A Game-Changer for Dairies: Rising Birthrate and Export Drive Revitalize the Industry Amid “Nobody Drinks Milk Anymore” Crisis

Seoul Dairy, Maeil Dairies, and Namyang Dairy Achieve Improved Results in First Half
Milk Products' Share of Total Revenue Shrinks
Portfolio Expands to Include Infant Formula, Protein Drinks, and Desserts
Strengthened Exports Drive Structural Imp

Despite a decline in white milk consumption—the core product of the top three dairy companies—they succeeded in defending profitability in the first half of this year. While the share of dairy products in total sales decreased, the rebound in birth rates fueled recovery in the powdered infant formula market. In addition, diversification into protein drinks, desserts, and other products, together with overseas expansion through exports, helped offset the decline.

According to related industry sources on September 3, the Seoul Dairy Cooperative's consolidated operating profit for the first half reached 19.2 billion won, a 110.5% increase compared to the same period last year. During this period, sales rose 3.5% to 1.0672 trillion won. Seoul Dairy's main revenue sources are its business operations and credit services. Among these, revenue from economic activities—including dairy production and sales—came in at 1.023 trillion won, up 3.4% year-on-year, driving improved performance. A Seoul Dairy official explained, "Despite unfavorable internal and external conditions, the strategy to maintain sales growth and improve profitability through cost efficiencies such as SG&A (selling and administrative expenses) led to an increase in operating profit."

A consumer is browsing the milk shelf at a large supermarket in downtown Seoul. Photo by Yonhap News

More specifically, the share of milk in total sales dropped from 62.3% in the first half of last year to 60.7% in the first half of this year. In response, the company sought new opportunities by exporting a wide range of products to about 17 countries, including China, the United States, Cambodia, and countries in South America. Seoul Dairy also shipped cream donuts, juice, and beverages to Guam, Saipan, and Hawaii, and in May this year, launched "Biyotte Ice Cream," a product exclusively for the Japanese market. Additionally, the company released processed sterilized milk in Kazakhstan, bar-type ice cream in Taiwan, and exported Enfant sterilized milk and the premium A2+ sterilized milk brand to Vietnam. Overseas sales for Seoul Dairy in the first half of the year increased by approximately 12% compared to the previous year.

The company is also expanding domestically with new businesses. Last month, it launched milk bread and milk morning rolls, marking its entry into the bakery market. More recently, Seoul Dairy introduced the "Seoul Milk Sand Cookie," targeting the premium dessert gift segment. A company representative said, "Although desserts currently account for only a small portion of overall sales, we plan to continue the growth trend by expanding the product lineup."

Maeil Dairies also saw the share of dairy products such as white milk and fermented milk in its total sales decline from 52% in the first half of last year to 50.96% this year. However, the company improved profitability through its nutrition business, which focuses on powdered infant formula and nutritional products for adults. Operating profit for the first half was 39.2 billion won, and sales reached 949.9 billion won—a 54.3% and 3.6% increase, respectively, compared with the same period last year. By business unit, nutrition revenue was 120.4 billion won, up 13.2% year-on-year, and exports rose 26.4% to 53.7 billion won.

A Maeil Dairies official said, "In the first half, there was a cost burden from losses in white milk (due to an oversupply of raw milk) and rising costs in packaging materials and imported raw materials stemming from the U.S.-Iran Middle East crisis." However, the official added, "A rise in birth rates drove strong sales in infant formula, the portfolio grew for non-dairy products such as soymilk and new jelly items, and overseas business expanded—all of which led to a rebound in performance." The official further noted, "In the second half, we plan to further strengthen domestic and international growth, centered around high-value nutrition products such as infant formula and plant-based beverages, and continue to improve white milk's profitability."

Meanwhile, Namyang Dairy Products reported an operating profit of 1.8 billion won in the first half, up 80% year-on-year, and sales of 483.2 billion won, a 7.9% increase. The share of milk in total sales fell from 54.4% last year to 48.9%, but this was offset by an increase in the share of other products—including Choco Emong and the protein brand TakeFit—from 24.3% to 29.2%. The share of powdered formula sales also rose from 21.3% to 21.9%.

Namyang Dairy Products is also expanding overseas operations based on powdered formula, freeze-dried (FD) products, French Café coffee mixes and cup coffee, and TakeFit. Overseas sales for the first half stood at 46.6 billion won, up 130% year-on-year, and the share of overseas sales in total revenue increased from 4.5% to 9.6%. A Namyang Dairy Products representative commented, "In the first half, the expansion of exports and the performance of growth portfolios such as protein drinks led to improvements in both sales and profitability. In the second half, we plan to continue building the foundation for sustainable growth by further expanding overseas operations, strengthening the competitiveness of growth product lines, and upgrading key distribution channels."

The diversification of business portfolios in the dairy industry is closely linked to declining domestic milk consumption. According to the Korea Dairy Committee, per capita white milk consumption dropped steadily from 26.2 kilograms in 2021 to 22.9 kilograms last year. An industry official commented, "Even though the share of milk in sales is declining, the dairy industry remains heavily dependent on white milk sales. Companies are enlarging new product lines and exports as a survival strategy, but the challenge of increasing milk consumption remains unresolved."

Meanwhile, the number of newborns last year reached 254,300—an increase of 16,000, or 6.7%, year-on-year, marking the second consecutive annual increase. The size of this increase was the largest in 15 years, and the total fertility rate returned to the 0.8 range for the first time in four years, at 0.80.

This content was produced with the assistance of AI translation services.