Cream, cheese, yoghurt and milk are increasingly finding their way into Chinese shopping trolleys, which creates a significant opportunity for Australian dairy producers.
The Australian dairy sector’s growing and lucrative market in China could emerge mostly untouched from a protracted trade war between the US, Europe and China as our free trade agreement with China gives farmers an inside run into the Asian giant.
Furthermore, as Chinese consumers increasingly adopt a Western diet that includes products such as milk, yoghurt and cream, led by dairy-based foods eaten during key Chinese festivals, it is offering new export opportunities for dairy farmers.
Peter Verry, managing director of China supply chain specialist Peloris Global Sourcing, said his firm was already seeing those opportunities turn into deals.
He said Peloris was working with several large Chinese food manufacturers who were looking towards Australia and New Zealand to increase security of supply for core ingredients such as butter, whipping cream and cream cheese.
And rather than being caught in a looming trade war, Australia could actually benefit thanks to its free trade deal with China, he said.
“If China imposes tariffs on Europe, it could be on dairy, it might not be, but it’s just that level of uncertainty … and they (China) have already just now imposed a 10 per cent tariff on dairy out of the US as a retaliation for Trump’s actions,” he said.
“And basically all of these things are creating an opportunity for Australia because we’ve got a free-trade agreement signed about 12 years ago, and most dairy products going into China actually have no tariff at all, no duty, zero.
“So that is an edge, as well as the faster supply chain (between Australia and China), and also quality is always an issue, always a factor. Australia and New Zealand products are always considered to be premium quality.”
Mr Verry said the Chinese customer currently trying to source whipping cream was currently sourcing out of New Zealand and Ireland, and was looking to Australian sourcing to balance the risk.
Underwriting much of this growth in dairy exports to China was the rise in Western diets among Chinese consumers, especially the middle class, who were buying milk, yoghurt or dairy based cakes and other products, he said. This interest in dairy products was especially high during the many festivals that filled the Chinese calendar.
“Their diet has changed. It’s really important to understand the culture of Chinese consumers. The Chinese have got 24 festivals in a year, believe it or not, and they’re all linked to the solar calendar. Most people have heard of the Moon Festival, and each festival typically focuses on a particular food. So for the Moon Festival, they have moon cakes and the traditional moon cakes used to be made with traditional ingredients and coated with ghee, which is clarified butter.
“They haven’t ditched the tradition, but they are adapting their taste. Starbucks in China, which is very big, recently introduced to the market an ice-cream moon cake. They are actually integrating their traditional festivals and customs with more contemporary type ingredients.
“Moon cakes are now being made, for example, with whipping cream rather than ghee.
“The Chinese are changing their tastes. Some of it is exposure to Western ways: they have worked for multinational organisations and have seen what their colleagues eat and they try it and like it.”
He said an increased focus on health was also helping dairy sales, with milk seen as a good source of protein.
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