Historically, Chinese cheese consumption is limited to their barbarians or nomadic tribes; therefore, cheese consumption was considered as an unsavory lifestyle for most of the Chinese in earlier days. However, with the collective contribution of fast food behemoths and restaurant franchises, China consumers are hungry to savor healthy and high-quality dairy products. Initially, typical western foods, including hamburgers, sandwich, pizza, burger, and salad, were the only medium of cheese products for Chinese. Nevertheless, at the present day, globalization and rising economy coupled with the benefits of cheese are increasing awareness of cheese among the Chinese population. As a result, China has emerged as one of the largest importers of dairy products in recent years and accounted for a global share of 6.1% in 2018. Thus, this rising cheese consumption in China is primarily attributed to the changing consumer behavior, which is a combination of a healthy lifestyle and socio-economic status of the growing population. Consequently, the China cheese market size attained a value of $1.2 billion in 2018. Furthermore, the China cheese market demand is rising at a CAGR of 4% during the forecast period 2019-2025.
Nutritional Benefits of Cheese Gaining Traction among the Lactose-Intolerants
Dairy products inculcate strength and promote faster growth among children as they are high in calcium and rich in protein. The Chinese Nutrition Society deems to take a variety of dairy products to promote balanced-diet, equivalent to 300g of liquid milk per day. On the other hand, Asian, especially Chinese populations, are majorly lactose intolerant. It is hard for them to digest dairy products. These lactose-intolerants have the comfort to eat dairy products such as cheese and curd as the fermentation process breaks down the lactose in milk. As a result, government awareness, coupled with the higher number of lactose-intolerants, is boosting the China cheese market growth.
U.S-China Trade War Set to Boost Europe and New Zealand Dairy Products in the Cheese Market in China
Chinese cheese industry is inclined towards foreign cheese products, including cheese coming from the U.S and European origin. However, with the China-U.S trade dispute in air, in 2018, China had levied tariffs as high as 25% on U.S dairy products which included processed cheese, grated cheese, blue-veined cheese, and other cheese. As a result, these newly imposed tariffs are giving a competitive edge to New Zealand and European-based dairy manufacturers. Therefore, processed Gouda cheese popularly imported from Europe and cheddar cheese is loved by Chinese consumers and are gaining significance further. Besides, New Zealand-based cheese manufacturers are attaining prominence in China. Youth and experimental food lovers are savoring the cheese platters as a call of curiosity. This, in turn, is boosting the growth of high-end domestic cheese bars and cheese products in franchise restaurants. As a result, China cheese market is surging with insatiable demand.
Bakery and Confectionery Set to Offer Lucrative Opportunities in the Chinese Cheese Market
Bakery and confectionery are one of the prominent segments in the China cheese market. Chinese bakery industry is significantly from the past few years. Chinese bakers are giving importance not only to the taste and flavor but also are considering the stability and consistency of the products. Cheese products are gaining more shelf space in China with the eye-catching packaging that attracts children. Besides, the products are listed with nutritional benefits to draw adults’ attention. Subsequently, cheese is a popular ingredient in snacks to supplement lactose-intolerant people, specifically, for children. With the increasing bread consumption in the country coupled with the message stating that ‘dairy is good for health’ is resonating among the Chinese consumers. In order to cater to this demand, manufacturers are producing ample variety of mascarpone based cheesecakes, diary creams, and confectioneries stuffed with cream and cheese. As a result, mozzarella, cheddar, and Gouda cheese sales are growing with their popularity with bread and snacks. Besides, local tea stores are also adapting to the budding dairy consumption trend by offering cheese tea and milky tea. With this avid adoption in the bakery segment, cheese market sales in China is experiencing promising growth.
Role of Social Media and Influencers in the China Cheese Market Strategy
Language plays a significant role in the marketing strategy of companies in China. With a strong e-commerce industry in the country, social media marketing creates abundant opportunities in food purchases and trends adoption. In China, social media marketing is a dominant force operating with a different playbook, unlike the other countries. The consumers are strongly influenced by the insights provided on WeChat and Weibo, popular social media platforms among Chinese. While Europe and the Americas have “influencers,” “KOL” (Key Opinion Leaders) drive the trends, opinions, promotions, and followers to customers conversion in China. Social media and KOL together can influence the purchasing trends and patterns of a large base of China population, which is highly beneficial to the food and beverage industry, including the cheese market. Consequently, China social media and KOL can empower the cheese market demand in China.
Key Companies in the China Cheese Market
The foremost companies operating with a dominant share in the China cheese market are Mengniu Dairy Co, SOE- Bright Dairy and Food Co., Sanyuan Group, and, Yili Group. After a major dairy scandal in 2008, the dairy companies of China are affected badly. Nevertheless, since 2010, these companies started seeking merger and acquisition opportunities abroad to learn technology and management expertise to stay ahead in the global marketplace. Few of them include:
· In 2019, Inner Mongolia Yili Industrial Group, largest dairy producer of China, has acquired Westland Cooperative Dairy Company Ltd, one of the largest dairy producers of New Zealand. The company has signed an agreement to sell West Coast dairy cooperative to Hong Kong Jingang Trade Holding Co Ltd, a subsidiary of Yili Group. Under this proposed agreement, shareholder Westland farmers are provided with partnership in return to the custody of knowledge, brand, and expertise of Westland Milk.
· In 2017, Fosun Group and Beijing Sanyuan Foods Co., part of Sanyuan Group together planned to buy French margarine maker St Hubert. They acquired the controlling shareholders of St.Hubert, which are Brassica TopCo S.A. and PPN Management SAS. With this transaction, the companies marked a foremost step towards mixed-ownership reform and maximized the advantages.
Furthermore, they are driving technological innovations to introduce healthy dairy foods into China to align with stringent government policies.
· In 2016, Beijing Sanyuan Foods Co. Ltd., a leading dairy producer of China, acquired Crowley Properties Ltd. This Vancouver-based company based enterprise is an expertise in making dairy products, including cheese, butter, ice cream, and yogurt. After this acquisition, Sanyuan group started exploring overseas markets to produce high-end dairy products.
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