November 29, 2012

China’s “Wine & Cheese Boom” Gains Strength

Optimistic Cheese Producers See China As Golden Opportunity

Wine imports may decrease in China next year, but cheese demand continues to rise

Following the broader trends in luxury retail, the Chinese palate has increasingly become open to more Western flavors including French wine and spirits, and more recently, imported cheeses. After all, what pairs better with fragrant French wine than a wedge of pungent imported cheese? Not too long ago, such a pairing would have been unfamiliar to all but the wealthiest or most well-traveled Beijing or Shanghai resident. However, as imported wine demand in China has continued to rise — the country imported 200 million liters of wine in the first six months of 2012 – and the foreign cheese market grows more optimistic with every bite, the two industries may be facing two very different futures.

As China Daily reported this week, a growing appetite for imported, and increasingly domestic artisanal, cheese among Chinese consumers have thrown cheese producers across the globe in a frenzy as they trip over themselves to chase burgeoning opportunity in the nascent market. “Both foreign producers and domestic dairy giants are sending positive signals,” says Han Jin, general manager of Shanghai Roria Trading Co. “More foreign brands want to come in, and sales in China are growing rather fast.” In 2009, Han’s company sold 40 metric tons of imported cheese, a figure that skyrocketed to approximately 100 tons in 2011. Nationwide, China’s cheese imports totaled US$139.3 million in 2011, up from $105.5 million in 2010.

While Han admitted he found his first bite of Parmesan cheese hard to swallow, many Chinese consumers, particularly the younger generation, has grown quite accustomed to the Western dairy staple with the rapid expansion of fast-food chains such as Pizza Hut and McDonald’s, as well as cafés and bakeries in China. As Leo Liu, a cheese trader who runs an online store on Taobao.com told China Daily, “Young people are buying cheese to cook pizza at home. It is not expensive, and gives a feeling of a Westernized lifestyle, which is chic.” Moreover, still shaken up by the melamine scandal in 2008, many see foreign cheese as a safer and more reliable alternative to domestically made products.

Top-flight Burgundy continues to reign supreme, though Chinese collectors are broadening their buying habits

While consumption levels are relatively low — cheese currently accounts for a minuscule four percent of China’s dairy market — many players see the small figure as representing huge potential. As Stephen Jones, managing director of Somerdale, puts it, “Our exports to China are quite small, about 50,000 pounds per year compared with 20 million pounds to all other export markets, but we expect this will grow in the next five years.” Furthermore, with no domestic brand taking a dominant position yet, New Zealand, Australia, and the United States (the top three biggest cheese exporters to China) have already taken over 80 percent market share.

Turning to wine, experts are not quite as optimistic as cheese producers, worried that prices for Burgundy wines could reach astronomical prices largely due to recent Chinese demand. As Burgundy specialist Laurent Gotti recently told Le Parisien, ‘‘After having made the market price of certain Bordeaux explode in an irrational manner, [Chinese buyers are] now logically interested in Burgundy and its niche wines…They want everything that is the most expensive and are prepared to fork out incredible sums.” Additionally, staking only three percent of total French wine production and experiencing lower harvest volumes in recent years, Burgundy — never a cheap wine — may grow even more pricey, a problem for bargain hunters. Thus, Burgundy wine may be facing opposite symptoms compared to cheese, as overwhelming Chinese investments are giving Burgundy drinkers everywhere a reason to fear a surge of speculative interest in the region and its wines.

Business & Finance / Culture / Food, Wine, & Spirits / Lifestyle
Tag: australia, burgundy, cheese, cuisine... , More
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