Rabobank Report: Chinese Cheese Demand To Propel Global Trade
According to a recent Rabobank report, between 2012 and 2022 Chinese cheese demand grew almost 200,000 metric tons. The report anticipates further growth at a 9.1% compound annual growth rate (CAGR) from 2023 to 2030, with total cheese demand reaching 495,000 metric tons in 2030.
Global Opportunities In The Chinese Market
According to Rabobank, as the domestic supply cannot satisfy increasing local cheese consumption, global cheese traders will have plenty of opportunities in the coming years to capture this rising demand.
“Low per capita consumption, expansion of quick-service restaurants (QSRs), bakeries and tea shops, and product innovation provide a platform for a gradual increase in Chinese cheese demand,” says Michelle Huang, dairy analyst for Rabobank.
Per Capita Consumption And Growth Outlook
China’s annual per capita cheese consumption is only 0.2 kilograms, much lower than neighboring Asian countries like Japan (2.5 kilograms) and South Korea (3.7 kilograms). With an estimated 9.1% annual volume growth, cheese consumption is expected to outpace the overall dairy category, already projected to grow on average 2.4% annually between 2023 and 2032, Rabobank says.
Economic Conditions And Cheese Demand Sensitivity
“However, weaker economic conditions pose downside risks to demand growth. Although cheese consumption has a long runway for growth, it will be sensitive to prices and consumer purchasing power,” Huang says.
The Role Of Imports In Satisfying Chinese Cheese Demand
The report says China will remain a growth engine for the global cheese trade, as domestic supply cannot satisfy increasing local cheese consumption. Domestic cheese production is likely to account for 35% to 45% of total cheese consumption, leaving a 55% to 65% share from imports.
Import Projections And Domestic Production Potential
“We estimate China’s annual cheese imports will reach 270,000 to 320,000 metric tons in 2030. Although trade opportunities remain favorable, the potential for increased domestic cheese production could impact our import growth forecast,” Huang notes.
Investment Trends In The Chinese Cheese Sector
The Chinese cheese market is seeing a healthy pipeline of investment activity, with local dairy companies investing in both onshore and offshore cheese capacity, and global companies investing in local manufacturing capacity to support their growth strategy.
Historical Growth And Future Projections
Meanwhile, Chinese cheese demand posted a 16% CAGR between 2012 and 2022, increasing from 57,600 metric tons in 2012 to 254,000 metric tons in 2022, Rabobank notes. Drivers of this growth include a rise in disposable income among middle class consumers, the growing appetite for Western-style QSR chains, and novel uses of cream cheese and Mozzarella, which led to the rising popularity of cheese in the foodservice channel.
The Foodservice Channel’s Dominance In Cheese Consumption
From 2012 to 2022, foodservice cheese sales accounted for 60% to 75% of total cheese consumption, with 2022 sales reaching 154,000 metric tons, the report adds.
Forecasting Cheese Sales In The Foodservice Channel
“We estimate cheese sales growth in the foodservice channel to average 10.3% annually between 2023 and 2030, with demand reaching 375,000 metric tons by 2030,” Huang says.
Competitive Landscape And Market Players
The report notes that market competition will intensify as leading dairy and cheese companies join the game to capture the increasing demand.
Strategic Moves By Market Players
“Generally, we classify players into three types: domestic dairy giants, international big cheese players and innovative startups,” the report says. “Understanding the strengths and challenges of the different types of players helps identify how the competitive landscape will evolve.”
Success Factors In The Chinese Cheese Market
As routes to consumers, capital investment, product and access to price-competitive milk sources all are essential factors to succeed, companies are entering partnerships for distribution networks, capital-intensive production capacity and product innovation, the report adds.
Advantages For Large Players And Strategic Investments
Large dairy or cheese players will benefit from the advantages of scale, integrated value chains and better access to funding sources, Rabobank says. They might be interested in acquiring contract manufacturing facilities close to low-cost, high-quality milk and integrating these into their existing supply chain to scale up and gain more customers. There might also be opportunities to act as strategic investors for cash-draining startup companies.
The Future Of Startups And Private Equity In The Cheese Sector
In an increasingly challenging operational environment, private equity investors will become more critical of providing new funding sources if startups cannot scale rapidly and become competitive rivals to established large companies, Rabobank adds, so the endgame could be that strategic investors acquire startups from early-stage private equity investors to enrich their cheese portfolio.
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Source: Cheese Market News