Fashionable food taking over from value as Chinese tastes change

China’s grocery market is beginning to mirror the rag trade, with a new trend showing smaller players gaining an advantage over the traditional industry rivals.

With consumers becoming more affluent and craving fashionable product lines from supermarkets over traditional preferences, BNP Paribas said in a report that the traditional benchmark of value is no longer the biggest factor to drive purchasing.

Whereas Chinese supermarkets would in the past compete through lower prices, now issues like fashion are critical and positioning are taking prominence as new product lines flood the market.

This craving for fashion is a risk, wrote Charlie Chen, an analyst at the French bank. 

“Fast-fashion companies launch new designs every quarter, selling them at a premium and the residuals later at a discount​,” Chen said.

“Traditionally, staples are not like that. Consumers have been drinking cola for decades with the original flavour unchanged, which is why investors tend to like staple companies for their ‘defensiveness’.​”

To illustrate this, Chen highlighted crystal sugar pear juice, which was a big hit with consumers after its launch two years ago, when it drove growth for the entire Chinese traditional juice category. 

“Now, the product’s volume is flat or has even declined as consumers seem a little bored with it​,” he said.

“The fate has been similar for the sour cabbage beef noodle product for which volumes have become stagnant in just a couple of years after the launch​.”

Potentially cancerous edible oil loophole needs to be plugged​ 

A Hong Kong food safety loophole that exposes consumers to cancer risks should be plugged to prevent restaurants and other food sellers from repeatedly recycling cooking oil in their kitchens. 

Helena Wong Pik-wan, a lawmaker in the special administrative region, said: "It is a good thing that the government can trace and prevent waste cooking oil from re-entering the market as fresh oil, but it is questionable as to how the government can ensure the cooking oil being used in restaurants does not end up exceeding safety standards after being used repeatedly​." 

Meanwhile, the Federation of Restaurants & Related Trades said the industry would meet the government to express concern over its approach to waste oil and to find out more about the implementation. 

Local authorities should watch more closely for food scandals​

China’s FDA has called on local authorities to be vigilant of cases of smuggled frozen meat.

The food safety watchdog also urged media outlets to report objectively on food safety issues. 

Meat processors, storage businesses and catering companies, the CFDA said, should refrain from buying or selling meat whose origin they do not know, and they should also notify authorities if they have handled such meat since July 2014. 

China’s General Administration of Customs and the Ministry of Public Security said that they have destroyed all the illegal frozen meat that was seized—some of which was 40 years old—and will continue to investigate smuggled meat cases. 

China fast replacing corn feed with less nutritious sorghum​

Over one-sixth of the world’s sorghum will be shipped to China this year as hunger for the grain continues to grow, according to market intelligence firm CCM​. 

China imported over 1m tonnes of sorghum in May alone, according to data from China Customs, and imports have risen every month since February. 

Based on current rates, CCM predicts that China will import over 10m tonnes of sorghum this year, more than one-sixth of the almost 60m tonnes the International Grain Council forecasts will be grown worldwide by the end of the current growing season. 

As it increasingly turns to sorghum as a cheaper substitute for corn, it is China’s feed industry that is largely driving this spike in demand. Over 80% of the sorghum imported to China is used to produce feed, according to China’s Ministry of Commerce. 

Sorghum’s chief advantage lies in its relative cheapness, CCM says. The government’s policy of stockpiling large quantities of corn has driven up domestic corn prices to US$393 per tonne, almost double the price in the US. 

At an average price of just US$284 per tonne, sorghum represents an attractive alternative for Chinese manufacturers, though it has a lower nutritional value than corn, and has a tendency to cause constipation. 

As a result of this, sorghum is unsuitable to completely replace corn. CCM says feed industry insiders suggest that Chinese manufacturers will typically choose sorghum over corn if the price difference rises over RMB150-200 per tonne (US$24.50-32.70).

Meanwhile, Chinese demand for imported corn continues to weaken, which could put more downward pressure on corn prices. 

The country imported just 140,700 tonnes of corn in April, less than 5% of its total grain imports during that month. CCM forecasts suggest China’s corn imports will decrease a further 50% during next year.

Herd cull sees sow prices rising by almost one-fifth​

Prices of sows have risen 18% between March and June due to a mass culling of the herd, according to commodities analyst Mintec​. 

The Chinese sow herd has fallen 16% year on year to 40.42m head in April 2015. March saw a fall of 700,000 head, meaning the herd reached its lowest level for four years. 

Farmers are looking to cull more of their breeding stock as increased feed costs have decreased margins. This fall in production has increased prices as demand still remains high due to pork meat being a popular choice in China. 

China is likely to increase imports of pork products to try and combat high prices. Additionally, there is a thriving grey market within China; in June, it was discovered that over 100,000 tonnes of meat, pig, chicken and beef had been smuggled into the country from India and Vietnam. 

As China battles to improve its food safety image, China is seeing a rise in food smuggling. The crackdown on grey market meat is likely to affect prices of Chinese products as this can create lower supply and possible price increases, Mintec says.

Tetramine poisoning count continues to grow​

Rodenticide poisoning caused the hospitalisation of 39 people in Shaanxi province after eating a cold noodle dish at a restaurant in Foping County. Eleven primary school students were among those who have been sickened.

Tests found that tetramine, a rat poison, caused the incident, according to official tests. As police continue to investigate the case, it is not yet known if the poisoning was deliberate.

This is the latest in a spate of incidents involving the chemical. Last month, two sisters died after drinking cola laced with tetramine. In March, Three months ago, a six-year-old boy was killed by the same toxic substance in a rural part of Shandong after eating it in some sweets he had picked up.