Australian sheepmeat in the world’s largest market – China

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Increasing urbanisation and improving standards of living in China have led to a steady increase in demand for meat protein. Although per capita consumption of sheepmeat remains small compared to other proteins, it too is growing and Australian sheepmeat is well-positioned to benefit. 

Findings from MLA’s Annual Consumer Survey’s China Report for 2015 have recently become available.  Interviews were conducted in June with 1,020 people, aged 18-64 years old and residents of Shanghai, Beijing, Guangzhou and Shenzhen.  All were main grocery buyers for the household and 84% living in upper income households (earning CNY100K+ p.a.). The survey also covers Taiwan, where some 1,038 consumers were surveyed across 14 major cities, with 65% earning TWD $720,000+ p.a.

Sheepmeat in the China context

• China is the largest sheepmeat producer and consumer in the world and although 90% of the product consumed is locally produced, imports have grown seven-fold over 10 years
• The MLA Global Consumer survey confirms that in the context of protein consumption in China, sheepmeat is comparatively small - Lamb was bought in the past month by 41% of respondents, compared to 90% for pork, 87% beef, 86% chicken and 79% seafood; lamb was a component of 13% of meals eaten out, compared to 26% that included beef
• Comparing per capita annual consumption of sheepmeat, Chinese consume 2.8kg (while beef/veal is 3.6kg), compared to Australians at 9kg (2014 OECD-FAO)
• As elsewhere, sheepmeat is a comparatively expensive protein in China - the latest wholesale price for sheepmeat averaged 48.09 RMB/kg, compared to 24.54 RMB/kg for pork and 14.58 for chicken (27 August, Ministry of Agriculture, People’s Republic of China)
• Sheepmeat consumption remains somewhat seasonal in China, with consumption peaking in the cooler months, as it is traditionally considered a “hearty” food
• Sheepmeat consumption also remains somewhat regional, with per capita consumption higher in China’s northern and northwestern areas.  Most Australian sheepmeat currently enters China via the northern ports of Qingdao (28%), Dalian (27%) and Xingang (26%) with only 3% going into Shanghai.
• China is Australia’s largest sheepmeat export market by volume, and second in value after the US (fiscal year 2014-15)
• Australia has recently (2014-15 fiscal year) been China’s third largest imported source of lamb (after New Zealand and Uruguay) and China’s second largest source of frozen mutton (after New Zealand)

Growing demand for imported sheepmeat in China

• Concerns over food safety are one factor driving demand for imported meat, which is recognised to be safer and higher quality than local product 
• Urban middle class Chinese consumers recognise the difference between imported and local lamb and are willing to pay a premium for it, particularly for its delicious taste, guaranteed safe to eat and consistent quality
• Local lamb is still eaten most often, but Australian and New Zealand lamb is recognised to be superior for its safety and quality, whilst local lamb is perceived to offer greater freshness
• Australian lamb earns strong spontaneous awareness (59%) up 4% on 2014 and the same level as New Zealand product. Around half (53%) of urban Chinese consumers say they consumed Australian lamb in the past year (compared to 81% Chinese lamb)
• Chinese consumers love Australian sheepmeat, especially for its taste, safety and quality – assisting lamb and mutton exports to China growing substantially over the last few years.  There are currently no significant perceived differences between Australian and New Zealand lamb.

Chinese sheepmeat consumption compared to Taiwan

• Whilst China and Taiwan share a similar Chinese cultural heritage, including culinary and dietary habits, the Taiwanese climate is significantly warmer than the northern parts of China, where sheepmeat consumption has traditionally been higher
• Taiwan consumes significantly more meat overall than Chinese mainlanders, but less sheepmeat

 

• In the MLA Global Consumer Survey,  13% of Taiwanese consumers said they bought lamb in the past month, compared to 41% Chinese mainlanders
• Whilst 80% of Chinese consumers felt positive about lamb, only 48% of Taiwanese did. Chinese averaged 12.9% of meals eaten out included lamb, whilst Taiwanese averaged 5.3%.

• Taiwan is currently Australia’s 12th largest sheepmeat export market by volume, taking 11,128 tonnes (fiscal year 2014-15), worth $A55,177 million
• For the 2014-15 fiscal year, Australian sheepmeat imports to Taiwan comprised 65% market share in terms of volume, with New Zealand at 35%.  Australia replaced New Zealand as the number one importer of Sheepmeat to Taiwan in 2014.
• However, overall sheepmeat import volumes to Taiwan have actually fallen somewhat over the past ten years, as the unit price of sheepmeat from Australia dropped below that of New Zealand and below the world average since 2012 

Addressing perceived weaknesses of sheepmeat and strengthening Australian product differentiation

• Chinese and Taiwanese consumers share similar perceptions when it comes to perceived weaknesses of sheepmeat
• Apart from its higher price, sheepmeat is perceived to be more difficult and less convenient to prepare and, hence, isn’t considered easily used in many different meals
• Preparing a variety of recipe suggestions will help consumers understand how versatile sheepmeat can be
• Sheepmeat is also perceived to be higher in fat and cholesterol than seafood, beef or chicken.  This may be influenced by the promotion by hot pot restaurants of their “fatty sheepmeat”, which is perceived to make the meat more delicious, aromatic and tender.
• Consumers are likely to welcome and benefit from receiving more information about the nutritional benefits of Australian sheepmeat such as it high iron and zinc content and easy absorption, long chain omega-3 and a focus on the lower fat content of lean, trimmed cuts
• Highlighting the technologies and systems used by Australian sheepmeat exporters and importers to maximise the freshness of product should help allay consumer concerns about the perceived “smelliness” of sheepmeat compared to other proteins
• Australia’s True Aussie branding has already achieved a 33% awareness in four key cities in Taiwan, where it strongly communicates nutrition, taste, safety and quality.  We will likely see the Chinese response in the next wave of the MLA Global Consumer Survey.

 Improving market access and competitiveness

• In Australia, there are currently 14 plants approved to export sheepmeat to China but as yet no access for chilled sheepmeat 
• The Australian red meat industry is working hard to improve market access for Australian sheepmeat to China
• New Zealand has benefited significantly from its free trade agreement with China, with sheepmeat product tariffs soon to reduce to zero from 2016
• Once the ChAFTA comes into force, expected to be later in 2015, Australian sheepmeat product will become more competitive, with tariffs currently ranging from 12-23% eliminated within 8 years