Chinese Middle Class Drives Fresh Produce Markets
Back in the 1990s I was fortunate to be involved in U.S. exports into the Asia Pacific region. Things were going pretty well, as there was increased demand for fruits and vegetables from the United States, until the Chinese markets crashed in the mid-90s. Business shrunk to a trickle as the economic downturn throughout Asia had a significant impact on what consumers spent their money on. Fast forward to current day. China has 1.4 billion people, representing a significant percentage of consumers in the global population. The middle class in China is growing faster than anywhere else in the world, bringing with it change in economic buying power and social standards. Research by The Boston Consulting Group and AliResearch notes that through 2020, 81% of consumption growth will come from households whose annual income is more than $24,000 (USD). Furthermore, consumers 35 or younger will account for 65% of growth. This emerging class of consumers are also much more educated than in the past and becoming more concerned with food safety. According to a Pew Research report, Environmental Concerns on the Rise in China, 38% consider the safety of food a very big problem, a 26 percentage point increase since 2008. This new generation of freer-spending, socially concerned shoppers results in tremendous opportunity in demand throughout China for products grown outside of their borders. Countries benefiting from this demand include those on the western side of North and South America, including Chile, Peru, and Mexico, and states on the West Coast. China is already the largest international market for U.S. food and agricultural products, accounting for 20% of all U.S. farm exports. With source recognition and identifiable brands playing a larger role in the consumer’s choice in China, consumption should continue to increase. Large, globally recognized brands, such as Welch’s® and Green Giant®, represent a high quality, consistent product consumers are looking to purchase. In addition, knowing the origin of the product provides a level of comfort among consumers in the region. One only needs to look at a commodity, such as avocados, to see the possibilities the Chinese population presents. As a relatively new fruit for the Chinese consumers, avocados have not been a traditionally consumed item. Yet consumption is starting to grow exponentially as the younger Chinese generations look to Western markets for consumption guidance. With avocados now incorporated on everyday meal items—from sushi to sandwiches, salads, and breakfast items—Chinese consumers are starting to follow suit. This has helped increase the demand in avocados with Chinese shoppers as consumption has jumped 127 fold from 2011 to 2014. As the Chinese middle class continues to grow not only in size, but also disposable income, more consumers can afford to add additional fresh produce items to their daily diets. The resulting demand for fresh fruits and vegetables is creating new opportunities for produce suppliers and reshaping global consumption. Are you enjoying the Freshspective blog? Head to our subscribe page to receive weekly email updates.