RPT-INSIGHT-China's pork demand hits a peak, shocking producers, as diets get healthier


Reuters

(Repeating to additional subscribers without changes to text)
    * Producers had expected pork demand to rise for some years
    * Sales of vegetable-only dumplings grew 30 pct last year
    * Catering company says it is serving less meat, more veg
    * In April, government started new healthy lifestyle
campaign
    * China is by far the biggest market in the world for meat

    By Dominique PattonBEIJING, June 20 (Reuters) - China's frozen dumpling makers
are finding there's a quick route to winning new sales -
increase the vegetable content, and cut down on the meat.
    This departure from traditional pork-rich dumplings is a hit
with busy, young urbanites, trying to reduce the fat in diets
often heavy on fast food.
    "They like to try to eat more healthy products once a week
or fortnight. It's a big trend for mainland China consumers,
especially those aged 20 to 35," said Ellis Wang, Shanghai-based
marketing manager at U.S. food giant General Mills <GIS.N>,
which owns top dumpling brand Wanchai Ferry.
    For pig farmers in China and abroad, it is a difficult trend
to stomach. The producers and other market experts had expected
the growth to continue until at least 2026.
    Chinese hog farmers are on a building spree, constructing
huge modern farms to capture a bigger share of the world's
biggest pork market, while leading producers overseas have been
changing the way they raise their pigs to meet Chinese standards
for imports. Some have, for example, stopped using growth
hormones banned in China. [nL1N1J201G] [nB9N1GH00K] [nL4N1IK3RA]
    China still consumes a lot more meat than any other country.
People here will eat about 74 million tonnes of pork, beef and
poultry this year, around twice as much as the United States,
according to U.S. agriculture department estimates. More than
half of that is pork and for foreign producers it has been a big
growth market, especially for Western-style packaged meats.
    But pork demand has hit a ceiling, well ahead of most
official forecasts. Sales of pork have now fallen for the past
three years, according to data from research firm Euromonitor.
Last year they hit three-year lows of 40.85 million tonnes from
42.49 million tonnes in 2014, and Euromonitor predicts they will
also fall slightly in 2017.
    Chinese hog prices are down around 25 percent since January,
even though official numbers suggest supply is lower compared
with last year.


    RARE LUXURY
    Since China began opening up to the world in the late 1970s,
pork demand expanded by an average 5.7 percent every year, until
2014 as the booming economy allowed hundreds of millions of
people to afford to eat meat more often. During Mao Zedong's
reign as Chinese leader from 1949-76 meat had, for many, been a
rare luxury.
    Now, growing concerns about obesity and heart health shape
shopping habits too, fuelling sales of everything from avocados
to fruit juices and sportswear. [http://reut.rs/2rpFDhp]
[http://reut.rs/2tis0Tg]
    "Market demand remains very weak. I think one factor behind
this is people believe less meat is healthier. This is a new
trend," said Pan Chenjun, executive director of food and
agriculture research at Rabobank in Hong Kong.
    Sales of vegetable-only dumplings grew 30 percent last year,
compared with around 7 percent for all frozen dumplings, Nielsen
research also shows.
    "Demand for vegetable products keeps rising, giving us large
room for growth," said Zhou Wei, product manager at number two
dumpling producer Synear Food.
    Guangzhou-based Harmony Catering says health is the key to
reduced servings of meat to the roughly 1 million workers eating
at its 300 canteens each day.
    Staff at the technology companies, banks and oil majors that
are Harmony's clients will consume about 10 percent less meat
today than they did five years ago, but around 10 percent more
green vegetables, according to Harmony vice president Li Huang.
"It's mainly because of media, the concept of health has entered
popular consciousness," he said.
    For now, it's mostly urban and white-collar workers paying
closer attention to their diets. There's been, for example, a
sharp rise in vegetarian food stations at university campuses.
 But the government wants a nationwide shift in eating habits.
    Childhood obesity in China is rocketing, and the country
also faces an epidemic of heart disease, Harvard researchers
warned last year. Among the problems, they blamed growing
consumption of red meat and high salt intake.
    In April, the health ministry kicked off its second 10-year
healthy lifestyle campaign, urging citizens to consume less fat,
salt and sugar, and aim for a 'healthy diet, healthy weight and
healthy bones'.
    By 2030, Beijing wants to see a marked increase in
nutritional awareness, a 20 percent cut in the per capita
consumption of salt, and slower growth in the rate of obesity,
it said in its recently published 'Healthy China 2030' pamphlet.

    Some companies have been urgently changing the mix of
products they sell, going for higher-margin pork meats rather
than volume. Sales of traditionally less popular lamb and beef
have also been increasing.
    Li of Harmony Catering says although servings of pork are
down, the firm is including more beef and lamb in meals.
    "People usually eat lean beef or lamb, like beef brisket,
while with pork it's both fatty and lean parts, like in 'hong
shao rou'," said Beijing-based nutritionist Chen Zhikun,
referring to the widely consumed braised pork dish.
    China's top pork producer WH Group has been going up market,
selling Western-style products in China, such as sausages and
ham. A lot of this is imported from Smithfield, the largest U.S.
pork producer, which was acquired by WH in 2013.
    Some producers say that the recent drop in pork consumption
can be partly explained by sharply lower output. A prolonged
period of losses during 2013 to 2015 forced farmers to cull
millions of hogs, hitting supply and sending pork prices to
record levels in 2016.
    But for a growing portion of Chinese consumers, price tags
on food items are less and less important. A spate of safety
scandals in recent years, many related to meat, have made urban
Chinese highly sensitive to food quality.
    More than 80 percent of people in China surveyed by Nielsen
last year said they were willing to pay more for foods without
undesirable ingredients, much higher than the global average of
68 percent.
    "China is in a new stage where consumption of pork and other
foods is no longer a simple matter of 'more is better'," said
Fred Gale, senior economist at the United States agriculture
department.


    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
China's meat and seafood sales IMG    http://tmsnrt.rs/2s83aam
Meat consumption by type and country    http://reut.rs/2s3F00J
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Dominique Patton and Beijing Newsroom. Additional
reporting by Julie Zhu in HONG KONG; Editing by Martin Howell)
 ((dominique.patton@thomsonreuters.com; +86 10 6627 1027;
Reuters Messaging:
dominique.patton.thomsonreuters.com@reuters.net))

Keywords: CHINA MEAT/DEMAND (REPEAT, GRAPHIC, PIX)



This article appears in: Stocks , World Markets , Economy , Commodities
Referenced Symbols: GIS


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