Insights

Unpacking China's Strong Growth Potential for Cheese Through Snacking

12 Nov 2021

6 min

In recent years, cheese has taken off in China with a double-digit growth (~18% YOY) showing very strong potential for the category. We’ve seen that the recent years of exposure to cheese has resulted in it gaining familiarity in the Chinese market. Consumers are beginning to see it as a tasty food group with nutritional benefits and many applications.

What this double-digit growth shows us, is that the potential is there for brands to capture a rapidly growing demand for cheese in China.

This article will cover how food manufacturers might be able to ignite this bubbling cheese popularity and drive more value into the category.

Processed Cheese is Driving Category Growth in China

The historically slow adoption of cheese in China may have been because it was perceived as a Western food that is less compatible with traditional Chinese diets. For example, 24% of Chinese consumers who say they know how to eat cheese often don’t because it does not fit within their diet. In addition, many Chinese consumers are not used to the taste of natural cheese.

There is growing recognition of cheese’s nutritional benefits. For example, over half of Chinese consumers think cheese is a better source of protein than milk. So, as a result, processed cheese has become the dominant format in the cheese category, as it provides consumers the ability to enjoy cheese in flavours and formats more palatable to them. 

Figure 1: Retail market value and volume of cheese, China, 2015-20

From 2020-21, 86% of new cheese launches in China are processed cheese formats.

With the cut-through of processed cheese products making consumers more familiar with the category, we see cheese ingredients having a renaissance period in China. Cheese is becoming the newest ‘trendy’ ingredient in multiple application categories. Various food and drink products use cheese as a star ingredient to upgrade their products or leverage cheese’s influence to spread on social media. 

According to Mintel GNPD, cheese flavour is amongst the fastest growing in multiple categories, such as snacks, bakery, and dessert.

We see processed cheese and cheese flavouring as the gateway for brands to grow cheese consumption in China for this reason.

 

The Children’s Segment Dominates due to the Nutritional Perception of Cheese

The perception in China is that cheese is a nutritious food with high protein and calcium that is a good option for children. As a result, we see the largest demand for cheese coming from products targeted at children from the ages of 5–12 years old.

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65%

of new cheese launches in China for the last year are targeted at children (5–12 years old).

Children’s cheese snacks in particular are very popular, with the processed cheese lollipop being the key format in this category. With the children’s segment being so popular, new innovations are often required to create cut-through. Those brands that are looking to expand market share via the children’s cheese category in China should look to new flavour, formats and nutritional claims as a way to differentiate themselves from the crowd.

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Gain Traction with Adults by Targeting Snacking Occasions

Whilst the children’s segment continues to grow, the real challenge (or opportunity) is to gain traction in the adult market by encouraging Chinese consumers to expand their cheese consumption occasions with snackable options. Chinese adults are showing high interest in having cheese as a snack, but this is yet to translate to actual consumption patterns.

In China, adult cheese consumption occasions are currently dominated by cheese on bread, toast, or in a burger, which is quite limiting. There has been no significant change in these cheese consumption occasions over the past few years (see figure 3). Of the small volume of cheese snacks that are consumed by adults, the main formats we observe are cubes, chips and strings due to their bite size nature.

Figure 3- cheese consumption occasion, 2020 vs 2016 and Figure 2- Chinese consumers show high interest in having cheese as a snack, 2020

In order to drive new growth in the adult cheese segment, we have identified some key strategies within the snacking occasion that might support brands moving more consumers into this space and fuelling the market growth in China beyond the children’s category.

 

1. Explore Novel Flavours & Formats

To appeal to adults in the dynamic snacking category, cheese brands can target on-the-go occasions with portion-controlled, flavour-driven offers.

95%

of Chinese consumers are interested in trying new varieties or flavours of snacks.1

Cheese brands can entice consumers with novel flavours and textures, for example; Natori, a major cheese brand in Japan, launched both puffed and soft snackable cheese portions. They also launched a squid-ink-flavoured cheese string in 2021. Both products offer consumers novelty and fun textural experiences.

 

2. Highlight Nutritional Benefits of Cheese

Chinese consumers are becoming more educated on the nutritional benefits of dairy with current consumer perceptions of cheese making it a good snacking choice for adults.

However, there is an opportunity here to better highlight the nutritional benefits of cheese products to further educate and raise awareness in popular market needs such as immunity, protein and calcium.

Consumers can also look to processed cheese as a low-calorie snacking option. For example Yili Miao Zhi Milk Flavoured Portable Processed Cheese is made using imported cream cheese, high in calcium and smooth and aromatic. It contains protein and less than 45kcal per stick, equivalent to half an apple (China).

3. Leverage Cheese Flavour into Parallel Snacking Formats

In other markets we see brands taking cheese as an ingredient and leveraging it in a wider range of more popular snacking categories. This helps capture adult market share of cheese consumption in more snack varieties.

 

4. Explore opportunities in pairing

There is potential in developing different cheese pairing occasions, which is popular and synonymous with cheese in many global markets. Cheese brands in China could educate consumers in the pairing of cheese with crackers, fruits and alcohol. This is a niche occasion, but certainly one that should evolve as Chinese consumers become more familiar with cheese and are more interested in exploring the taste experiences to be had when trying new varieties.

22%

of cheese consumers in China claim they pair cheese with an alcoholic drink.

Although this level of consumption is fairly low, snackable cheese products could explore consumption opportunities that come with pairing with alcoholic drinks. Major cheese companies such as Megmilk Snow and Meiji Hokkaido Tokachi in Japan have launched various cheese snacks to pair with different types of alcohol such as sake, wine, beer and whiskey.

In conclusion, finding a way into adults’ snacking repertoire is key to further growth in cheese. Brands can expand the formats of cheese to place it in competition with the broadening snack category and target more adult consumers, rather than focusing purely on the competitive children’s category.

     

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This article was from the November edition of Perspective.

Expert

Daisy Li

Associate Director, China, Mintel Food & Drink

Daisy is the China market specialist for the Mintel Food & Drink team. Prior to Mintel she worked in Kantar TNS, accumulating 10 years’ experience in consumer insights. Daisy has a Bachelor’s degree of Business Management from Jiao Tong University, Shanghai. Mintel specializes in what consumers want and why. As the world’s leading market intelligence agency, their analysis of consumers, markets, new products and competitive landscapes provides a unique perspective on global and local economies. For more information, please visit www.mintel.com

  • [1] Fig. 1 Source: Mintel
  • [2] Fig. 2 Base: China: 3,000 internet users aged 18–49; 2,357 internet users aged 20-49 who have bought cheese. Source: KuRunData/Mintel, September 2020
  • [3] Fig. 3 Base: China: 1,832 internet users aged 18–49 who have eaten cheese in the last six months; 2,357 internet users aged 20–49 who have bought cheese.

Disclaimer This article is based on insights and data provided by Daisy Li and Mintel, the world’s leading market intelligence firm. Unless otherwise referenced, this content is derived from Daisy’s own analysis and Mintel’s intelligence database. The views expressed above are the opinion of the author, not those of Fonterra, and Fonterra is not responsible for any decisions taken in reliance on the same.

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