Yangmei – super yummy superfruit

Superfruits are still hot, in spite of the growing criticism on the excessive promotion of some of them.

China is well-positioned to gain from the superfruits craze (also see my post about the seabuckthorn). Yumberry, for example, is unique to the country, and produces good quality, clarified not from concentrate juice, but also excellent concentrate. China is good for 90% of the global yumberry production, with sporadic occurrence in Japan, India, Vietnam and Thailand. China produced 832,680 mt of yumberies in 2016, from 745,600 mt in 2012. Zhejiang province is the largest production region, with more than 570,000 mt in 2016.

Yumberry is the commercial name for the yangmei berry, a fruit of the wax myrtle; also known in English as waxberry (Myrica rubra), the fruit has a high antioxidant activity and high vitamin and mineral content. Yumberries look a little bit like a raspberry with a sweet-sour flavour similar to cranberry and pomegranate juice. Their texture is unique – slightly stringy like the flesh of citrus fruit – with a pit in the centre.

Super healthy

Yumberry juice is rich in antioxidants like proanthocyanidins and contains many vitamins including vitamin C, thiamine, riboflavin, and carotene. Yumberries are also said to help clear up hard-to-digest food in your stomach, cure stomach aches and “dispel summer heat.” They have been used since ancient times in China for medicinal purposes, and as early as the 16th century, the well-known herbal pharmacologist Li Shizhen said that yumberries could:

“Eliminate sputum, stop vomiting, helpful to digestion and alcoholic drinking … quench thirst, conciliate the five internal organs, cleanse stomach and intestines, remove the muddleheaded … and be efficacious to cure diarrhoea.”

Further, because the trees have a high tolerance to pests and diseases, they are often grown organically or with few pesticides applied to them.

66% of the output of 2016 was consumed as fresh fruit. 15% was processed into juice or concentrate, 5% was exported and 20% was wasted in various stages of processing. The latter is high for such a valuable product, but offal is unfortunately still a major problem in China.

Juice production is hampered by its short season which lasts only one month, in which processors struggle to process all the fruits on time. However, its rising popularity in the health beverage boom will certainly benefit the industry.

International interest

The international superfruit industry discovered the value of yumberries before health drinks started to get popular among Chinese consumers.

  • US juice supplier SunOpta has entered into an exclusive supply agreement with China’s Zhejiang Yumberry Juice Co., Ltd to market yumberry juice concentrate in North-America. The harvested fruit is carefully selected, pressed, de-pectinised, filtered, concentrated and pasteurised, before being shipped to North America.
  • Bombilla and Gourd, a US tea drinks company, has moved into the fruit juices sector. Its new Super Fruits line, launched last April, comprises four blends: orange/ mango, yumberry/lime, açaí/blueberry and pomegranate/lemonade, in 600 ml plastic bottles.
  • Fruttzo, another US fruit juice maker, has introduced a yumberry juice range. The ruby red, 100% juice has no preservatives, added sugars or added colours and comes in pure 100% yumberry form, or blended with pomegranate, blueberry or cherry. It is packed in 12 oz recyclable glass bottles and is on sale nationwide.
  • In the UK, Uren Food Group‘s innovation division Juicevibe has developed a yumberry juice blend, claimed to be the first in the country. The 100% juice blend has been listed by a major retailer. Endorsed by Heart Research UK, it has secured approval from the Food Standards Agency so the fruit will not be subject to review under EU novel food regulations.

At this moment, it is still uncertain if the yumberry has a future in Europe. While the supermarkets in my home country are flooded with blueberries, which are often rather tasteless, perhaps because the growers want to cash in on the superfruit image, instead of concentrating on making a tasty product, I have never seen a yumberry of yumberry product, outside China. Whenever I do, I will add my finding to this post.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975.

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Mengniu – game changer of the Chinese dairy industry

China’s two dairy giants, Mengniu and Yili, are located in the self-styled Dairy Capital of China: Huhhot. What is their relation and the nature of their competition in the Chinese cultural context?

