Consumption Status and Trends of Palm Oil in China

Xiaoqiang Zou Jiangnan University

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Content

n  Introduction n  Comsumption Status n  Trends and Challenges

3

n  Introduction

1. Palm oil's share in vegetable oil consumption

2. Palm oil's consumption fields

4

1. Palm oil's share in vegetable oil consumption

Fig. 1 Comsumption of palm oil for food and non-food uses over years

For food� For non food�

Years�

10 KT�

5

Fig.2 Palm oil's share in vegetable oil consumption in China

Plam oil�

Soybean oil�

Rapeseeed oil�

Peanut oil�

Cottonseed oil�

Other oils�

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2. Palm oil's consumption fields

Fig. 3 Palm oil's shares in different comsumption fields

Specialty fats �

Cooking oil (for blending and mixing)�

Others �

Instant noodels�

Fried foods�(chips, Fried chicken, Traditional Chinese fried

foods)�

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n  Comsumption status

1. Palm oil for cooking

2. Palm oil for specialty fats

3. Palm oil for frying

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1. Palm oil for cooking

n  In recent years, the annual import volume of palm oil is around 6

million tons. Except palm oil for specific purposes such as

instant noodles, biscuits and baking industry, specialty fats and oil

chemical industry, about 2 million tons of palm oil disappeard

n  It is estimated that they are mostly used for cooking oil or mixed

with other vegetable oils

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Fig.4 The annual output of blend oil

n  The output of China's edible blend oil reached 2.38 million tons in 2011, an increase of 21.1% over 2010, accounting for 46.9% compared with small package edible oil of 5.07 million tons, and became the oil species with the highest market share

Blend oil output/10 kt �

2008 � 2009 � 2010 � 2011�

Small package edible oil: 5.07 million tons

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Fig. 5 The distritbuion of blend oil species in 2011

Ordinary blend oil

Peanut blend oil

Sunflower blend oil

Nut blend oil Deep sea fish blend oil 3%

Others

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2. Palm oil for specialty fats n  The production capacity of speciaty fats in China increased rapidly, among

which margarine, shortening, and cocoa butter substitute accounted for the

largest proportion. The amount of speciaty fats except frying oil was only

0.15 million tons in 1996, increased to 0.3 million tons in 2001, and to more

than 1 million tons in 2008.

n  The gross output value was over 15 billion yuan, the overall increase rate

was faster than that of edible oil itself, and it was also one of the most

profitable products in edible oil processing fields.

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12

A C

C

C YiHai Kerry 72000MT/Y

Tianjin�

Eastocean 65000MT/Y

Longkou 43000MT/Y

YiHai Kerry 216000MT/Y

Dongma 30000MT/Y

YiHai Kerry 72000MT/Y

YiHai Kerry 86400MT/Y

Jinguang 30000MT/Y

Shengzheng�

Zhangjiagang�

Qinghuadao�Fuji oil

30000MT/Y

Nanqiao 30000MT/Y

Nanqiao 40000MT/Y

Tongqing 22000MT/Y

Longkou�

YiHai Kerry 30000MT/Y

Xiamen�

Nanjing�

Old

New Golden Eagle 30000MT/Y

Changsu�

Dongguan�

To be built

Huanan 10000MT/Y

B

B

Sime Darby

The processing capacity of domestic enterprises accounted for about 15%

Shanghai�

Guangzhou�

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Fig. 6 The major specialty fat enterprises and their market shares

Yihai Kerry

Eastocean Longkou 4%�

Nanqiao Gloden Eagle 3%�

Jingguang 3%�

Dongma 3%�

Tongqing 2%�

Fuji 3%�

Tongfeng 3%� Others

25%�

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Palm oil is the most commonly used base oil for specialty fats n  All kinds of palm oil products replacing hydrogenated oils become major

base oils for specialty fats

n  Palm oil accounts for 30-50% in recipe on average, and margarine, shortening industry consume 0.25-0.40 million tons of palm oil per year

烘焙用油40%

煎炸喷淋用油20%

冰淇淋饮料用油15%

速冻用油15%

其他10%

Fig.7 The application of margarine and shortening and their market shares

Baking oil

Frying and spraying oil

Ice cream and beverage oil

Fast-frozen oil

Others�

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n  In 2011, the yeild of ice cream was 3.5 million tons, the sales volume was 79 billion

yuan, and low-and-medium products accounted for more than 60%. The products

had 5-6% oil content, most of which were 42 degree palm oil, and the industry

consumed about 0.11 million tons of palm oil

n  The annual output of biscuits was about 6 million tons in China. Biscuits consume

much palm oil which is in bulk and not recorded in specialty fats, generally. The

comsumption of palm oil in biscuits increased from 0.97 million tons in 2008 to 1.16

million tons in 2011. The annual average growth rate was about 9%

Fig. 8 The amounts of palm oil used for cocoa butter substitute, powdered oil and whipped cream

