China's  Domes-c  Seafood  Market  

John  J.  Galiher  President  /  CEO  

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The  Great  Wall  of  China…  

And  How  to  Break  Through.  2

Photo  by  Gail  Hannagan  

Target  Regions  

China  has  3  economic  mega-­‐regions  

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Growth  Rate  Rapid  growth  in  per  capita  income  is  expected  to  result  in  increased  consumer  spending,  par?cularly  by  the  middle  class  

Annualized  income  growth  rate  per  capita  (2000-­‐2009)  

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Growth  Rate  Chinese  middle  class  consump?on  is  expected  to  grow  from  approximately  $750  billion  in  2009  to  over  $4  trillion  in  2020,  exceeding  the  U.S.  

Total projected middle class consumption 2  

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Growth  Rate  China  is  expected  to  maintain  the  size  of  its  working  age  popula?on  over  the  next  decade,  which  could  con?nue  to  drive  China’s  GDP  growth  going  forward.  

Popula-on  and  age  profile  forecast  for  2020  2  

In  2010,  China’s  GDP  grew  10.3%,  while  U.S  GDP  grew  2.8%  and  global  GDP  grew  5.0%  

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China  Consump-on  Total  popula-on  of  1.3  billion  people    •  Annual  Total  Protein  Consump-on:  Per  capita  

Protein   Kg   Lbs.  

Beef,  Pork,  Chicken,  Duck   58.0  per  year   127.6  per  year  

Seafood   11.7  per  year   25.74  per  year  

•  Seafood  

City  Dweller’s  consume  3x  more  seafood    in  general  per  capita  as  compared  to  Village  or  Rural  Popula?ons.  

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China  Consump-on  -­‐  Meat  2010  Es-mated  Produc-on  –  Domes-c  (Measured  in  thousands  of  tons)  1  metric  ton  =  2,200  lbs.  

Total  Meat  Consump-on  

Total 78,476 172,647,200,000

Beef 6,531 14,368,200,000

Lamb 3,982 8,760,400,000

Poultry 16,561 36,434,200,000

Rabbit 692 1,522,400,000

Pork 50,710 111,562,000,000

1,000  MT                                        Pounds  

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China  Consump-on  -­‐  Seafood  

Total  Seafood  Produc-on  

Total Production 2009 2010 2011

Thousands of Tons 51,200 52,500 53,600

Pounds 112,640,000,000 115,500,000,000 117,920,000,000

Sources,  2009  Chinese  Agriculture  Department  Data   9

China  Consump-on  -­‐  Seafood  

Details  of  Seafood  Consump-on  –  Annual  Sea  or  Ocean  

1,000  Metric  Tons   2005   2006   2007   2008   2009  

Sea  Fish   9,139   8,926   8,913   8,643   8,808  

Sea  Shrimp/Crab   2,813   2,994   2,989   2,888   3,036  

Sea  Shellfish   10,081   10,467   10,682   10,725   11,200  

Sea  Weed   1,339   1,376   1,388   1,423   1,484  

Sea  Other   1,286   1,338   1,536   1,221   1,310  

Sources,  2009  Chinese  Agriculture  Department  Data  

1,000  Metric  Tons  =  2.2  million  pounds/1  Million  Kg  

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China  Consump-on  -­‐  Seafood  

Details  of  Seafood  Consump-on  –  Annual  Freshwater  

1,000  Metric  Tons   2005   2006   2007   2008   2009  

Fish   17,372   18,225   19,085   19,985   21,099  

Shrimp/Crab   1,403   1,678   2,021   2,101   2,288  

Sea  Shellfish   463   509   505   501   520  

Sea  Other   302   328   356   387   442  

Sources,  2009  Chinese  Agriculture  Department  Data  

1,000  Metric  Tons  =  2.2  million  pounds/1  Million  Kg  

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China  Consump-on  -­‐  Seafood  

Biggest  Produc-on  Seafood  Province:    •  ShanDong  •  Guangdong  •  Fujian  

   Biggest  Produc-on  Freshwater  Province:  

•  Hubei  •  Guangdong  •  Jiangsu  

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Imports  

Protein  

From  2009  –  2010    Pork  Imports  Increased  +80%  Pork  Prices  Rose  +9%    Beef  Imports  Increased  +95%  Beef  Prices  Rose  +13%    Lamb  Imports  Dropped  -­‐14%  Lamb  Prices  Rose  +30%  

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Popula-on  Top  Ten  Ci-es  by  Popula-on  and  Port  Based  Ac-vi-es  

Source:  6th  Na-onal  Popula-on  Census  Data,  April  2011   14

Popula-on  Top  Ten  Inner  Ci-es  by  Popula-on  

Source:  Na-onsonline.org   15

Popula-on  Comparison  Chart  

Source:  Na-onsonline.org  

Comparison  Ci?es  

Comparison  Countries  

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Supermarkets  Top  4  Global  Supermarkets  in  China  

