European meat processor Danish Crown has announced it will establish a processing plant in China, invest app. DKK 300 million, as part of its strategy towards 2021. It is to be situated in Shanghai and the production will be based on Danish raw material.
Today Danish Crown is already a big and successful exporter of fresh pork and the so-called “China goods” – i.e. trotters, ears, tails etc. which the Chinese love, appreciate and pay well for. Summing up Danish Crown is already measured in value Denmark’s second largest exporter of goods to China, only surpassed by Kopenhagen Fur.
But there is more to be had. The sale of meat to Chinese consumers continues to a large extent to be from so-called wetmarkets where the pig is sold cut into relatively large pieces, which the consumer can see and touch. However, China’s consumer pattern is rapidly changing.
“Actually three things are happening: First, much of the consumption is moving into foodservice or restaurants similar to the USA or Europe. Second, we see a vast increase of e-Commerce where groceries are bought and delivered at home. This is growing immensely in China and cities such as Shanghai likely have the world’s most advanced e-Commerce market. The third trend is that consumers in supermarkets have also started buying retail-packed products precisely as we know from Denmark,” says Jais Valeur, CEO.
From frequent visits to China the Danish CEO has noted that Chinese consumers have many common characteristics with consumers in Europe. The Chinese also have less time to be at home cooking food from scratch than they had a few years back. Their wishes and demands for convenience, quality and animal welfare is therefore increasing. Denmark and Danish raw material is in this connection popular.
“It is therefore evident that we should try to capitalise on this by our own production. Is this a chance we are taking? Yes, it is, but this is one of the chances we should take as a big company and try to see if we can get closer to the market, closer to consumers and further up in the value chain in China – rather than just being a raw material supplier,” says Jais Valeur.