1 1

China Citrus Industry :

Current Status and

Future Growth

Yi Shen

Technical Manager, Citrus

Firmenich China

Sept. 2013

2 2

Agenda

Current Status of Citrus Industry in

China

Citrus Processing Industry in China

Citrus Juice Consumption in China

Outlook of Chinese Citrus Industry

3 3

Current Status of

Citrus Industry in

China

4 4

Current Status of Citrus Production in

China

Developed rapidly in both acreage and yield during

the past 30 years

In 1990, citrus acreage reached 1.14 million

hectares, ranking first in the world.

In 2008, China became the world’s largest citrus

producer

Mainly for fresh market, with only 5% for processing.

5 5

Citrus Production and Acreage in

China

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000Citrus Production (tonnes)

Production (tonnes)

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

Area Harvested (Ha)

Area Harvested (Ha)

Source: FAOSTAT

6 6

Citrus Production (China vs Brazil, tons)

0

5000000

10000000

15000000

20000000

25000000

30000000

35000000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

China Citrus

Brazil Citrus

Source: FAOSTAT

7 7

Citrus Growing Area

Large area suitable for citrus cultivation

90% planted in hilly and mountainous

regions

19 provinces in China can grow citrus

9 provinces contribute 95% of total citrus

production

8 8

Key Producing Provinces

9 9

Key Producing Provinces Output

Source: CRI

Citrus Output in 2011-2012,Tonnes

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

4500000

5000000

柚 Pomelo

橙 Orange

桔 Tangerine

柑 Mandarin

10 10

Citrus Strategic Location

- Four Citrus Zones

11 11

China: All Citrus by Varieties

Source: FAOSTAT

Grapefruit (inc. pomelos)

12%

Tangerines, mandarins, clem. 42%

Oranges 21%

Citrus fruit,N.E.S 21%

Lemon ,Lime

4%

12 12

Changes in China Citrus Varieties

The structural changes of citrus varieties in China (Tons)

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Grapefruit (inc. pomelos)

Tangerines, mandarins, clem.

Oranges

Citrus fruit,NES

Lemon ,Lime

Source: FAOSTAT

13 13

Citrus Processing

Industry in China

14 14

Mostly as Fresh Fruit for Domestic Consumption

(92%)

Mandarins and oranges represent 54% and 32% respectively of total fresh

consumption.

Per capita consumption of fresh citrus in China is 13 kg per year, close to world

average 17 kg.

As Fresh Fruit for Export (3%)

China exports a small proportion of its citrus production

Most are mandarins

Mostly to SE Asia and Russia

For Processing (5%)

Canned Citrus / Citrus juice extraction / Others

Citrus Utilization in China

15 15

Canned Citrus Industry

China is in the leading position

Produced about 400,000 MT canned citrus in 2011

Mandarins are the main raw materials for canned citrus

Mostly for export : World largest exporter

Labor Intensive and manual work

Labor costs are up 40-50 %

16 16

Tangerines / Mandarins for Processing

in the World

660, 46%

320, 22%

158, 11%

100, 7%

85, 6%

38, 3%

35, 3% 31, 2%

2012-2013 July (1,000 Metric Tons)

China

European Union

United States

Japan

Korea, South

Israel

Argentina

Other

Source: USDA

17 17

Main Citrus Canneries

Hunan Chic Foods Co.

Limited

Zhengjing Taizhou Yiguan Food

Co. Limited

18 18

Orange Juice Extraction Industry

Capacity and yield increased greatly in recent years

Major plants in Chongqing, Sichuan, Hunan

The capacity is equivalent to 170 JBT extractors and is able to

process 2 million tons oranges per year.

