China’s protein consumption has changed: Where protein exporters are getting it wrong

Chinese consumers' food-buying patterns have changed, according to Rabobank. Photo / Arend Kuster

Protein exporters to China will need to adjust to structural and cyclical changes taking place place there, agribusiness banking specialist Rabobank says.

The bank said in a report that consumption trends are evolving in China’s animal protein market due to cyclical factors such as market oversupply and an economic slowdown, along with structural factors such as demographic shifts and changing consumer values.

“Across recent decades, China’s animal proteins market has seen plenty of change due to rapid economic growth, the opening of its markets, and digitisation trends triggering the fast evolution of the country’s consumer market,” the report’s author, RaboResearch senior animal protein analyst Chenjun Pan, said.

These developments saw Chinese consumers double their consumption of meat in less than 30 years, from 35kg per capita in the mid-1990s to 72kg in 2023.

However, the report says, in recent years China’s economy has changed gears, with GDP growth slowing significantly.

“In parallel, middle-class wealth has increased substantially, supporting a resilient spending power, albeit with income growth slowing,” Pan said.

“We’ve also seen the Chinese animal protein market oversupplied across the last year, resulting in sluggish prices and a supply chain that is struggling to manage supply.”

China’s animal protein consumption had nevertheless remained resilient.

“Statistics show that consumers have lowered spending in other categories but maintained spending on food,” Pan said.

“Taking a deeper look however, we observe that China’s animal protein consumption is developing new patterns.

“The days of one-size-fits-all products in China’s animal protein market are over.

Rabobank senior animal protein analyst Chenjun Pan.

“Today’s consumers expect more than just a product, they seek a comprehensive value proposition that includes good service and valued experiences.”

China’s total population reached an inflection point in 2021, with reductions following in 2022 and 2023, and the birth rate declining since 2017.

Forecasts indicate that the population will decline from the current 1.4 billion to 1.3 billion by 2050, and its estimated that the population aged 65 and above may exceed 20%.

Pan said China’s aging population and smaller household sizes were leading to a nuanced impact on animal protein consumption.

“The market is gradually moving away from pork, traditionally the dominant choice, toward poultry, beef and seafood, which are favoured for their perceived health benefits,” she said.

“Additionally, the older generation’s adoption of e-commerce, food delivery and convenience foods mark the end of past consumption behaviours.”

Among all the changes, the report says, four major trends stand out in shaping future animal protein consumption in China: value for money, the “experience economy”, a focus on nutrition and health and a changing channel mix for purchases.

“Consumption of beef and seafood has increased strongly over the last decade, despite slower income growth, illustrating that consumers continue to seek higher value but at reasonable prices,” Pan said.

Rabobank New Zealand analyst Jen Corkran.

Commenting on the implications of the changes in China for New Zealand’s red meat sector, New Zealand-based RaboResearch senior animal proteins analyst Jen Corkran said it was encouraging to see Chinese beef consumption continuing to grow in a broad sense.

China is New Zealand’s second-largest market for beef exports, accounting for about a third of total exports over the 2023/24 season.

“From 2013 to 2023, Chinese beef consumption grew by a compound annual growth rate of 3.2%, and there is scope for this to growth to continue as long as companies within the beef supply chain can successfully adapt to the changes in consumer trends within the Chinese market,” Corkran said.

In order to adapt to these changes, Corkran said animal protein companies in New Zealand and other regions around the globe must pivot from a volume-centric to a consumer-centric approach.

“Given the vast majority of red meat produced in New Zealand is exported, it’s essential we have a deep understanding of our consumers across all of our key markets,” she said.

– Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.