Currently, China's meat product consumption is nearly 8 million tons, with a five-year CAGR of 7% before 2013. Since 2014, due to downward economic pressure, sluggish market consumption, and policy impacts on high-end catering, meat product demand has slowed, leading to a significant decline in 2014-2015, with cumulative consumption dropping over 15% in two years. From January to April 2016, China's meat processing industry revenue reached 421.208 billion yuan, a year-on-year increase of 7.79%; total profits reached 20.745 billion yuan, a year-on-year increase of 14.4%. Currently, China's pork consumption is mainly fresh pork, with processed pork products accounting for less than 15% of total pork consumption, while in the US this proportion exceeds 67%. There is still significant room for growth in the proportion of meat products in China. In China's meat product consumption structure, low-temperature meat products account for only 30%, a large gap compared to Europe, America, and Japan. Due to different dietary habits and the popularity of Chinese-style meat products like ham sausages, China's meat product consumption structure is still dominated by medium- and high-temperature meat products, with low-temperature products only accounting for 30%. In the Japanese market, the three major categories of low-temperature meat products (bacon, ham, and sausage) account for up to 90% of household meat product consumption, making low-temperature products the main consumption target. Currently, China's low-temperature meat products have a relatively low share, indicating huge development space, and they will be the main development trend in the future. 2008-2015 China Meat Product Consumption and Growth Rate US meat products account for over 67% of meat consumption China's meat products account for less than 15% of meat consumption Japan's three major low-temperature meat products account for 90% of meat product consumption China's low-temperature meat products account for only 33% of meat products Currently, the growth of per capita disposable income of urban residents in China is slowing, and the population growth rate has dropped to 0.5-1%. After 2005, meat product consumption experienced rapid growth in the early stage, with demand largely released, and has since been in a stable growth period, corresponding to the second stage of Japan's meat product industry. At this stage, most people's demand for meat products is met, and volume growth mainly comes from the low-speed growth of new population and the increase in consumption brought by the growth of disposable income of low-income groups, with compound growth rates remaining in single digits. China's vast territory and diverse consumption habits, coupled with the constraints of cold-chain logistics development, mean that low-temperature meat products still account for a relatively low proportion. The delayed upgrade of meat product consumption structure has led to differentiation between high- and low-temperature meat products during the stable development period. Low-temperature meat products are better in nutrition and taste, better catering to health demands. With the rapid development of China's cold-chain transportation market breaking the cold-chain bottleneck, low-temperature meat products will gradually replace high-temperature meat products as the mainstream. Low-temperature meat products have better nutrition and taste Type | Process Characteristics | Shelf Life | Nutrition and Flavor High-temperature meat products | High-temperature and high-pressure processing, sterilization temperature 115-121°C | Long shelf life, 6-12 months | Protein over-denaturation, nutrient loss, poor taste Low-temperature meat products | Normal pressure, temperature 72-85°C, packaging, storage, circulation, and sales all at low temperature | Short shelf life, generally not exceeding 45 days | Maximally retain original nutrition and flavor The consumption upgrade of meat consumption mainly has the following four directions: upgrade from pork consumption to other meats like beef and mutton, upgrade from fresh meat consumption to meat product consumption, upgrade from medium- and high-temperature meat products to low-temperature meat products, and upgrade from pure dietary consumption to service value-added consumption (such as catering). Among them, the rapid growth of low-temperature meat products driving the upgrade from fresh meat to meat products and from medium- and high-temperature to low-temperature meat products are the main upgrade directions. Compared with fresh meat consumption and medium- and high-temperature meat product consumption, low-temperature meat products align with the trend of healthy consumption. Future growth drivers, in addition to the pig cycle impact and market demand recovery, mainly benefit from the enhancement of residents' health consumption awareness, the rapid growth of middle- and high-income groups driving consumption upgrades, and the rapid growth of the cold-chain market promoting the extension and sinking of low-temperature meat product channels. Specifically, Boston Consulting shows that the upper-middle class and affluent class with the strongest purchasing power (household monthly income above 12,500 yuan) are expected to have a CAGR of 13.2% in the next five years, and the middle class and emerging middle class with consumption upgrade potential will also maintain stable growth of 2.8%. The growth of middle- and high-income groups ensures the potential demand for low-temperature meat products. The scale of the cold-chain market has been continuously improving in recent years; Roland Berger consulting data predicts that the future growth rate will further increase, with a CAGR of 25%. Data from the Agricultural Products Cold-Chain Logistics Development Plan show that the cold-chain circulation rate of meat increased from 15% in 2010 to 34% in 2015, and this proportion will continue to rise in the future. The rapid growth of cold-chain logistics breaks the bottleneck of low-temperature meat product transportation, facilitating channel extension and sinking, and potential market demand is expected to be further converted into actual demand. China's cold-chain market is developing rapidly, with expected future CAGR exceeding 25% China's meat cold-chain circulation rate increased from 15% to 34% in the past 5 years Middle- and high-income population will grow rapidly in the next 5 years It is expected that the CAGR of low-temperature meat products will exceed 10% in the next five years, and the proportion of meat product consumption will reach 40%. The rapid growth of low-temperature meat products is the main driving force for the upgrade from fresh meat to meat products and the structural upgrade of meat products. We believe that the decline in pig prices and the recovery of market demand in the second half of 2017, similar to conditions before 2013, coupled with the improvement of middle- and high-income groups' consumption capacity and the gradual breaking of the cold-chain bottleneck, will lead to a growth rate of low-temperature meat products exceeding the compound growth rate of about 10% during 2009-2013 (except for 2011 when high pig prices led to slightly lower growth), possibly even exceeding 15%. Considering the low growth rate due to high pig prices in 2016, it is expected that the CAGR will exceed 10% in the next five years, and the proportion of total meat products will approach 40%. In the next 5 years, the CAGR of low-temperature meat products will exceed 10%, and the inflection point of the meat product industry will appear in 2017 Driven by the rapid growth of low-temperature meat products, the upgrade from fresh meat to meat products and the structural upgrade of meat products will be gradually realized. Combined with our judgment on the decline of pig prices in 2017 and our estimates of a 3.5% compound growth rate for medium- and high-temperature meat products and a 10% compound growth rate for low-temperature meat products, it is expected that the CAGR of meat product consumption will be about 6% in the next five years, a significant improvement compared to 2010-2015, mainly due to the recovery of market demand after the sharp decline in 2014-2015 and the rapid growth of low-temperature meat products under the consumption upgrade. By 2020, meat product consumption will account for 16% of total pork consumption. It is estimated that the CAGR of meat product consumption will be about 6% in the next five years Upgrade from pure dietary consumption to service value-added consumption. Service value-added consumption includes catering, where services are purchased on top of satisfying dietary needs. In the meat product channel, the catering channel accounts for only 15% in China, far lower than the 32% in the US, making it a major direction for future channel transformation. -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and applicable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operation | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operation management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brand | 016 Distributor B2B transformation | [Long press QR code to follow]