James O’Donnell, Shanghai Office, Bord Bia – Irish Food Board

2015 marked a difficult year for the Chinese Dairy sector with the major processors registering reduced profits on the back of a slowdown in demand particularly for milk. Yogurt which is mainly sold in UHT format in China due to logistic constraints was the only bright point showing growth rates in the region of 100% as demand expands outside of tier 1&2 cities.

The big question within the sector is whether the slowdown in dairy imports during 2015 which played a significant factor in reduced global demand and depressed prices showing some signs of turning around? China’s WMP imports in November amounted to some 27,000+t which was up 8% on the corresponding month in 2014 however overall WMP imports Jan – Nov 2015 were back 50% on the corresponding period in 2014. New Zealand remains the main source of supply accounting for over 95% of imports. SMP imports in November were at 11,900t while imports for the year to November were back 22% on the previous year. UHT milk sales were down in Q1-3 despite very competitive pricing and promotions on the main imported brands. The general downturn in the economy and a switch where possible to fresh milk were the contributing factors.

2015 was a year of reduced profits for the main players with Bright Group (Shanghai) reported to have seen profits back over 40% despite a very strong performance by its Momchikovtsi (Bulgarian yogurt) brand while Sanyuan Foods (Beijing) saw profits back by over 60%.

For more information please contact james.odonnell@bordbia.ie