Proyi Report
Total Page:16
File Type:pdf, Size:1020Kb
Issue: No. 1 Thursday, May 7, 2020 REPORT: Proyi Consultancy Subscribe to us to get monthly information and inspiration on food industry in China Dairy Market in China Meet the author of the Dairy Market in China Report Source: chinadaily.com.cn Simone Ciuffi Simone Ciuffi is our Proyi Consultancy’s data analyst, who based in Shanghai, China. He has professional knowledge Summary and experience as a food consultant. Besides his expertise in Food Industry, China presents itself as one of the largest dairy markets worldwide, and there is every he also has the academic background in Sustainable Tourism, Rural reason to believe that it will increase its importance in the following years. In China, Development. dairy consumption is constantly growing but the domestic dairy production does not >> Get in contact with author yet guarantee sufficient supply of products. Therefore, foreign imports are already widely distributed in China market and they include an increasingly variety of products. Besides milk, milk powder and infant formulas, Chinese consumers are also becoming familiar to yogurt and cheese. The popularity of >> Start reading on Page 2 foreign brands and new dairy foods is linked to the influence of western food habits and the possibility for a largest number of Chinese to choose a more expensive and higher quality product. Australia and New Zealand are the main importers of dairy products into China, but EU countries have recently increased their market share. Opportunities arise for foreign dairy food operators to market their products in China, but they must take into account a) consumer segmentation, b) current food trends, c) food registration procedures, d) sales channels and e) marketing strategies. About the Company Proyi Consultancy was founded by Emmy Zhang and her team in 2015, it Index provides four services including: Diary Consumption in China ........................................2 Specific Occasions ……………………………………….3 Consultancy (technical, project Demand vs Supply ………………………………………..2 Different Flavors …………………………………….…….3 management, international trade and business development); Training (food Import Size Market………………. ………………………2 How to Import in China …………………………………..3 law, environmental policy); Sourcing Suppliers ……………………………….…………………..2 Registration and Claims ………………………………….3 and Talent pool. Proyi is expanding fast Food Trends ……………………………………….………3 Sales Channels ………………………………………..…..3 and have two offices in NL and CN. Plant-based Dairy ………………………………………..3 Marketing ………………………………………….……….3 Target Audience…………… ……………………………..3 Products …………………………………………………….3 >> Visit the company site 1 Report: Dairy Market in China On the Side Dairy Consumption in China lactose intolerant, plant-based milks are also becoming Goat Dairy Products quite popular as an alternative to regular milk, with a China is the second largest dairy market in the world market size growth of 17% between 2015 and 20172. after US, having the demand for dairy tripling over the last 20 years. But China has not always been a great Some kinds of cheese happen consumer of dairy products, which have started to be to be easier to digest for integrated in the diet only from the ‘80s. Since then, lactose intolerant people, more and more Chinese people have been craving for making it a suitable product for milk, yogurt and even cheese, and this has occurred for a growing market audience, a number of reasons. who is today more familiar with western foods like pizza. Firstly, and this point has great significance in China, the government has been the biggest promoter of dairy Demand vs Supply consumption among its citizens. Dairy consumption In China, dairy production does not yet keep the pace of was included in the party’s 13th five-year plan of 2016, the demand growth rate. Looking at the time frame and in the same year the Chinese Nutrition Society has 2013-2017, it can be observed that the dairy production updated dietary guidelines, recommending that each resulted in a CAGR of 2.1%, while the dairy Chinese adult should consume 300 grams of dairy per day. The health community have been publishing further dietary recommendations and promoting trainings to raise the interest of consumers in dairy. Since there is a high diffusion of lactose intolerance in Dairy products in China are mostly Chinese population, the government is promoting milk related to cow milk, but sheep, goat consumption for infants, which is an efficient way to and buffalo milks are also produced reduce future population’s intolerance. and sold in China. In particular, goat milk is increasing its popularity as an What contributes to the raising demand of dairy alternative milk for infant formula products is also the higher purchasing power of products. This 2020, goat infant formula Chinese middle class, especially in 1st tier and 2nd tier market is estimated to reach rmb 10 cities. The higher expositions they have to international consumption scored 2.7%3. Forecasts for 2019 billion, while it was rmb 5 billion in 2015 trends and foreigner