10.2

3.64.2

0

2

4

6

8

10

12

代可可脂 粉末油脂 植脂奶油

2011年棕榈油在代可可脂、粉末油脂、植脂奶油的用量/万吨

n  China's annual imports of palm kernel oil were 0.6-0.7 million tons, mainly for daily-use chemical industry

n  About 1/3 of the imported palm kernel oil was used for specialty fats. They are mainly cocoa butter substitute, powdered oil and whipped cream

The amounts of palm oil used for cocoa butter substitute, powdered oil and whipped cream in 2011/ 10 kt

cocoa butter substitute powdered oil whipped cream

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3. Plam oil for frying

n  Instant noodle

n  Fried chicken

n  Potato snack food

n  Shrimp, squid roll and traditional snacks

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1. Instant noodle n  Instant noodle has become the world's second largest convenient staple food,

just behind bread

n  China is the world's biggest instant noodle production and comsuption

country, the output accounts for more than 51% of the word, 50 billion

packages, 55.7 billion yuan

n  Fried instant noodles accounted for more than 90% of total instant noodles,

and non-fried instant noodles accounted for a small proportion

19 Fig. 9 Production and sales of instant noodles, and consumption of palm oil

n  Almost all oils used in instant noodles are palm oil n  The consumption of palm oil in instant noodle market remained at

0.85-1 million tons after 2004

Instant noodle�

Sales (hundred million)�Comsumption of palm oil/10 kt�

Year�

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33%

18%14%

8%

7%

5%

5%4% 3% 3%

康师傅

白象集团

今麦郎

珠海化丰

统一企业

锦丰集团

斯美特

河南焦作

郑州国华

Fig. 10 The output proportion of the largest 10 instant noodle enterprises

n  The brands of large enterprises of instant noodles have been established in the market

Master Kong

White Elephant Group

Jinmailang Zhuhai Huafeng�

Uni-presedent�

Jinfeng Group�

Smetana

Helan Jiaozuo�

Zhengzhou Guohua

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n  Palm oil in instant noodles was mainly used for frying, followed by using

as oil in ingredient package

n  33 degree palm oil can be used for frying. When temperature is

slightly lower, 24 degree palm oil is also added. Generally, antioxidants

are not used

n  Palm oil content in instant noodles is18-20%

n  The palm oil content in ingredient package is around 20%

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2. Fried Chicken

n  The number of KFC stores in China achieves 4,000

n  Keshi and McDonald have about 2,000 and 1,500 stores in China,

respectively

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n  Pre-processed meat products such as chicken balls, chicken feet, chicken

wings and other traditional Chinese hot pot foodstuff are usually pretreated

by frying with palm stearin (more than 50 degrees)

n  The consumption of palm oil for chicken frying is about 70,000-80,000 tons

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3. Potato snack food

n  The rapid developing potato snack foods in Chinese market are

fresh cut potato chips, composite chips and frozen French fries

n  The output of potato chips: 0.16 million tons in 2005; 0.4

million tons in 2011, annual growth rate approximately 25%.

Total domestic sales is 18 billion yuan in 2011

n  24 degree palm oil and palm olein are used. No antioxidants

n  Annual consumption of palm oil is 0.10 million tons

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Potato chips Fried fresh-cut potato chips: n  Sales, about 40 billion

n  Major producers: Lay's, Oishi, Orion, Angel

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Potato chips

051015202530

达利 乐事 盼盼 上好佳 小王子

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5 4 1.5

复合油炸薯片生产前5名企业产值/亿元

Fig.11 Sales of top 5 fried potato chips producers in 2011

Fried Potato Chips: n  Sales, approximately 10 billion n  Top 5 producers : Daly, Lay's, Panpan, Oishi and The Little

Prince Sales of top 5 producers/hundred million yuan

Daly Lay's Panpan Oishi The Little Prince

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Potato chips Baked potato chips (biscuit crisps):

n  Sales, about 4 billion

n  The number of biscuit crisps companies reached a hundred in its

peak period. Currently, the two giants were formed: the northern

Le Bar, output about 500 million yuan in 2011; Anhui Qiaqia food

advocates "non-fried, more healthy" , annual output 400 million

yuan in 2010

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French Fries n  Frozen french fries: 50,000 tons in 2005, 113,000 tons in 2010, annual

growth rate 17%; 170,000 tons in 2011, growth rate 47.8%, much higher than that in previous years, showing high growth rate

Fig. 12 Annual processing capacity of frozen frenchfries from 2005-2011�

0

5

10

15

20

2005年 2006年 2007年 2008年 2009年 2010年 2011年

56.3 6.8 7.8 9.8

11.3

17

2005-2011年我国年冷冻薯条加工能力/万吨Annual processing capacity of frozen French fries from 2005-2011/10 kt

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French Fries n  The high growth of frozen french fries is due to the increasing demand

from nearly ten thousand western fast food shops and high-end hotels in

China, and even some supermarkets started selling frozen French fries.

