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Could China Become the Largest Cheese Buyer?

25 November 2014

US Dairy Export Council

While your typical Chinese shopper will never have bought cheese at a supermarket, food service sectors are hugely important to China's future cheese demand.

Lack of consumer interest in the supermarkets is not a negative, as it is the food service segment that is driving cheese imports, explains Ross Christieson, senior vice president at the US Dairy Export Council. 

In his perspective on the Chinese market, he underlines the importance of education and product. 

The main request he hears in China is, "teach us how to use cheese". 

Could China Be the Largest Buyer

A soon-to-be-released research report from the checkoff-funded U.S. Dairy Export Council (USDEC) details the escalation of Chinese cheese imports and consumption in recent years—a streak that, with some help from knowledgeable, committed U.S. suppliers, could make the nation not only the largest U.S. cheese buyer but also the world’s largest cheese importer over the next decade.

Ross Christieson: "A rapidly growing food service sector is driving
cheese imports."

From 2008-2013, Chinese cheese imports grew an average of 28 per cent per year by volume. The country went from being the world’s 16th largest cheese importer to the 8th largest.

This year, China is on pace to move up to the No. 7 slot, with cheese imports up 51 per cent through September. Volume is on track to exceed 150 million lbs. The scarcity of retail sales would seem to suggest disinterest or distaste from Chinese consumers, but it is really more an issue of unfamiliarity.

This is a country that is just discovering how to enjoy cheese—learning tastes, textures and applications. What it has learned, it likes. A rapidly growing foodservice sector is driving cheese imports. Almost all the cheese eaten in China is eaten as an ingredient in a Western dish, like pizza, burgers and baked goods.


What Cheeses and Why

Cheddar for processing, mozzarella for shredding and grated cheeses for a variety of industrial uses make up nearly half of China’s import volume. Another 17 per cent is processed cheese for foodservice use.

The key end-user sectors—bakery, pizza and other Western foods—all have tremendous upside growth potential. Local and multi-national manufacturers are investing in capacity to produce more processed cheese domestically, moves sure to drive cheddar imports.

"The key end-user sectors—bakery, pizza and other Western foods—all have tremendous
upside growth potential."

Conversion and cut-and-wrap facilities for bulk imports will almost certainly come sooner rather than later. And retail opportunity, previously centered on Western gourmet food chains, is spreading to mainstream retailers, as consumers take their first tentative steps toward at-home use. With help from suppliers, the natural cheese sector will certainly emerge and grow over the next 10 years.

Broad opportunities exist in cheese in China if U.S. suppliers focus on developing them. The United States is China’s No. 3 supplier after New Zealand and Australia. U.S. share of imports is close to 20 per cent.

Moving to the top will require more than armslength sales transactions. We have often talked about the need for commitment to export markets, and here again it holds true. Chinese food manufacturers and distributors are gearing up for increased cheese usage and looking for partnerships that go beyond the traditional buyer-seller relationship.

They are looking for consistent, ongoing support and innovation and suppliers who can meet their unique needs, such as smaller retail packaging.

Using Cheese

In virtually every meeting I take in my visits to China, buyers will say to me, “Teach us how to use cheese.” They need outside help to understand the business. They need technical, marketing and new product development assistance and training.

They want to hear new ideas. There is a huge opportunity to develop fusion foods that incorporate cheese into traditional Chinese dishes, as well as introduce iconic American dishes that can help make the United States synonymous with cheese: New York cheesecake, Chicago-style pizza, Idaho potato skins.

We can own those names as well as the supply chain for companies making them. Consumers too have a thirst for knowledge, and in the case of retail, promotion equals education. China is a rapidly growing cheese importer and we can help them grow even faster.

Every end-user I’ve spoken with has expressed strong interest in reliable U.S. suppliers. They are serious. They know they will not get all the cheese they need from Oceania in the future. Best of all, with China, we have a chance to shape the market.

In other major cheese buying countries like Japan and South Korea, the United States was the second or third supplier to enter the market. We had to claw back share from established suppliers who dictated desirable cheese traits by virtue of their early engagement. In China, the United States is in on the ground floor.

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