Cheese in China – a gargantuan challenge

Most Chinese believe that cheese smells like a kitchen rag, but there definitely is a future for cheese in China.

First of all, you should know that most of the Chinese do not like cheese, or at least the typical cheeses Westerners eat every day. Indeed they think it smells horrible and find hard cheeses such as Gruyere or Emmental outright disgusting.

However, more and more Chinese people would like to try new things and to taste imported products, as is attested in many of the posts in this blog. This also includes cheese, especially in first-tier cities such as Shanghai, Beijing or Guangzhou. However, almost all cheese consumed by Chinese is processed, as this removes some of the most problematic properties (texture and odour).

CnProcCheese

Imports

While domestic production is growing, most cheese consumed in China is imported. In 2013 China imported 47,330.9 mt of cheese, more than 20% more than in 2012. The following table shows the most important regions of origin and their shares.

Region share (%)
New Zealand 42.2
Australia 27.2
USA 18.6

The old world is obviously lagging behind, which is again a result of the Chinese dislike of unprocessed cheese.

Distribution Channels

93% in supermarkets and hypermarkets
4.8% in small independent grocers
1.9% in other food retailers
0.3% small outlets like hotels and upscale restaurants targeting expatriates

The supermarket is the no.1 distribution channel, because it is absolutely necessary to maintain the cold chain for cheese. Many small grocers cannot provide this quality service.

With the development of the Internet and new ways of consumption, it is now possible to buy your cheese online, see here for more information.

Demand

Demand for cheese is driven by two factors: Chinese consumers looking for high quality dairy products and safe products prefer major western brands. Lifestyles are moving towards European standards of consumption.

The tastes of Chinese regarding cheese will develop gradually. Traditionally Chinese food is served with several dishes. And unlike us, Chinese don’t eat cold meal. However, pizza has made extremely popular in China after the arrival of Pizza Hut in the Middle Kingdom. Its success has inspired many Chinese entrepreneurs to venture into Italian restaurants, and cheese is an inalienable ingredient of Italian cuisine.

PizzaHutChina

Main players

The site Manufacturing News has published the following list of China’s top 10 cheese brands of 2015

1 Yili
2 Bright
3 Suki
4 Milkana
5 Anchor
6 Mengniu
7 La Vache qui Rit
8 Sanyuan
9 Arla
10 Tala Eji

Half of these are indeed domestic companies, but most of them import bulk cheese and further process it into processed cheese in various shapes and flavours.

Strikingly, domestic companies that actually produce cheese in China are small, often privately owned, enterprises. There is Qishi (Inner Mongolia), China’s first producer of Mozzarella, but the most interesting case is no doubt Le Fromager de Pekin, a company set up by a Chinese, Liu Yang, who learned making cheese in France. Liu spent 7 years in France studying the language, business administration and cheese making. Upon his return to China in 2007, he stumbled through careers in translation and IT sales before opening Le Fromager de Pekin, which sells about 5300 pounds of cheese a year. Although Liu’s mission is to promote cheese to fellow Chinese, almost all of his clients are expatriates living in Beijing. Still, he’s convinced that will change. Watch this video report about his activities.

Case study: Golden Valley: Gouda as only a Dutchman can make it

When Marc de Ruiter’s Yellow Valley business opened up in 2004, it was the first fair trade Gouda cheese producer in China. Known by almost half the expat population in Beijing. Here is a video impression from 2009.

Yellow Valley is located near Taiyuan (Shanxi). It is a small production facility on the premises of a dairy farm. Here, Marc de Ruiter, a Dutch agriculturist, produces his original Gouda cheeses. He is supported by two full-time employees – one cheese maker and one who handles marketing and sales. Two part-time employees take care of the online sales activities via China’s e-commerce platforms. The small Gouda cheese making business grew more successful over the years and the Yellow Valley products were widely known in China’s largest cities. After China was hit by the melamine milk scandal, Yellow Valley had to close down, like many small dairy-processing businesses.

YV

After the close-down from 2011 to 2015, Marc found a way to restart. “Producing ‘farmhouse based cheese’ was the loophole I needed. It requires a lot less licences and permits. The cheese can only be sold directly and online – not in stores.” The Yellow Valley ‘new style’ offers a wide range of traditional and special products, like the original Cheese, the Aged, Herbs de Provence and Cumin varieties and even with local cheese favourites with onions and garlic. There is even a spicy variation red Currently, nearly 90% of its sales go through WeChat, Weidian and Taobao channels.

After the reopening of Yellow Valley in mid-2015, Marc aims to increase production. The company is expanding its facilities to 65+ square metres of production space, a ripening chamber and an exhibition space.

What is missing?

So the Chinese are surely developing a taste for cheese, but what would it take to bring this market to maturation? One problem is that cheese is hard to integrate in Chinese cuisine. You can try to design a recipe for cheese-filled dumplings, but this may make them taste more like an Italian dish than a Chinese snack. The same would happen, if you would sprinkle grated cheese over a bowl of Sichuan-style dandan noodles. It may actually be tasty, but I wonder if it would ever become a hit. One solution could be to do tests with adding molds like those used to produce furu (fermented bean curd) to cheese and develop an indigenous moldy cheese.

Another problem is that the little natural cheese that is actually produced on Chinese soil is not linked to the local food tradition, the local terroir. When I first lived in China in the 1970s, we could buy cheese from Heilongjiang province (the home region of Mr Liu Yang), close to the Russian border. That was real natural cheese. However, production seems to have halted; pushed from the market by imported cheese and locally produced processed cheese. An idea for Mr Liu Yang would be to promote his Beijing-produced cheese as the ideal companion of Beijing’s famous baijiu (distilled liquor): Erguotou; a beautiful marriage between the old and new local tradition.

Cheese has set a firm foot on Chinese soil and it certainly there to stay and to grow.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975.

3 thoughts on “Cheese in China – a gargantuan challenge

    • In fact, Chinese cuisine includes a type of fermented soy bean curd called ‘stinky bean curd (chou doufu)’. Most Westerners find the smell appalling, while the taste is actually quite agreeable.

  1. Pingback: China’s breakfast revolution | Peverelli on Chinese food and culture

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s