Though small in number, but a new point

n  The production and sales of frozen French fries will continue to increase in

next few years , the recent demand is 230,000 tons or more

n  The capacity of Simplot, McCain, Landunxumei, Hong Kong Taimei will

reach 255,000 tons in next two years

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French Fries

北京辛普劳食品公司21%

麦肯食品(哈尔滨)公司31%

蓝顿旭美食品公司15%

甘肃金大地食品公司2%

内蒙恒源农业责任公司

2% 香港太美集团29%

n  The capacity distribution of major enterprises

Fig. 13 Shares of processing enterprises of frozen French fries in 2011

Beijing Simplot

McCain (Haerbin) 31%

Landunxumei 15%��

Hong Kong Taimei

Inner Mongolia Hengyuan

�Gansu Jindadi

2%

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French Fries n  The consumption of French fries accounts for 12% -15%. Half

is used in the factory (fried before freezing in the production

line), and half is used in the food stores.

n  After the incident of "French fries oil" in 2006 , people began to

question frying oils. Palm oil has become increasingly common

for French fries

n  The frying oil is usually 42 degree palm oil

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4. Shrimp crackers, Squid rolls, Shrimp slices

n  Shrimp crackers, squid rolls, shrimp slices: popular in rural areas, the

main producers: Fujian Qinqin, Panpan food. The annual output is

nearly 100,000 tons

n  24-42 degree palm oils is generally used and the consumption is

30,000-50,000 tons per year

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5. Chinese traditional snacks n  Chinese traditional snacks: fritters, fried dough twist, fried dumpling,

pies, deep-fried dough cakes, crispy rice, skin peanuts, candied fritter, fried spring rolls, fried fish, popcorn, etc.

n  Characteritics: varieties, mannual workshops, breakfast shop, small business, but gradually showing the trends of the scale of production

n  Soybean and cottonseed oil are widely used, but palm oil has great potential

n  Golden wheat and COFCO developed special butter with palm oil/palm kernel oil for popcorn, increasing blasting rate of corn, uneasy to stick pan

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Trends and Challenges

1. Trends

2. Challenges

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Trend 1: Growing demand for domestic edible oil should rely on palm oil

n  It is expected that China's palm oil import will increase by 6% per

year in the next few years, to reach 7.95 million tons in 2015

n  The consumption will be more than 10.5 million tons in 2020,

gradually approaching soybean oil

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Trend 2: Processing technology continues to improve, more and more palm oil products will appear

n  Small/medium package palm oil products were successfully developed,

the oil companies are expected to follow, and the market share will

increase

n  The annual consumption of edible oil in China's catering industry reachs

6-8 million tons, of which edible oil with disposable packaging is only 6-8

million tons, edible oil with recyclable packaging barrels is about 4 million

tons, edible oil without packaging 1.4 million tons

n  Cancellation of bulk oil in catering industry has been implemented,

edible oil with disposable medium package (the main component is palm

oil) will become the main restaurant oil, and will account for nearly 50%

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Trend 3: Convenience food production will strongly drive the consumption demand for palm oil

n  By 2015, the output of China's convenience food industry will

reach 530 billion, an annual increase of 30% on average

n  Sale target of instant noodles is 100 billion yuan in 2015, there

is a large potential for palm oil in the instant noodle industry

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Trend 4: Potential safety hazard of trans fatty acids and genetically modified food will effectively promote the demand for palm oil n  The consumption of selectively hydrogenated oils in

margarine, shortening is decreasing

0

5

10

15

2008年 2009年 2010年 2011年

12.2 11.410

8.8

选择性氢化油/万吨Selectively hydrogenated oils/10 kt

Fig. 15 The consumption of hydrogenated oils in specialty fats

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Trend 5: Palm oil in the food industry becomes widely used, and special type of palm oil is being developed

n  With the development of fractionation technology, industrialization of

traditional food, acceleration of the process of industrialization of

staple food and prosperity of food and beverage industry, palm oil in

food processing will be more widely used.

n  Palm oil products will be tailored based on the demands of

downstream food industry, the number of subdivided palm oil

products for different food categories will be increased.

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Challenge 1: Edible oil quality standards are not perfect n  Edible oil quality standards are not perfect and palm oil adulteration

is serious.

n  Palm oil standard system should be strengthened. GB 15680-2009 only

includes palm oils with 33 degree, 24 degree, 19.5 degree, 44 degree

as edible oil.

n  PMF and more low melting soft fat products are excluded from

national standard, which does not match production status and

restricts the promotion of fractionation products

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Challenge 2: Potential risks of 3-MCPD esters, polyglycerol esters

n  Refined vegetable oil (including palm oil) contains a certain level of 3

-MCPD esters, polyglycerol esters

n  In Feb 5-6 2009, the International Life Sciences Institute Europe

(ILSI Europe) conference identified 3-MCPD esters as new potential

risk factor for vegetable oil

n  In September 2009, the incident of Japan's Kao "Econa" oil

indicated it was a substantial impact on oil industry

n  Infant formula manufacturers have started to control 3-MCPD esters

in the oil

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