Despite not being a traditional part of the Chinese diet, the popularity of cheese is on the increase in China. Although cheese consumption in China is still a long way behind that of Europe and the US, the market potential is huge, as Edward Peters reports.
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“If it flies and it’s not an aeroplane, if it’s got four legs and isn’t a table, we’ll eat it!” So runs one of China’s most popular gastronomic aphorisms, and a stroll around some of the country’s fresh markets reveals a veritable Noah’s Ark of animals large and small that are definitely not being sold as pets.
But while they’re serving up grilled rats in Guangzhou and fried scorpions in Tianjin, the traditional Chinese palate baulks at foodstuffs that pass for everyday items in other parts of the world. Dairy products are a prime example. When Pizza Hut – with its eye on a billion plus population that it reasoned must finally tire of rice day in day out – first ventured into the mainland, old China hands helpfully pointed out that Chinese did not eat cheese and that the corporation’s efforts were doomed to failure. But the snazzy (to youthful Chinese eyes) modern fastfood chain brought with it the tang of forbidden fruit. Before too long Pizza Hut was hip, and parents and grandparents were getting dragged inside by their offspring and finding that cheese – incredibly – was actually edible.
Naturally, the market potential is enormous. Current research indicates Chinese citizens consume only about 150 grams of cheese per person a year, compared with 14 kilograms in the US and 24 kilograms in France. While there is no evidence of a cheese bonanza just yet – many supermarkets in major cities still don’t stock it, and what is sold is often relatively bland, processed cheese – the opportunity is obviously there.
A growth market
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By GlobalDataOne trader who has got in on the ground floor is Hong Kong-based Samir Kumar, popularly known as “The Cheeseman”. Indian born, US educated, he now works for the Australian distribution company Frontier Foods.
“Despite everyone telling us not to do it when we started out in 1994, the Chinese are definitely eating cheese nowadays,” says Kumar.
The current market is estimated to be worth only around US$30m, but since Frontier Foods started its sales have increased rapidly. Kumar claims Frontier’s revenues roughly doubled in 2002, largely due to the success of its business strategy in targeting the country’s rapidly burgeoning middle class.
Chains like Pizza Hut, Kentucky Fried Chicken and McDonald’s have not only started to habituate Chinese people to products like cheese, but also encouraged them to try new products.
One of Frontier Food’s more significant deals is selling processed slices to a major Chinese dairy – Shanghai Bright – which then markets the product under its own name. The deal demonstrates that foreign companies can find a lucrative niche in the Chinese cheese market, despite competition from big local dairies. Other companies also trying new approaches in the People’s Republic include Fonterra’s New Zealand Milk Products unit, which sells raw ingredients to Chinese dairies to help them make cheese, and France’s Bongrain, which has set up a plant outside Beijing to process cheese.
However Kumar claims it’s easier to just import it, particularly with tariffs on cheese coming down as part of China’s membership of the World Trade Organisation. “China cannot produce everything,” Kumar says. “And it has no competitive advantage in producing cheese.”
Astronaut boosts milk sales
In a similar vein, milk is now becoming a popular drink for Chinese, thanks as much to aggressive promotion as anything else. The dairy company Meng Niu (Mongolian Bull) pulled off a coup last year when it paid an estimated 10m yuan (US$1.2m)) to become the sole provider of milk to astronaut Yang Liwei. Whether Colonel Yang, who comes from Liaoning province where few people consume milk, actually drinks it at home was not revealed to the breathless millions who followed his exploits in space on state television. But Mongolian Bull ran ads showing an astronaut delivering milk to a family in their front parlour.
At a time when the population was bowled over by a wave of patriotic fervour, the adverts were a huge marketing coup. Current figures show that the average Chinese consumes a total of just 9.7kg of dairy products a year, compared with 200kg per person in Europe, and a world average of 100kg.
Most Chinese still prefer to drink tea, congee (rice gruel), soup or soybean milk. But if they change their consumption habits in the same way as the Japanese, Koreans and Taiwanese have, there are fortunes to be made in the industry.
Following up on the astronaut milk ads, since the start of this year the 300 million viewers of the prime time evening news have been bombarded with yet more milk advertising. Lasting as little as a few seconds, and lacking much in the way of sophistication, the adverts are sponsored by Mongolian Bull (“High calcium milk comes from good cows”) and rival company Yili (“Greetings from the great plains”). The ads stress the cleanliness and high quality of the product, the health benefits – especially to children – and the cuteness of the animals.
Appetite for foreign food
For most Chinese, milk has been unfamiliar and too expensive, and this is what the dairy firms want to change. Guang Ming has come to dominate the Shanghai market by setting up a distribution system in which thousands of people go to its plants in the middle of the night and load cartons onto three-wheelers and bicycles, delivering them to homes before seven in the morning.
While dairy products mark one of the boldest steps for Chinese gastronomy in the 21st century, the appetite for foreign food and drink shows little sign of diminishing if it is encouraged by energetic advertising and marketing. 7-Eleven is planning to open up to 500 convenience stores in the capital Beijing, Florida grapefruit have suddenly become the trendy dessert of choice just as Norwegian smoked salmon is now seen as a rather daring ingredient in Feng Sheng Shui Qi, a raw fish salad traditionally eaten over the Chinese spring festival holiday. And together with food, imported wine is becoming increasingly popular, even if it is still regarded as chic to mix Mouton Cadet with Coke and Riesling with 7-Up.
