volume and price management the two -...

A project financed by the European Union

Implementing Partners

Volume and price management – the two

ingredients for a flourishing EU Dairy”

European Dairy Association Annual meeting 2017

Stockholm 28th September, 2017

China expert

Food and Drinks Industry expert

• Managing Director of EIBENS CONSULTING

• Living and working in China since 2005

• Focus on food and beverage import and

distribution processes and trade barriers

• Previously worked for public agencies including

ICEX (Spanish Institute for Foreign Trade) and

Extenda (Trade Promotion Agency of

Andalusia) as well as private companies

• Bachelor in Business from the University and

Granada and Masters in Quality Management

and Business Internationalisation

Pablo Recio Gracia

[email protected]

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Dairy market in China will continue being a major importer of dairy products,

despite the improvement in the domestic industry and compliance barriers to

demand increases faster than the offer. Alfalfa case study.

However market is quickly shifting making volume and price management as key

components for success.

Volume is needed to justify constant adaptation efforts and be seen as an

important long term supplier while price management is linked to our strategy

development in China, when positioning may be different from our European

markets

Volume and price management

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Understanding China

Origin

Purchasing decision process

Price

Image. Format/packaging

Management .

Create value/reduce risks

Key issues

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Dairy sector in China

HS Code Description

0401

Milk and cream, not concentrated nor

containing added sugar or other sweetening

matter

0402

Milk and cream, concentrated or containing

added sugar or other sweetening matter (milk

powder)

0403.10 Yogurt

0404.10

Whey and modified whey, whether or not

concentrated or containing added sugar or

other sweetening matter

0405Butter and other fats and oils derived from

milk; dairy spreads.

0406 Cheese and curd

1901.10Preparations for infant use, put up for retail

sale

(2105) Ice cream and other edible ice, whether or not containing cocoa.

is out the scope of this guideline since it is usually excluded from the

definition of dairy products used by Chinese Authorities

Market Definition

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China Imports (Value) in 2016

0401 Milk and cream (not

concentrated)10%

0402 Milk and cream (concentrat

ed) 24%

040310 Yogurt 0%

040410 Whey and modified whey 7%

0405 Butter and other dairy spreads 5%

0406 Cheese and

curd 6%

190110 Infant

formula 48%

Source China customs

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6


0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2012 2013 2014 2015 2016

Mill

ions

0401 Milk and cream (not concentrated) 0402 Milk and cream (concentrated)

040310 Yogurt 040410 Whey and modified whey

0405 Butter and other dairy spreads 0406 Cheese and curd

190110 Infant formula

China Imports (USD) per year

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2012 2013 2014 2015 2016

Liquid milk 80 161 287 402 549

Cheese 39 47 66 76 97

Whole milk powder 406 619 671 347 420

Skimmed milk powder 168 235 253 200 184

Whey 378 434 404 436 497

Infant formula 92 123 123 180 225

TOTAL 1163 1619 1804 1641 1972

0

500

1000

1500

2000

2012 2013 2014 2015 2016

Liquid milk Cheese Whole milk powder Skimmed milk powder Whey Infant formula

China imports per product (thousand tons)

Source: China Customs

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China Global Imports

(Value) in 2016

China Imports from EU countries

(Value) in 2016

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Netherland

s 35%

Ireland

19%

Germany

18%

France

13%

Denmark

6%

Other

5%

United

Kingdom

2%

Poland

2%

New

Zealand

34%

Netherland

s

17%

Ireland

9%

Germany

9%

Other

9%

Australia

7%

France

7%

USA

5%

Denmark

3%

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China Imports of milk and cream (not

concentrated) HS 0401 by country 2016 (Value)

China Imports of milk and cream (concentrated)

HS 0401 by country 2016 (Value)

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New

Zealand

29%

Germany

25%

France

20%

Australia

10%

Other

7%

United

Kingdom

4%

Rep. of

Korea

3%

Poland

2%

New

Zealand

77%

Australia

8%

Other

4%

Netherlands

3%

USA

3%

France

2%

Germany

2%

Finland

1%

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China Imports of yogurt HS 040310 by

country 2016 (Value)

China Imports of whey and modified whey HS

040410 by country 2016 (Value)

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Germany

56%

Spain

11%

Switzerland

10%

New

Zealand

7%

Other

5%

Rep. of

Korea

4%

Australia

4%

Other Asia,

nes

3%

USA

42%

France

18%

Other

12%

Netherlands

8%

Germany

6%

Ireland

5%

Argentina

5%

Poland

4%

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China Imports of butter and other dairy spreads

HS 0405 by country 2016 (Value)

China Imports of cheese and curd HS 0406 by

country 2016 (Value)

1111


New

Zealand

82%

France

8%

Belgium

4%

Australia

3%

Other

1%

Netherlands

1%

Argentina

1%Germany

0%

New Zealand

52%

Australia

18%

USA

10%

Other

6%

France

5%

Italy

4%

Denmark

3%

Germany

2%

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China Imports of infant formula HS 190110 by country 2016 (Value)

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Netherlands

33%

Ireland

19%

Other

12%

New

Zealand

11%

Germany

11%

Australia

5%

Denmark

5%

France

4%

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Example of changes that are raising barriers…

Compliance

− EG. Infant formula CFDA registration

− EG. Cheese imports conflict

Commercial

− UHT milk prices due to saturation and

ecommerce


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Example of changes that are opening opportunities to sell volume

− Category management (new formats, flavored milk, on the go, etc)

− Raise of the private label

− Pasteurized yogurts, liquid yogurts, cream cheese, pizza toppings, etc…

− Cold chain improvement

− Ecommerce boom

− Inputs for their dairy industry such as protein.

− Lactose intolerance (not a concern yet)

− China market access as a valuable asset

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Case > SUNKIST

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Case > SUNKIST

China imports a great amount of citrus from hundreds ofsuppliers worldwide. However SUNKIST is probably theonly brand that the Chinese can recognize.

Founded 120 years ago SUNKIST was established as acooperative of farmers in California and later Arizona. Now,after strong brand building, their commercial model hasexchange and includes franchising of the trademark to foodproducers worldwide:

“We have entered into licensing agreements with a multitudeof companies worldwide and are the leading food andbeverage licensor globally”

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Case > Dutch food product shops

in JD.com and Tmall

Dutch products in Tmall

https://netherlands.tmall.com/

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Case > Dutch food product shops

in JD.com and Tmall

Dutch products in JD.com

https://gedijinkou.jd.com/

www.eibens.com

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www.eusmecentre.org.cn

www.eda.eu www.euromilk.org

Thank you!

volume and price management the two -...

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