (about 240 mt per year) that it sources from New Zealand. The WPC is mainly used for nutrient fortification in UHT ready-to-drink milk products. Ice cream manufacturers such as Nestle use skim milk replacers (ex Europe) that are formulated with WPCs. Opportunities exist in the ice cream, dairy beverage and bakery sectors. Global Tariff Survey Health Certification and InspectJon Requirements World Dairy Trade Trends Please contact USDEC for copies of trade show and mission reports. one-on-one consultations. applications research reports and any other country-specific question. Copies of educational and promotional materials developed for this market are available upon simple request. Kellogg's. A:rl~pl('s h"als are formulall'd \rllh \rhel' prolf!ln isnlalf!s In SE..I.~ia. Thailand Lallnchf!d Fall 99. U.5. DAIRY EXPORT COUNCIL, April 2000 Page 54