An estimate of 600,000 tons oranges was used for juice

extraction in 2011

40,000 tons 65°Brix FCOJ

20,000 tons NFC

Extractor utilization is below what is expected

19 19

FCOJ Production and Import in China

0

10

20

30

40

50

60

70

80

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Improted (1000 t)

Produced(1000t)

Source : Chinese Custom and Juice Industry

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Improted (1000 t) 34.7 48.5 39.1 57.3 60.6 61.8 43.3 48.9 66.2 73.3

Produced(1000t) 2.5 3 3.5 5.4 18 22 24 25 26 40

20 20

Juice orange shortage

Short production window

Inconsistent fruit quality

Unstable fruit price

The Challenge of Orange Juice Extraction

Industry

21 21

Juice Orange Shortage

Become the bottleneck of OJ development

The income of planting juice orange is less than planting table

orange

Balance the benefit between processors and growers

Increasing fruit yield and quality and reducing cost

Large scale cultivation

large-scale professional farmer and company to participate

Encourage farmers into cooperatives

22 22

Main Orange Juice Extraction Plants

Cha Meei Food Intl. Co

Huiyaun Juice Group

Summi Food Co.

Tianyi Ltd

Chongqing Three Gorge

Construction Group

23 23

Citrus Juice

Consumption in China

24 24

China Juice Market

18/0

9

/201

3

2 4

Source: Euromonitor

Off-Trade mn Liters

173.3 195.1 211.9 229.1 269.1 317.5 1,114.0 1,253.2 1,357.0 1,476.4 1,621.3 1,788.8

6,624.3 7,962.0

8,972.7 10,152.5

11,595.8 12,941.1

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

16,000.0

2006 2007 2008 2009 2010 2011 100% Juice Nectars (25-99% Juice) Juice Drinks (up to 24% Juice)

China JUN market size (2011, Off trade Volume) 15.5 billion litres, 17.8 billion USD.

Growth rate per year 13.7%

25 25

Market Shares by Volume

86%

12%

2%

Juice Drink (upto 24% juice)

Nectars(25-99%juice)

100% juice

26 26

Citrus Market Share in 100% Juice

Apple 30%

Grape 1%

Mixed fruits 17%

Orange 48%

Peach 1%

Tomato 1%

Other Flavours

2%

100% Juice

27 27

Citrus Market Share in Nectar

Nectars (25-99% Juice)

Apple 12%

Grape 5%

Kiwi -1%

Mixed fruits 17%

Orange 55%

Peach 1%

Pineapple 1%

Other Flavours

9%

28 28

Citrus Market Share in Juice Drinks

Apple 5%

Grape 4%

Grapefruit -1%

Guava 1%

Lemon and Lime 5%

Mixed fruits 16%

Orange 37%

Pear 25%

Pineapple 1%

Other Flavours 6%

29 29

Chinese Fruit Juice Consumption

on SSE juice in 2011

Orange juice 42%

Apple juice 23%

Pear juice 17%

Other juice 18%

1.8 million tons SSE juice consumed

Source:Chinese Custom and Juice Industry

30 30

China Juice Market

ORANGE IS THE CLASSIC AND TOP TONALITY IN JUICE CATEGORY

Ting Hsin Orang Juice Drink

President Orange Juice Drink

Coca Cola Minute Maid

Orange Juice Drink

Pepsico Tropicana

Orange Juice Drink

Suntory Orange Juice Drink

31 31

China Juice Market

NEW CITRUS CREATES NEW INTEREST

Ting Hsing Honey Yuzu

President Crystal Sugar

Kumquat

Tao Di Mandarine Lemon Yangsengtang

C100 Grapefruit

32 32

Key Trends Towards Citrus:

– Orange is a classic and leading flavour

– Lemon is getting popular

– Adding fruit pulp attracts the consumers

– New citrus flavours such as kumquat offer new innovation

33 33

Outlook of Citrus

Industry in China

34 34

Outlook of Citrus Industry in China

The acreage will remain stable while the production

will increase with the improvement of agricultural

practices

Will remain for the domestic fresh market

Export will still be low at the level of about 5%

Tangerine and mandarin will remain as the major

variety

35 35

Outlook of Citrus Industry in China

Sweet orange, especially the navel orange and

summer orange will increase steadily

Both late season and extra early cultivars and

acreage will increase

More modern packing houses will be set up to

enlarge the post harvest capacity

Although the orange juice will still rely on imports,

the domestically produced orange juice will increase

36 36

Acknowledgement

Prof. Wu Houjiu

Vice Director of National Research

Center for Citrus Engineering Technology

Beibei, 400712 Chongqing, P. R. China

37 37

Thanks for your attention!