China’s cheese market consumption has exploded

Cheese is ushering in the “golden period” of development in China.
In 2017, the per capita consumption of cheese was still less than 0.1 kg, and in 2020 this figure has doubled to 0.23 kg.

As of May this year, China’s cheese imports have increased by 66.4% year-on-year, showing a rapid “explosive” growth.

Compared with Western countries, gaps and opportunities still exist in China’s cheese consumption.

Recently, the 12th China Dairy Industry Conference, 2021 China Dairy Industry Exhibition and 2021 China Dairy Industry Top 20 (D20) Summit were held in Hefei. Industry professionals had a lively discussion on the development opportunities and challenges of China’s cheese industry.

From the data point of view, China’s cheese consumption has increased significantly for three consecutive years. According to Zhang Shuyi, a researcher at the China National Animal Husbandry Station and a senior Chinese national dairy appraiser, in 2020, China’s per capita cheese consumption will increase from less than 0.1 kg in 2017 to 0.23 kg in 2020. Cheese has become the fastest-growing dairy product in consumption.

With huge consumption potential, China’s cheese imports continue to grow rapidly. According to the general manager of an import company in Beijing, the proportion of Chinese cheese imports in global imports has increased from 1% in 2008 to 8% in 2019, a rapid growth rate. In 2019, China imported 114,900 tons of cheese, a year-on-year increase of 6%; in 2020, 129,300 tons, a year-on-year increase of 12.5%; from 2021 to May, the import volume of cheese was 82,700 tons, a year-on-year increase of 66.4%, a significant increase in the increase. The sharp increase in cheese imports in the first half of this year is related to the explosive growth of children’s cheese sticks this year. An important raw material for cheese sticks is cream cheese. “The import volume of Chinese cream cheese almost drives up the price of cream cheese all over the world. This has a lot to do with the drive of several leading companies.”

According to Zhang Shuyi, a researcher and China’s national senior dairy appraiser, “In the past two years, almost all cheese companies have increased the production of processed cheese. Calculated at a CAGR of 22.6% last year, the country’s children’s cheese will reach more than 10 billion yuan in 2021 and will double in the future.”

Attracted by the higher gross profit margin and rapid market growth, a large number of companies entered the cheese market, and the competition became fierce. The children’s cheese stick market is highly competitive, and the most obvious manifestation is the price war. The children’s cheese stick market has entered a price war from 2020, and the industry is about to enter the “final stage”.

The person in charge of a large Chinese dairy company said that in recent years, with the strong support of the Chinese government and industry associations, China’s cheese industry has made rapid progress. The fastest-growing segment of the track, compared with the mature cheese market abroad, China’s cheese industry still has a lot of room for development. Through five to ten years of hard work, we are expected to build a market size of 100 billion yuan.

There is a gap in China’s cheese consumption compared with developed countries, and the market potential is huge

Gao Hongbin, former Vice Minister of Agriculture and Honorary President of the China Dairy Association, pointed out that cheese consumption in Western countries accounts for 40% of the country’s consumption of dairy products, and the world average is more than 20%. China’s cheese consumption accounts for less than 2%.

“Developed countries eat more cheese and drink less milk. The milk in developed countries is used to produce cheese.” Luo Zhigang gave some data on global dairy product transactions. From a category perspective, liquid milk accounted for 67% of global dairy product consumption in 2018, Cheese is 15%, but in 2019, the consumption of cheese in the United Kingdom, the United States, and Australia accounted for more than 50%, which is higher than the consumption of liquid milk. In terms of global cheese production, EU and North American cheese production accounted for nearly 80% of global cheese production. EU milk production is 223 million tons, 37% is used for cheese production; US milk production is 101 million tons, 49% is used for cheese production; China’s milk production is 34.4 million tons, 1.4% is used for cheese production.

The proportion of China’s cheese consumption is much lower than that of developed countries. Although this illustrates the current gap between China’s cheese consumption and developed countries, it also illustrates the huge potential of China’s cheese consumption market.

Luo Zhigang predicted the future development trend from the perspective of China’s cheese imports. He pointed out that currently China’s cheese consumption is still dominated by bakery and catering. Baking and catering scenarios are more suitable for most consumers, accounting for 70%; retail channels account for about 30%. However, cheese snacking has become a new consumer trend, especially for children’s cheese and cheese snacks, such as freeze-dried cheese and puffed cheese. Luo Zhigang said that there are opportunities for the development of specialty cheese production in some regions of China, such as goat cheese and yak cheese. Learning from foreign experience, fusion category innovation is an opportunity.

Liu Yaqing, Vice President and Secretary-General of China Dairy Industry, said that the key opportunity period for cheese development should be seized to enrich cheese varieties, improve cheese quality, and expand cheese consumption.

In fact, some large dairy companies have expanded their business to the catering channel. In 2020, based on core products such as cheese sticks and mozzarella cheese, some companies will launch new products such as cheese slices, cream cheese, cream, butter, and baked cheese. Among them, the family dining table series income was 331 million yuan, an increase of 108.82% year-on-year; the catering industry is 272 million yuan, an increase of 29.9%.

The person in charge of a large Chinese dairy product company believes that the current cheese terminal market is competing for children’s cheese sticks, and the design, packaging, and selling points of these cheese sticks are homogenized. In the future, the entire industry will fight for innovation.

The key to future competition in the cheese market is not price. Companies need to have insights and conform to consumer needs in advance, and carry out long-term consumer cultivation. Therefore, the focus of competition is still to seize brand awareness and channel penetration.

(The above information comes from China Xinhua News Agency and China Economic Net)