New Zealand Coconut Milk and Cream Market Trends

Market driver - Rise in vegan and flexitarian population

As more and more people are becoming conscious about their health and diet, they are reducing or completely avoiding consumption of animal products. The number of vegans and vegetarians has significantly grown in New Zealand in recent years. According to various surveys, nearly 15-20% of New Zealand's population now identifies themselves as vegan, vegetarian or flexitarian. Flexitarians are people who mainly follow a plant-based diet but occasionally eat meat, eggs or dairy. The main reasons behind this transition are health, ethical concerns for animal welfare and environmental impact of animal agriculture.

Coconut milk and cream has emerged as one of the most popular non-dairy alternatives for vegans and flexitarians. They are derived from coconut flesh which does not require animal slaughtering or cruelty towards animals. Compared to cow milk and cream, coconut milk and cream is lower in calories and saturated fat. It is a rich source of many vitamins, minerals and plant-based nutrients. Moreover, its texture and taste resemble dairy cream and milk to a large extent which makes it suitable for direct substitution in recipes. Majority of vegans and flexitarians in New Zealand now rely on coconut milk and cream for their cooking and beverage needs.

The vegan grocery stores, cafes and restaurants have massively expanded their offerings based on coconut milk and cream in recent years to cater to this consumer segment. Even mainstream supermarkets are allocating more shelf space for various coconut milk and cream products. The coconut milk and cream industry has proactively launched new variants like barista blend coconut milk to target coffee shops. Overall, as more people cut down on animal products for health, ethical or environmental reasons in New Zealand, the demand for coconut milk and cream as a dairy alternative will continue rising sharply.

Market driver -Increasing adoption in beverages, bakery, confectionery and snack industries

Coconut milk and cream have found widespread usage beyond just direct consumption or recipes at homes. Various food processing industries in New Zealand have incorporated these products in their formulations to cater to evolving consumer preferences. The beverage industry has introduced numerous coconut milk-based drinks ranging from cold coffees to nutritious smoothies. They are ideally positioned as healthy alternatives to high sugar fruit juices or dairy-based coffees and shakes.

In bakery and confectionery segment, coconut milk and cream are utilized in various cake mixes, frostings, icings, fillings and desserts. They enhance texture and appeal of the products while allows using plant-based label. Even savoury snacks and fast foods chains have added coconut cream or milk-based dips, sauces and toppings in response to niche consumer demand. Overall, these industries foresee coconut products as lucrative ingredients for new product development.

The acceptance of coconut milk and its derivatives in both household and commercial applications presents a long-term business potential for B2B coconut product suppliers. Their expanding reach through retail chains and tie-ups with food companies act as catalysts for industrial consumption. Growing health awareness and environmental consciousness of shoppers pushes establishments to shift towards more sustainable options as well. Thus, coconut milk and cream are expected to experience heightened demand cycles across beverages, bakery and savory food space in future.

Market Challenge: Price volatility of coconut

The price volatility of coconuts poses a significant challenge for the New Zealand coconut milk and cream market. As coconuts are an agricultural commodity, their price depends heavily on weather conditions, pest infestations, and global supply and demand trends. A bad harvest in a major coconut producing country can cause international coconut prices to spike rapidly. For example, in 2021 coconut prices increased by over 25% due to Cyclone Seroja damaging crops in Indonesia and the Philippines, two of the world's largest coconut producers. Higher international coconut prices force local producers to pay more to source the raw materials needed to make coconut milk and cream. This squeezes their margins and makes it difficult to set stable retail prices. Volatile commodity prices also make forecasting costs and profits challenging. If producers are unable to pass on higher costs to customers, price volatility can negatively impact their financial performance. To mitigate risks, producers often negotiate flexible contracts with suppliers. However, frequent price fluctuations still present an ongoing threat to the stability and growth of the New Zealand coconut market.

Market Opportunity: Growing demand for organic and non-GMO products

The growing demand for organic and non-genetically modified (non-GMO) food and beverage products presents a major opportunity for the New Zealand coconut milk and cream market. Increasing health consciousness among consumers has driven strong growth in the global organic food industry in recent years. Customers are paying attention to how products are grown and processed, and willing to pay a premium for organic options. This provides an opening for New Zealand coconut producers to tap into this lucrative niche. As an island nation with a pristine environment, New Zealand is well positioned to offer organic and non-GMO coconuts and coconut products. Local producers can highlight the provenance advantage of sourcing organic coconuts grown without synthetic pesticides or fertilisers. There is also an opportunity to build on New Zealand's clean, green image to access new international markets seeking sustainably-produced goods. With the right marketing and certification, New Zealand coconut producers can charge higher prices and gain greater market share by meeting the strong demand for organic and non-GMO coconut products.