Dairy brands in China are adopting creative strategies to navigate some of the industry's emerging challenges, such as a declining birthrate, an aging population, a market traditionally dominated by shelf-stable milk products and increased consumer preference for more cold-chain products.

Sales of packaged milk products fell 2.9 percent in the first quarter compared to the same period last year, mainly due to a recovery in outdoor activities and a shift in consumer spending patterns post-COVID, according to the China Shopper Report 2024 by Bain & Co and Kantar Worldpanel.

Given the situation, it is imperative that Chinese dairy brands create new categories and discover innovative opportunities, said Yan Wei, a principal of the China health and consumer and investor support teams at global management consultancy Roland Berger.

Yan made the remarks during the Food and Beverage Innovation Forum 2024 and FBIF Food Innovation Exhibition held in Shanghai from June 25-27.

Some dairy brands have already taken steps to overcome the challenges.

Haihe Dairy, an over six-decade-old time-honored brand based in Tianjin, has, for instance, designed innovative products specifically for Gen Z consumers. The company has infused local humor and incorporated the relaxed nature of Tianjin residents to come up with offerings such as coriander and avocado-flavored milk.

Zou Yang, chairman of Haihe Dairy, credits its success to Tianjin's inherent sense of humor.

Speaking at the FBIF Forum, Zou described Tianjin as a "Florida" for China, renowned for its xiangsheng, or crosstalk comedy.

Viral moments, such as the "diving grandpa" and motorboat surfing during city floods, epitomize the unique humor and laid back attitude of Tianjin residents.

Haihe Dairy has integrated city landmarks and cultural elements into its yogurt product promotions, making "playfulness" a hallmark of its product innovation, Zou said.

"In our collaborative products, we focus on the unique characteristics of Tianjin," Zou said.