China’s consumer revolution is continuing to create export opportunities for Australian agribusinesses, with fruit producers and processors the next in line to benefit as the country’s more affluent middle class increasingly seeks out high-end gourmet foodstuffs.
As China’s middle class has become increasingly affluent, it has also developed a seemingly insatiable appetite for any food that’s certified to come from clean and pristine growing environments, particularly in Australia.
Australian producers have also been helped by the China-Australia Free Trade Agreement (ChAFTA), which was announced in 2015 and has resulted in greatly reduced tariffs across a range of agricultural products, with 95 per cent of exports to China due to have tariffs removed when ChAFTA is fully enforced.
Forecasts by the Australian Bureau of Agriculture and Resource Economics and Science show Chinese demand for high-quality agriculture and food products is expected to continue its meteoric rise, eventually accounting for 43 per cent of global growth in agricultural demand by 2050.
The latest icon to tap into the phenomenon is SPC, the 100-year-old manufacturer of processed fruit products under its own brand, as well as the Goulburn Valley and IXL trademarks.
SPC has begun exporting its processed fruit products, as well as those under the Goulburn Valley brand, to China, in a partnership with state-owned China State Farms Agriculture Shanghai.
By March, SPC and Goulburn Valley products will appear on high-end supermarket shelves across Chinese tier one cities, while they are also readily available at premier e-commerce portals Tmall, JD.com and Kaola.
SPC managing director Reg Weine said his company spent between 18 and 24 months researching the Chinese processed fruit market, which is worth around $1.2 billion annually, about five times the size of the Australian market.
Mr Weine said SPC had also evaluated myriad strategies to enter the lucrative arena, a process which unearthed the importance of choosing the right distribution partner.
To that end, SPC has partnered with CSFA, which was also responsible for introducing A2 Milk and A2 baby formulas to the Chinese market.
“We had a lot of inbound interest to partner with Chinese companies on distribution and taking our leading brands into that market,” Mr Weine told Australia China Business Review.
“But I think in the end we’ve chosen a partner that’s got scale and significant reach into the China market.
“Certainly, they can help with any of the regulatory environment and challenges that are ahead of us, given that they are a state-owned enterprise, and they have an enviable track record of taking foreign premium brands into the China market, including A2 Milk and A2 infant formula.
“We think they are the right partner, there is good cultural alignment and good brand alignment.”
Mr Weine said SPC’s consumer face in China would be Ye Yiqian, the well-known singer and actress and social media influencer.
“She has already injected a great amount of personality and vibrancy into our brand, she’s got a passion for cooking and food, so we think that connection will be really important to contextualise our products for that consumer market,” he said.
“She’s a fantastic ambassador and a really good fit for the brand.
“Just in terms of cut through and in terms of brand salience, it’s a bit of a shortcut to build that credibility for the brand, and I think that a famous Chinese person can do that better than an Australian.”
Chinese demand for Australian fruit is also being felt particularly strongly by citrus producers.
Data from Citrus Australia show a total of 220,754 tonnes of Australian citrus was exported in the 12 months to September 2017, up 18 per cent on the previous year and worth more than $377 million.
More than 65,000t of those exports went to China, with trade volumes predicted to reach as high as 85,000t for calendar 2017, once the data is collated.
The China citrus export explosion has been a priority for Citrus Australia since 2012, with a bespoke end-to-end system developed in 2014 to manage the industry from growth to harvest.
In Western Australia, processing firm Moora Citrus recently announced plans to construct a $7 million packing facility in Bindoon, to help growers across the state take advantage of the export opportunities for Australian fruit.
Moora Citrus began exporting fruit to China three years ago, expanding its reach to six other South-East Asian countries in the subsequent two years.