November 28, 2012

 

Foreign cheese producers expect larger market in China

 

 

Cheese producers across the globe see golden opportunities in China's booming cheese market.

 

China's cheese market is booming as more diners in the nation take their first bite of this still relative newcomer to their plates, offering golden opportunities to foreign cheese producers. The nation's cheese imports totalled US$139.26 million in 2011, up from US$105.45 million in the previous year, and US$69.77 million in 2009, according to the Italian Trade Commission.

 

"Both foreign producers and domestic dairy giants are sending positive signals. More foreign brands want to come in, and sales in China are growing rather fast," said Han Jin, general manager of Shanghai Roria Trading Co, a local distributor of imported food. Han's company sold 40 tonnes of imported cheese in 2009, and the figure rocketed to around 100 tonnes in 2011.

 

Entrepinares SAU from Spain and Parmalat SpA from Italy, both dairy giants in their own countries and globally, have been cooperating with Roria. Parmalat saw its annual sales in China increase by more than 100% in the past year. "The nation's consumption of cheese is growing at a stunning speed," he said.

 

And with the rapid expansion of fast-food chains such as Pizza Hut and McDonald's, most people have tasted cheese, and can accept it. In addition, with more bars, cafes, bakeries, high-class restaurants and hotels opening in China, more people are adapting their palates to Western tastes.

 

Ji Haiyan, a senior account manager with Foodgears (Shanghai) Trading Co Ltd, said there were more important reasons for Chinese people to purchase imported cheese. "People are concerned about food safety, especially dairy products, after the melamine scandal," she said. Melamine-tainted milk killed six infants and left more than 290,000 others with kidney damage in 2008, making the whole country question the quality of domestically produced dairy products. After a decline in sales and more efforts in quality control, the cost of milk has surged.

 

Considering the appreciation of the yuan, improving living standards, and the rising cost of milk, as well as people's concerns about food safety, now is definitely a good time for foreign cheese producers.

 

After years of patient work, some players have already made considerable profits in China. The Italian Trade Commission said the value of Italian cheese exports to China had doubled to US$4.79 million from 2009. And their competitors from New Zealand saw sales surpass US$58 million last year, with the nation holding a 41% share of China's cheese market.

 

According to a report by food and drink consultancy Zenith International in 2009, consumption of cheese accounts for just 4% of China's dairy products market, which points to the huge potential for the industry.

 

"The Chinese market has a big potential when it comes to cheese, as consumption levels are relatively low," said Theis Brogger, a spokesman for Arla Foods, a Swedo-Danish dairy cooperative based in Denmark, and the largest producer of dairy products in Scandinavia.

 

"At the moment, our exports to China are quite small, about GBP50,000 (US$80,000) per year compared with GBP20 million (US$32 million) to all other export markets, but we expect this will grow in the next five years," he said. But competition will be fierce.

 

Although Chinese dairy giants, such as Mengniu, Yili and Bright Dairy, have all introduced cheese products in recent years, none has acquired a dominant position yet. New Zealand, Australia and the US, the top three biggest cheese exporters to China have already taken more than 80% of the market, thanks to strong promotional activities and competitive prices, so latecomers should find their niche as soon as possible, said Han, the local distributor.

 

Brogger said that European brands' expertise in food quality control is a natural advantage compared with Chinese competitors, especially as food safety is currently a concern in China.