Consumers switching to smaller convenience containers will help drive a 4.1 per cent annual growth in demand for dairy packaging, according to new market research.

The Cleveland-based Freedonia Group's latest findings forecasts dairy packaging suppliers will have to respond to consumers' increased nutritional awareness and demand for fresh foods sold in smaller units.

Increasing spending on food prepared or eaten away from home, which tends to be served in convenience sizes, as well as a general consumer move towards smaller serve units is expected to increase while aggregate demand for dairy products per capita will remain flat, the analyst stated.

The dairy packaging market is expected to reach $4.3bn in sales by 2010, representing an annual growth of 4.1 per cent, Freedonia stated. Within that figure, milk packaging demand is expected to expand by 3.5 per cent a year to reach a $1.25bn market by 2010.

Cheese packaging is expected to increase by 3.4 per cent a year to $965m, while packaging for frozen dairy products is forecast to grow by 3.8 per cent to $800m during the same period.

New products aimed at children and functional products offering health benefits added to continuing demand for existing products is expected to grow packaging demand for cultured products alone by 7.5 percent annually, to reach $575m by 2010.

Drinking  yogurt, packaged in bottles rather than less costly cups, is a significant growth opportunity in the expanding yogurt market.

Increased demand for cream packaging is being driven by rapidly expanding sales of coffee brewed outside the home, even though per capita milk consumption overall continues to fall.

Shifts to single serve plastic bottles away from gabletop cartons in schools and quick service restaurants, tends to boost sales in these venues also, booting packaging demands.

Pouches and bottles present the strongest opportunities for the industry, with demand for tubs and cups expected to grow also. Continued growth in Cheese, frozen dairy and cultured dairy uses, will drive pouch demand, while single serve milk and drinkable yogurt will expand bottle demand, Freedonia forecasts.

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