educating Chinese customers on Western food

Discussing dairy products and food distribution channels in China

China Paradigms interviewed David Beutin, sales manager at Lactalis International to understand the food industry recovery from the coronavirus crisis and to discuss food distribution channels in China.

Dairy products in China: a market to be conquered

As growing health awareness has incentivized the Chinese population to opt for more dairy products, many local and foreign players have started increasing their interest in this market they were often neglecting previously. In fact, with an estimated proportion of 85% of the Chinese population intolerant to lactose, it is not surprising that numerous companies had not given priority attention to selling milk products in the Chinese market.

[Source: Statista; Major producers of cow milk worldwide in 2019, by country (in million metric tons)]

As the industry still largely relies on creamy products used for cooking and pastries, China has a large room for improvement when it comes to dairy products such as cheese or yogurt. During the interview, David Beutin explains that despite the steadily increasing market demand for cheese, there is still a need to educate  Chinese customers on Western food and adapt the offer to the demand. He explains that the industry strategically focuses on kids and teenagers to increase market penetration. Since introducing clients to new dairy products via traditional retail strategies have proven to have only low success, companies often opt for B2B2C strategies that seem to be particularly suited for the market (learn more about dairy products in China). Thus, collaborations with fast-food chains, bakeries, or chefs are used to introduce their products to the Chinese market (learn more about KFC and fast food restaurant chains).

«People don’t experience and don’t want to try something new in retail, they would try something new usually in food service when they go to a pizza chain, or a burger chain, or a bakery chain. »

The key learnings from the food industry recovery from the coronavirus crisis in China

Being the first country hit by the virus, China was also one of the first countries to see its economy recover after the outbreak. David Beutin explains that at Lactalis, logistic costs have almost doubled as a consequence of the increasing fees, the need to re-route numerous boats, and the insufficient labor force available (learn more about the early logistics issues from the virus in China).

The guest also discusses different factors and measures that have helped the food industry recovery from the coronavirus crisis. He explains that restaurants have been down to 20% of their prospected business revenue but that their close collaboration with delivery applications has allowed them to generate the revenue necessary to keep their business afloat (learn more about daxue consulting’s services for restaurants in China).

selling milk products in the Chinese market
[Logistics costs following the coronavirus outbreak have almost doubled for the food industry in China]

How to find the right food distribution channels in China?

During the interview, David Beutin explains that entering a market like China is extremely challenging and that companies try to do everything on their own will most likely fail. According to our guest, it is important to first take time to analyze the market, understand what you can import, and where the opportunities lie. Then, in accordance with this analysis, you can start looking for the right distributor and food distribution channels in China to deliver your product. Finding local partners to size the opportunities of each channel is also key to the success of companies with no experience in the market.

“In China, you really need to take time, evaluate all those potential distributors that you have, build up your network, go for exhibitions, go through networking”

One of the tips of the experienced manager is to have good communication on your brand with distributors and push them if you believe there is more to achieve in the market. Also, building a strong relationship with distributors is particularly relevant in China. Attending exhibitions where your distributors are and inviting them to the one in your country might be the first necessary step to build strong ties with local actors.

food industry recovery from coronavirus crisis
[Finding the right partners and educating Chinese customers on Western food are two challenging tasks for the dairy industry in China]

Related reading: A deep dive into China’s food industry

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