habits is favoring an interest expected an increase of 2.3% for China’s milk and only 300 million in 20088. toward western lifestyles, including food products. production, against the consumption for dairy products Chinese consumers are getting interest 4 Being influenced by both western lifestyle and which was predicted to reach 2.5% . in goat milk for three main reasons9: government recommendations, Chinese consumers are Some possible causes for this gap can be found in paying great attention to their wellbeing, and desire to 1. Its protein composition is more certain costs (e.g. feed and land) that the domestic dairy similar to breast milk compared to consume healthy and nutritious food. In this respect, production has to cope with. Small dairy farms are dairy products are appealing because they provide an cow milk, and it contains higher closing their operations and the production is shifting to levels of calcium. important amount of protein, calcium, vitamins and large-scale farms, but this change is happening at low minerals, besides favoring essential nutritional pace. In addition, Chinese companies are still 2. Fat contained in goat milk is easier functions. recovering from the climate of distrust that followed to digest and present more Infant formula is one of the past scandals related to milk and infant formula quality, nutritional benefits, such as highest requested products, resulting in consumers’ lack of confidence on domestic preventing infantile constipation, considering that only 25% of dairy products. favoring the growth of intestinal probiotics, supporting Chinese mothers breastfeed their And despite the success and expansion of national infants. Yogurt market is also cardiovascular health and improving dairy brands, in the coming years consumption growth calcium absorption. growing, with 40% of Chinese is likely to keep exceeding domestic supply. This residents declaring consuming signifies a great opportunity for foreigner dairy 3. It contains fewer potentially 1 yogurt on a daily basis . Being a producers who did not yet entered China market. allergenic proteins and it present a large part of Chinese population low risk of lactose intolerance, which is relevant for Chinese consumers. Report: Dairy Market in China Some international brands are already selling goat infant formula, for example the brand Kabrita from the Dutch could be falling up to 90%, creating a surplus of stock Import Size Market Hepnoke Group or Karicare from the in Europe. China could then intercept the need of New Zealand Nutricia. Considering the In 2018, China has imported 2.74 million tons of dairy European companies for an alternative market. products, indicating an increase of 7.8% YOY, for an increasingly competition in the infant import value of USD 10.65 billion, up to 14,8% YOY5. Suppliers formula market, the goat milk niche could offer additional opportunities to Milk powder was the most imported product, The leading supplier to China is New Zealand, which foreigner manufacturers and importers. representing the 70% of the overall dairy import value in contribute with 52% of the overall dairy imports. EU 2018. The milk powder includes infant formula, raw milk countries are increasing their participation, with powder, whole milk powder (WMP) and skim milk Germany being the European largest supplier with 12% powder (SMP). of imports. In the following table the ten main suppliers for some of the most relevant dairy products are shown: Infant formula milk powder is highly imported because Milk, Whole Milk Powder (WMP), Whey, Infant milk of consumer’s distrust about the safety of Chinese formula, Skim Milk Powder (SMP), cream, cheese and products, but consumer perception is expected to yogurt. change by time and each year more Chinese citizens are opting for domestic dairy. However, it is predicted that the share of consumers choosing imported infant formula will still be around 50% by 20236. Besides powder milk, other products are also increasing Table 1. Main 10 suppliers for imported dairy products in 2019 (Tons)10 their market share in China. European cheese exports to China from January-November 2019 have been 24% higher than in 2018, while European butter exports have reached a growth of 36% compared to 20187. Demand of whey has instead shown a negative trend in 2019. Whey is highly used in pig feed and China pig farms have suffered lot of losses because of the African swine fever virus. In general, there are important growth opportunities for European food operators in China market, and this is even more significant after the new tariffs introduced by US, being the European dairy products one of the most affected by it. Considering the effect of the levy on food and drinks exports, it was mentioned that US imports 2 Report: Dairy Market in China Food Trends Chinese consumers are showing a rising interest in health-related and functional foods, including dairy products. The dairy industry has been developing a wide range of foods with functional claims, the most common ones being yogurt and other dairy drinks with digestive health claims.