China’s Massive Seafood Market is Shifting Toward Higher-Value Products
By Louis Harkell | Aug. 8, 2024, 09:53 BST
China’s seafood market is undergoing a significant shift toward higher-value products like shrimp, wild-caught fish, and deep-sea species, even as the country’s post-pandemic economic slowdown crimps income growth, according to a new report from Rabobank.
The Dutch lender forecasts seafood to be among China’s fastest-growing animal protein categories over the next decade, with consumption rising 4.4% annually from 2013-2023—outpacing pork, poultry, and eggs. Even consumption of beef grew more slowly, at 3.2% annually over the decade.
“Consumers have a positive perception of seafood. Demand for premium products increased the consumption of higher-value seafood, including shrimp, wild-caught fish, and deep-sea fish, over traditionally consumed carps,” wrote RaboResearch, Rabobank’s research arm.
The shift reflects both growing wealth and health consciousness among China’s 1.4 billion consumers, as well as anxiety over food safety. China already consumes about one-third of global seafood production. It imported $23 billion worth of seafood in 2023, including $6 billion worth of shrimp, according to Rabobank. Undercurrent News data shows $19 billion worth of seafood products and import volumes of 4.67 million metric tons last year. Much of this seafood is whole frozen fish processed in China and re-exported as fillets to Europe, North America, and Japan. However, increasing volumes are being consumed by China’s domestic market, said the report.
“Shrimp, the largest item in terms of value, has seen a sixfold increase in the past 13 years. We expect seafood imports to maintain an upward trend in the coming years, despite the slowing economy,” said RaboResearch senior analyst Chenjun Pan.
Of China’s $6 billion worth of shrimp imports, about two-thirds are low-value, high-volume frozen head-on shrimp from the world’s largest shrimp exporter, Ecuador. Other top imports include crab, lobsters, and fresh Atlantic salmon. Pan noted that domestic aquaculture and wild-catch fisheries are also growing rapidly to satisfy consumer demand, such as locally produced snakehead fish and carp.
“On the supply side, surging imports and rising local supply enabled this hybrid demand for higher value and attractive prices,” said Pan. But Pan emphasized that suppliers will need to evolve beyond simply exporting large volumes of shrimp and fish to feed China’s massive market.
“The era of supplying homogenous products to meet basic needs is over. China’s animal protein consumer market has entered a new stage where demand is becoming more sophisticated,” Pan wrote.
New Market Trends
Among the changes Pan advises seafood companies to prepare for are closer partnerships with retailers and restaurants to deliver sustainable products and meet emerging consumer demand for convenient prepared foods. Companies should also integrate vertically to gain more visibility and input into consumer preferences.
“Consumers are becoming more value-conscious amid moderating income growth,” Pan said. Chinese consumers are still trading up to higher-value seafood, beef, and poultry products, she explained, but they are increasingly focused on getting “good value for their money.”
As China grows wealthier, its consumers are allocating more of their spending to services like dining out and livestreaming, the report said. While restaurants have used heavy discounting to attract cost-conscious customers, Pan said larger chains will eventually enjoy lower costs that could translate into higher seafood demand.
“Chinese consumers—especially older generations—are more concerned about issues like nutrition, food safety, and sustainability,” Pan wrote. This is helping shift share from pork to proteins like seafood, poultry, and beef, which are considered healthier.
Online seafood purchases still account for only about 15% of China’s seafood sales, compared to 36% for consumer goods overall. Pan said the channel should continue growing through platforms like Pinduoduo as investments in cold-chain logistics expand.
Contact the author at louis.harkell@undercurrentnews.com