Chinese starting to say cheese
The Chinese businessman's first experience is shared by many of his compatriots, who consider cheese a strange, even alien, dairy product.
"Cheese is new for us in China. Most people only know the word cheese but don't know what it is or how to use it," said Mr Han, general manager of Shanghai Roria Trading Company, a distributor of imported food.
After acquiring a taste for various cheeses from around the world - from blue cheese to mozzarella - Mr Han is on a mission to cultivate the same appreciation in other Chinese people. "We're organising seminars about cheese for adults and children," he said. "There's much to learn."
Growing disposable incomes and exposure to Western-style food through chains such as McDonald's and Pizza Hut is driving China's demand for cheese.
China rose from Australia's sixth to second-largest cheese export market in the past two years, with 7400 tonnes of cheese - almost three times the amount of a decade ago - landing in China in 2012.
Japan remains the biggest market, figures from Dairy Australia show. NSW was the second-biggest export contributor after Victoria.
Mr Han's company sold 100 tonnes of mostly French and Italian cheese in China last year, up from 40 tonnes four years ago. He said he was helping fellow distributors secure markets for Australian cheese in first-tier cities, including Beijing and Shanghai.
"Local consumers are becoming interested in foreign food and foreign tastes," he said, when asked about the boom. "People also believe food and drinks from developed countries are safer and healthier."
Each year, Australia jostles with the US to be the second-biggest cheese exporter to China, but both are far behind New Zealand, which is reaping the benefits of a free trade agreement.
"Chinese dairy imports for 2012 were more than 1.3 million tonnes, up 26 per cent on 2011. Smooth Chinese leadership transition and plans to significantly lift domestic consumption will support ongoing demand," industry analyst at Dairy Australia John Droppert said.
Bega Cheese accounts for half of NSW's cheese exports and is the state's only cheesemaker exporting to China. While its biggest market is Japan, the growth story is in China.
"As GDP improves in more Asian countries, you're seeing families move to more protein products, and, obviously, dairy is the first port of call," Bega Cheese chairman Barry Irvin said.
China's public health scandals - such as the melamine-contaminated infant formula in 2008 that killed six babies - drove a demand for Australian dairy products, Mr Irvin said. "They feel safer with products from here. We're the preferred source of supply."
Frequently Asked Questions about this Article…
Rising disposable incomes, greater exposure to Western-style foods through chains like McDonald's and Pizza Hut, and a perception that imported foods are safer are driving growing Chinese demand for cheese. Industry commentators in the article say this trend is opening new markets for exporters — especially in first-tier cities such as Beijing and Shanghai — and is increasing opportunities for foreign cheesemakers and distributors.
China jumped from Australia’s sixth to its second-largest cheese export market over the past two years, with about 7,400 tonnes of cheese arriving in China in 2012 — nearly three times the volume from a decade earlier. NSW is the second-biggest export contributor after Victoria.
Bega Cheese is highlighted in the article: it accounts for half of New South Wales' cheese exports and is the state's only cheesemaker exporting to China. Although Bega’s biggest market remains Japan, the company sees China as the primary growth opportunity.
New Zealand is the largest supplier to China and has gained advantages from a free trade agreement. Australia and the United States routinely compete for the second-largest position, but both lag behind New Zealand in the Chinese market.
Chinese dairy imports were more than 1.3 million tonnes in 2012, up 26% from 2011, according to Dairy Australia figures cited in the article. Industry analysts expect ongoing demand supported by stable political transition and efforts to lift domestic consumption.
Distributors such as Shanghai Roria Trading are educating consumers (running seminars for adults and children), introducing a variety of cheeses, and expanding supply. The article notes one distributor grew sales from about 40 tonnes four years ago to roughly 100 tonnes last year, helping place French, Italian and Australian cheeses in key urban markets.
High-profile food-safety scandals in China — including the 2008 melamine-contaminated infant formula incident — have increased consumer preference for dairy from countries perceived as safer. The article quotes industry sources saying Chinese consumers often view products from developed countries, like Australia, as a preferred and safer source of supply.
Investors should watch export volumes and growth rates to China, industry data from bodies such as Dairy Australia, trade developments or free trade agreements that affect tariff and market access (as New Zealand has benefited), and company-level exposure — for example, firms like Bega Cheese that already export to China. Also monitor consumer trends in China (disposable income, Western food penetration) and food-safety perceptions, which influence demand for imported dairy.
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