Top  3  Domes-c  Supermarket  Chains  

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Seafood  Consump-on  

Seasonal  Seafood  Consump-on  Timing  

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Seafood  Consump-on  

Geographical  Seafood  Consump-on  Centers:  In  general,  large  “Coastal  Ci?es”      Top  Provinces:  Fujian,  Shanghai,  Zhejiang,    Hainan  and  Guangdong  

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Food  Safety  

There  are  major  fishing  restric?ons  or  moratoriums  that  “present”  frozen  and  import  opportuni?es!  A.   South  China  Sea  –  Closed  June  –  July  B.   East  China  Sea  –  Closed  June,  July,  ½  August  C.   Bohai  Sea  –  Closed  June,  July  and  August    Coastal  Communi?es  s?ll  prefer  fresh  and  “live”  seafood  products  from  domes?c  sources  for  price  and  “fresh”  and  “live”  from  Import  sources.    Restaurants  prefer  “fresh”  and  “live”  in  general.  

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Food  Safety  

There  is  a  growing  trend  in  consumers  to  accept  frozen  seafood  while  “shopping.”  They  are  gaining  confidence  in  quality  of  imported  products.      Safe  –  Clean  –  Larger  Size  –  Refrigerated/Frozen  is  beger    *Imported  Seafood  is  “Expensive”  in  China.  

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Food  Consump-on  Consump-on  of  Imported  and  Imported  Frozen  Seafood  will  Increase:  WHY?    

A.   Macro  Trends  of  Demographic  Growth    (Rise  of  the  Consumer  in  China)  

B.   Increase  in  Disposal  Income;  They  can  afford  it  C.   Health  Insurance  Cost  Rising:  Focus  on  healthy  diet  D.   Chinese  Culture  Views  “Seafood”  as  “Healthy”  E.   Chinese  Natural  Seafood  Resources  Deple?ng  F.   Pollu?on  of  Local  Environments  is  a  Concern  and  a  

Problem  

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Key  Trends  •   Consumers  are  seeking  “BRANDS”  •   Consumers  are  no?ng  “Country  of  Origin”  •   Oysters,  Salmon,  Cod,  Snow  Crab  are  widely  enjoyed  

now  and  known  as  imported  •   Seafood  Buffets,  Mid-­‐Tier  and  Luxury  are  very    

popular  for  Imported  Seafood  •   $30  USD  –  $45  USD  for  a  Quality  Imported  Seafood  

Buffet  is  acceptable  •   Domes?c  Seafood  Importers  and  Distributors  cite  that  

although  “Imports”  are  expensive,  the  demand  is  increasing  steadily  

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Key  Trends  

•   Demand  and  Increases  are  large  and  steady    in  Tier  I  ci?es  all  over  and  stronger  yet  in  Tier  I  coastal  ci?es    

•   Largest  Problem  –  Seafood  Importers  and  Distributors  –  LACK  OF  SUPPLY    

•   Consumers  like  “Whole  Product”  and  Directly  Accept  “Meat”  as  an  Ingredient  or  Component  

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Spot  Pricing  •   Demand  for  Imported  Seafood  is  High    

•   From  2009  –  2010  Australian  Lobster,  USA  Scallops,  USA  Crawfish  all  rose  +50%  in  price  with  no  drop  in  demand  

In  WalMart,  Carrefour  and  Metro  all  pork,  beef,  chicken,  lamb  and  duck  was  more  expensive  than  a  “Chinese”  supermarket,  however,  in  the  same  comparison  for  high  quality  “Frozen”  imported  seafood  these  global  supermarkets  were  “Cheaper”  or  “Lower”  priced  than  the  “Chinese”  supermarkets.  

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Agacking  the  Market(s)  

Do  not  confuse  a  “GOAL”  (the  result  or  achievement  toward  which  effort  is  directed)    With  a  “STRATGEY”  (a  plan,  method,  or  series  of  maneuvers  or  strategies  for  obtaining  a  specific  Goal  

If  your  GOAL  is  to  penetrate  the  China  Seafood  Market,  Then  you  need  a  STRATEGY  to  achieve  that  GOAL.    

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Clear  Strategy  Steps  1.   You  must  understand  your  Target  Market,  or  Know  Who  will  

Buy  and  Why!  2.   Build  and  Maintain  an  Infrastructure  that  enables  easy  growth  3.   Constantly  posi?on  and  reposi?on  yourself  to  stand  out  from  

the  compe??on  4.   Market  and  Sell  Intelligently  5.   Choose  your  Team  carefully  and  wisely  6.   Play  professionally,  execute  precisely  and  perform  

excep?onally  7.   Build  a  “Brand”  8.   Do  not  compromise  on  Quality,  Integrity  or  Reputa?on  –  EVER  9.   Know  the  Laws  10.  Know  the  Customs  

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Thank  You!.