Bright future for Chinese cheese

By Dominique Patton

- Last updated on GMT

Related tags Milk Food

China's biggest domestic cheese producer, Bright Dairy, has
invested in a new production line for sliced cheese to increase its
profits from this growing, niche market.

The company has imported cheese from New Zealand since 1998 and also contracted an Australian dairy to produce cheese for sale under its own brand in China.

But in April this year it started production of sliced and cream cheese at its Shanghai plant, thanks to a new production line imported from Germany last year.

"The new cheese line allows us to make greater profits than when we imported the product, and also makes it easier to meet demands for freshness," said Wu Xiaohong, product manager of Bright Dairy's Cheese and Butter division.

She told that the firm has seen a 40 per cent rise in cheese sales in each of the last two years.

She declined to reveal volumes of cheese sold by the dairy.

China's cheese industry is miniscule compared to those of European markets but domestic and foreign dairies alike believe it holds great potential as Chinese consumers become more affluent and develop a taste for western foods.

Research by McKinsey in more than 150 Chinese cities and towns suggests that sales of cheese and desserts will grow by 38 per cent a year over the next five years.

To date most cheese is consumed on pizzas or other fast foods, although there is growing demand from hotels and the numerous foreign restaurants in China's larger cities.

Supermarkets are also stocking a growing variety of cheeses but most is imported.

China imported 10,000 tonnes of cheese in 2004, according to Song Kungang, director of China Dairy Association at its annual meeting last month, much more than its domestic output of some 3,000 tonnes.

Wu said that although Bright's cheese sales are growing fast, they are rising from a low base, and the product does not compete with its other businesses, like liquid milk.

"Cheese is not a traditional food for us, and because of insufficient marketing, many Chinese don't know the benefits of eating cheese," she added.

However this will prove an advantage to the early entrants to a market segment with strong growth potential.

"What we need to do now is to promote the benefits of eating cheese to more people."

Bright Dairy claims to hold 46 per cent of China's entire cheese market, competing with Inner Mongolia firm Yili and Beijing-based Sanyuan.

Foreign competitors Kraft Food and New Zealand's Anchor are also significant players in the fast-growing cheese market.

Cheese slices are most popular among Chinese consumers as they can be incorporated with other foods.

Additional reporting by Francis Yang .

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