The fast growth of premium dairy products is mostly contributed by imported UHT milk. They were first introduced to China via foreign supermarkets, and then B2C (business to consumer) websites launched marketing campaigns to sell the imported milk and won customers.

China's domestic dairy companies have also set up sub brands for their premium dairy products, such as Momchilovtsi under Bright Dairy. In future, domestic dairy companies will have to compete with imported brands on availability and marketing. They now are very strong in distribution.

In the end, domestic companies will dominate the dairy market, Kantar said.

Chinese consumers do not necessarily need to drink more milk, but they definitely want to drink better and safer milk. In these categories, they believe expensive products are better products, according to Kantar.

E-commerce has played an active role in introducing premium products, and it will play a bigger role in the future.

To avoid cannibalizing among their own products, fast-moving consumer goods companies should design different product lines for online and offline channels. Offline can sell more low-cost products for ordinary consumers, while online is the major channel driving premium product sales.