{"id":2898,"date":"2020-01-20T07:22:26","date_gmt":"2020-01-19T23:22:26","guid":{"rendered":"https:\/\/daxueconsulting.com\/?p=2898"},"modified":"2022-07-20T20:23:35","modified_gmt":"2022-07-20T12:23:35","slug":"meat-market-in-china","status":"publish","type":"post","link":"https:\/\/daxueconsulting.com\/meat-market-in-china\/","title":{"rendered":"The meat market in China: Pork making way for the growth of Beef"},"content":{"rendered":"\n

The meat market in China is the second largest sector in the country\u2019s retail food market,  after the fresh vegetables sector. However, it is one of the last to be affected by the development<\/a> of new retail<\/a>. Much of the meat sold in retail outlets are sold at traditional wet markets, most of which are in open-air market places or streets. These markets provide a venue at which the customer can buy live poultry or freshly slaughtered meat produce direct from local farmers. However, these markets are gradually being removed from cities, merged into supermarkets and hypermarkets<\/a>. <\/p>\n\n\n\n

Chinese are consuming more meat than ever<\/h4>\n\n\n\n

China\u2019s meat market has less to do with company and brand shares than sector growth: local consumers eat far greater quantities of fresh meat than they did before economic reforms were launched some 40 years ago. Not only are today\u2019s consumers able to buy more meat than ever before: they also have a far wider choice of meat from which to choose. Traditionally, China\u2019s meat of choice is pork<\/a>, however recently there has been growth in more diverse meats, for example, the veal meat market in China.<\/p>\n\n\n\n

\"Beef
[Beef in China, Source: Pixabay]<\/figcaption><\/figure><\/div>\n\n\n\n

China’s role in the global\nmeat market <\/h3>\n\n\n\n

China is now the world’s largest\nproducer, consumer, and importer of meat. In 2019, the country consumed around 28 percent<\/a>\nof the global meat supply, which accounts for 73\npercent<\/a> of the Asia-Pacific meat market value. In the same year, the\nmonthly import of meat products in China reached 1\nbillion<\/a> U.S. dollars, with Brazil being the leading meat supplier whereas\nimports from the EU countries including Netherlands, Spain, and Germany growing\nthe fastest. In 2013, a Chinese meat processing company Shineway acquired the\nworld’s largest pork company Smithfield to meet heavy Chinese demand for pork.\nAccording to the industry profile, the Chinese meat market consumption volume\nincreased with a CAGR of 2.4%\nbetween 2014 and 2018, reaching a total revenue of $209\nbillion<\/a> in 2018 and is expected to rise steadily over the next three-year\nperiod 2020-2023. China, therefore,\nwill continue to play a significant role in global growth of meat products.  <\/p>\n\n\n\n

Pork makes up 80% of the market<\/h2>\n\n\n\n

Pork<\/a>\nsales accounted for the highest value in the Chinese meat market <\/h3>\n\n\n\n

As food scandals and the general interests in healthy\nfood rises, fresh meat sales are representing strong growth in the Chinese meat\nmarket. Fresh meat sales in China make up nearly 80%<\/a> of the market value. Among all the types of meat, pork\nsales dominate the market, followed by poultry, beef.<\/a> It is\nexpected, however, that the Chinese beef and veal meat market will witness a\nrising demand, with the current per capita consumption rates increased by at least\n25 percent<\/a> in the next decade, whereas pork market growth will\nslow. These trends are in line with the growth of the overall meat market\nvalue. It is also not hard to believe that the prolonged\nincrease in pork prices<\/a> will have an impact on the domestic consumption behavior,\nleading to lower per capita pork consumption rate and greater demand for\nbeef\/veal in the near future. <\/p>\n\n\n\n

\"The<\/figure><\/div>\n\n\n\n

[Source: Statista \u2013 The prolonged\nincrease in pork prices will lead to the growth in pork market value]<\/p>\n\n\n\n

The local meat market is mature and constrained by limited resources<\/h2>\n\n\n\n

Chinese domestic big\nmeat retailers: Shineway and Yurun <\/strong><\/h3>\n\n\n\n

Shuanghui Group, now WH\nGroup, is the largest meat processing company in China and offers\nhigh-temperature meat products, low-temperature meat products, fresh meat, and frozen meat<\/a>. It was the first meat processing company to pass\nISO9001. It was established in 1994 and is headquartered in Luohe, Henan. The\ncompany mainly focuses on hog slaughtering and pork processing, and fresh\nfrozen meat consists of more than 30 percent of the company’s total revenue.\nThe group’s beef and poultry meat sectors have increased in recent years, in\nresponse to the rising demand in the market.    <\/p>\n\n\n\n

CONTACT US NOW TO ANSWER YOUR CHINA BUSINESS QUESTIONS<\/span><\/a><\/div>\n\n\n\n

Yurun Group Limited is one\nof the largest meat product manufacturers in Mainland China. It is\nheadquartered in Nanjing (\u5357\u4eac), Jiangsu (\u6c5f\u82cf). It operates in two segments, chilled and frozen meat\nand processed meat products. Its products are marketed under its brand names of\nYurun, Furun, Wangrun, and Popular Meat Packing.<\/p>\n\n\n\n

China will\ncontinue to import meat from foreign markets<\/strong> <\/strong><\/h3>\n\n\n\n

