Cheese finding its special niche in China

Updated: 2015-09-07 15:44

By Emma Gonzalez(China Daily USA)

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Xi Dai, a graduate in her mid-20s, started getting familiar with cheese from a very young age thanks to her family frequently eating out at Western-style restaurants.

"The very first time I tried cheese, it was cooked or baked in pasta or pizza. I loved the smell when melted. It was extremely tasty," said Xi.

She now regularly eats cheese on pizzas or in burgers. Even though Xi likes the taste of cheese on its own, she rarely eats it that way because it does not go well with Chinese meals.

Demand for cheese is expected to keep growing in the coming years amid higher interest in Western cuisine and healthier lifestyle habits in the country.

New Zealand dairy giant Fonterra Co-operative Group Ltd is expanding fast in China thanks to its strategy of selling products to food services clients in the country, including mozzarella and cream cheese.

The company, which foresees ongoing growth in the next five years, is spending heavily to ramp up production volumes outside of its home market to satisfy China's new hunger for processed cheese.

Robert Spurway, managing director of global operations at Fonterra, said: "We have invested more than $170 million in doubling production of mozzarella, cream cheese and processed cheese slices over the past 18 months."

Although not at love at first bite, Chinese have been gradually developing a passion for cheese, evidenced by the solid growth in imports, interest and consumption of the product.

Jin Han, business director at Chinese food importer Shanghai Roria Trading Co, said: "We are seeing continuous expansion in cheese products sales because new consumers are always joining in, while existing consumers are increasing their level of consumption by trying new products."

To reflect this, China's cheese market is expected to be worth 3.55 billion yuan ($570 million) this year, up 24 percent compared with 2014, according to market research firm Euromonitor International Ltd.

By 2017, Euromonitor sees the value of China's cheese market jumping to 5.38 billion yuan.

France-based cheese manufacturer Groupe Bel, owner of the Laughing Cow, Mini Babybel and Kiri brands, started selling cheese products in China in 2007.

Since then, its sales have grown gradually as Chinese become increasingly eager in indulging in new flavors.

Groupe Bel has been selling an average of 500 to 700 metric tons of cheese every year in China, volumes that are still significantly low compared to its home market, but with numbers having more than doubled in the past two years.

"Five years ago, the market for cheese products was still very slow," said Gaelle Launay, general manager for China and South Korea at Groupe Bel. "However, it started accelerating in the past three years, helped by fast-food chains in China."

China consumed about 70,000 tons of cheese in 2014, of which almost 94 percent were imported, according to market analysis firm Mintel Group Ltd.

Cheese finding its special niche in China

China's economic growth has not only translated into more adventurous palates but also led to higher nutrition awareness, with consumers paying greater attention to food properties.

Outside of fast-food chains, cheese is gaining popularity in supermarkets because of its high levels of protein and calcium content.

Andrew Kuiler, managing director at Shanghai-based food and beverage marketing and insights agency the Silk Initiative, said: "Cheese has become popular with Chinese children. Parents are clearly recognizing its nutritious value."

Producers agree that there are still plenty of opportunities in supermarkets to attract new cheese consumers.

Groupe Bel, which claims to have a 6 percent share in hypermarkets and supermarkets in Beijing, Guangzhou and Shanghai, said it is focusing on healthy cheese snacks.

"The retail cheese market in China is experiencing double-digit growth," said Gaelle Launay.

"In 2014, it expanded more than 20 percent, growing twice as much as the retail dairy market."

Michael Mullen, senior vice-president of corporate & government affairs at United States-based Kraft Heinz Co, said: "Our company has been selling cheese in China, including Kraft Parmesan Cheese, since 2014.

"And we believe there is still significant untapped potential to internationalize many of our brands."

Cheese finding its special niche in China

Customers wait in queue to buy cheese at a shop in downtown Beijing. China consumed about 70,000 metric tons of cheese in 2014, of which 94 percent were imported.Luo Wei / For China Daily

(China Daily USA 09/07/2015 page15)