African Swine Fever (ASF) and Covid-19 have created great volatility in China’s animal protein market in recent years leading to shifts in distribution channels and consumer behaviour that will create new opportunities for meat exporters, according to a new report by agribusiness banking specialist Rabobank.
In the report, New Opportunities for Animal Protein in China, Rabobank says several major trends are expected to drive future change in the Chinese market including more diversified consumer groups, more blurring of the distinction between various market segments and channels, and a higher demand for convenience and smaller packaging.
Among the major animal proteins, the report says Chinese pork consumption has seen the greatest changes in recent years as a result of ASF.
“In 2019, Chinese pork supply dropped by more than 20 percent, and we expect a further drop of 15 to 20 per cent in 2020,” RaboResearch Animal Proteins Analyst Blake Holgate (pictured) said.
“Despite two years of strong imports, the supply drop has been so drastic that pork consumption per capita in China has dropped from 40kg in 2018 to 32.6kg in 2019.”
Holgate said in the coming years, particularly in 2021, retail Chinese pork prices were expected to stay relatively high, with consumption relatively low, and this would lead to ongoing opportunities for substitute meats such as poultry and beef.
“However, as pork production recovers, opportunities for other proteins to fill the gap will fall. Instead, the longer-term opportunities for other proteins will rest on whether they can make use of the opportunity to penetrate into a wider consumer base and establish new dietary habits during this time window,“ he said.
New Zealand opportunity
Mr Holgate said further growth of beef exports into China was the major opportunity for New Zealand and, encouragingly for New Zealand beef producers, there are signs Chinese dietary patterns are altering in ways that will support longer-term beef consumption growth.
“Beef, which used to be consumed in China mainly in eating-out-of-home channels, is now finding ways to penetrate into home cooking. In the first eight months of 2020, Chinese beef retail prices increased faster than wholesale prices, indicating that demand from retail consumers is increasing strongly. In this way, beef is unlocking a vast retail market, albeit gradually, which will support consumption growth in the years to come,” he said.
“China is already New Zealand’s largest export market for beef sales, making up 41 percent of our beef exports by value last season, and, given our strong connections into China, the increased penetration of beef into the Chinese retail market can only be good for New Zealand beef producers.”