With domestic meat\nproduction constrained by limited land and water reserves, China will continue\nto import a significant amount of meat from foreign markets. In the first 9\nmonths of 2019, China’s\nfrozen beef\nimports<\/a> showed a y-o-y growth by 48.3%,<\/a> while poultry imports increased by 46.1%. China’s rising\nimport needs had also lead to an influx of foreign direct investment in China’s\nmeat market, and food inflation in China has now reached an all-time\nhigh.  <\/p>\n\n\n\n

Moreover, as new middle class<\/a>\nand fitness\ntrends<\/a> sweep across the country, Chinese shoppers are likely to shift\ntowards premiumization. This includes the desire for premium, fresher, and\nhealthier meat. This will create opportunities for foreign meat suppliers that\ncan offer organic meat and premium beef\/veal products to meet consumers’ more\nsophisticated tastes. <\/p>\n\n\n\n

\"Meat<\/figure><\/div>\n\n\n\n

[Source: Statista<\/a> \u2013 China\u2019s import demands showed\nan upward trend]<\/p>\n\n\n\n

Distribution in the Chinese meat market<\/h2>\n\n\n\n

Hypermarkets and\nsupermarkets are becoming the leading distribution channel in the Chinese meat\nmarket <\/strong><\/h3>\n\n\n\n

Improved choice stems in part from vast improvements in China\u2019s distribution networks \u2013 thanks, in turn, to expanding transportation networks, which have helped to develop more regional trade in fresh and processed meats. More produce is, therefore, reaching consumers in less populated regions. Processed meat products are mainly sold through new retail<\/a> formats such as supermarkets and hypermarkets, dominated by Hema Fresh (\u76d2\u9a6c\u751f\u9c9c) and Yonghui (\u6c38\u8f89), the former has developed an innovative online-to-offline (O2O) value proposition. This suits the increasingly sophisticated and demanding needs of urban fresh-food shoppers with rising incomes. People are now able to buy more expensive cuts of meat than before, leading to greater demand for variety and quality of produce. Foreign hypermarkets like Walmart, ALDI<\/a>, and Costco<\/a> also have been reaping the benefits of China\u2019s growing meat market.<\/p>\n\n\n\n

eRetailers are gaining popularity\nas a retail place for purchasing meat <\/strong> <\/h3>\n\n\n\n

The popularity of online shopping has surged in China, paralleled with China’s rapidly growing e-commerce market. Hypermarket and supermarket chains now are gravitating towards offering a seamless online-to-offline shopping experience. Hema Fresh, Alibaba’s grocery chain, is one of the leading fresh food retailers that offer mobile applications for online orders as well as in-store catering and offline shopping. <\/p>\n\n\n\n

Around 60 percent<\/a> of the sales in Hema are made via the Hema mobile application, and shoppers can have the orders delivered free within 30 minutes within a 3-kilometer radius of each store. Hema’s successful pilot in China’s “new retail” landscape has given rise to food retailers to rethink their distribution networks, and perhaps through creating opportunities for partnership or licensing. It is reported that the RT-Mart’s online sales have grown from 3 percent to 20 percent of total sales after the partnership with Hema and is on track to increase profits.  <\/p>\n\n\n\n

\"Hema<\/figure><\/div>\n\n\n\n

[Source: Hema Fresh mobile\napplication – Hema Fresh makes fresh-food shopping more convenient]<\/p>\n\n\n\n

Drivers of China’s meat market<\/strong><\/h2>\n\n\n\n

Premiumization<\/h4>\n\n\n\n

Various sociocultural, economic, legal factors have collectively led to the general growth of the meat market. From the customer side, premiumization and the desire for a healthier diet, along with the rise of disposable income, will be key growth drivers across all categories, especially the food and drinks sector. As food and drinks account for almost one-fourth of the total household spending, the growth in household income will go to food expenditure. Due to more Chinese being lifted out of poverty, more families can afford meat and eat it daily. <\/p>\n\n\n\n

Busy lifestyles<\/h4>\n\n\n\n

Moreover, the strong growth of processed food could be attributed to the fast-growing supermarket and hypermarket chains and the busy lifestyle of Chinese consumers. Improved farming techniques and management are leading to larger-scale operations that increasingly rely on automation in production, packaging, and transportation \u2013 a process that ultimately will create significant meat supply companies. However, frequent food safety scares, especially related to hygiene, disease and the use of food additives, have all added to reluctance among consumers about the meat they buy. These issues have the potential to seriously harm the market<\/a>.<\/p>\n\n\n\n

Why foreign farmers\nshould export their meat to China <\/strong><\/h2>\n\n\n\n

Following the end of the Trans-Pacific Partnership<\/a> (TTP), farmers wishing to pursue business in Asia can select China to export their products, where demand for meat is on the rise. Since China cut tariffs on 859 consumer goods including frozen pork from 1 January 2020, it is, therefore, easier for foreign meat suppliers to reach the meat market in China, a $209 billion market. Indeed, many multinational manufacturers have voiced their interests in establishing a local production system and new deals to be made in the profitable Chinese meat market, where imported goods and organic products are increasingly in demand. Lower entrance barriers, ever-growing demands of the population, and China’s rising import demand will benefit more foreign meat suppliers in the future. <\/p>\n\n\n\n