A blog needs to renew regularly. Although most of my posts introduce companies, after the post on COFCO I have never written another one featuring a single company. I will make up for that, starting with this post about one of China’s top dairy companies. This post is derived from a case study in one of my academic writings: Chinese Corporate Identity. Readers who are triggered to get a deeper understanding, please read that chapter, or better: the entire book.

Inner Mongolia – a bit Chinese and a bit Mongolian

Inner Mongolia is an administrative region of northern China of the same level as a province, but with a larger degree of political autonomy.

The greater part of Inner Mongolia is a plateau with elevations of about 1000 metres. The Yellow River flows north from Ningxia and forms a loop that encloses the Ordos Desert. Grasslands predominate on the plateau, where they sustain large numbers of grazing animals such as cows, sheep, goats, camels, and horses. Milk from all those animals has been part of the traditional diet of the Mongols. Apart from drinking the fresh product, milk is processed into a number of cheese and yoghurt like products. Horse milk is even fermented into an alcoholic beverage.

The population of Inner Mongolia is approximately 25 million, up from only 6.1 million in 1953. The rapid population growth since the 1950s is a result of better nutrition, increased health care services, and a substantial migration into the region of Han Chinese. More than 80% of the current population is Han. Mongols comprise the largest minority group in Inner Mongolia, and their presence is acknowledged by the government’s designation of Inner Mongolia as an autonomous region.

From orphan to entrepreneur

Mr Niu Gensheng (1956), Mengniu’s founder, is one of the most mythical among present day China’s entrepreneurs; more even than that of Jack Ma, the founder of Alibaba. Story has it that he lost his parents at the very early age of 3 months and was raised by a farmer called Niu (which ominously means ‘cow’). His foster parents gave him the name: Niu Gensheng.

Niu was hired by what was then called the Yili Dairy Factory in Huhhot, as a bottle washer, in 1978. From that humble position, he gradually worked his way up from work shop supervisor, subsidiary director, vice-director of the mother factory to Vice-President in charge of production of, what was then rename into, the Yili Group. Niu’s career did not pass by unnoticed. He has been granted a number of regional awards and was included in the 10 Top Young Entrepreneurs of Huhhot.

Ousted from Yili

For reasons that have never been actually expressed, a conflict developed between Niu and the other board members, resulting his removal from the board in November 1998. The Board issued a statement indicating that ‘Comrade Niu Gensheng no longer fitted his position.’ He was ‘advised’ to find a place to study outside his home region for at least two years. Judging by this ‘advice,’ it could have been that his fellow board members did no longer feel comfortable with a self-made man among their ranks. Niu grabbed this opportunity to enrol himself in the MBA course of the prestigious Guanghua Business School of Beijing University. He left Yili the following year.

Founding Mengniu

Already within the same year, 1999, Niu Gensheng and a group of more than 50 of his old subordinates at Yili and a number of private individuals, raised RMB 1.3 billion to establish Mengniu Dairy Co., Ltd. When asked during an interview how Niu could so easily convince a considerable number of his former colleagues at Yili to not only quit their comfortable positions, but also entrust a considerable amount of their savings to him, Niu’s own rationale was that he had the habit of sharing his income with his subordinates. His last salary as a Vice-President of Yili exceeded RMB 1 million, which he found more than he needed to make a good living. He often shared part of it with subordinates that he believed to have contributed to his success. In Niu’s eyes, he was cashing in on the goodwill thus accumulated during the establishment of Mengniu. This was good leadership in a communitarian culture like the Chinese.

Fastest growing private enterprise

At that point of Mengniu’s early age, the company was still in a situation Niu himself recalls as ‘four deficiencies:’ no raw milk source, no factory, no brand (he had registered a brand name, but it was unknown among Chinese consumers), no market. He contacted dairy plants all over China with a surplus capacity and contracted those to produce for Mengniu. Mengniu provided specifications, a brand name and technological assistance. Mengniu first created a market and only then built its own production facilities.

Mengniu turned out to be the fastest growing private enterprise in China’s history. The company generated a turnover of RMB 43 million in the first year of its existence, which was approximately 4% of Yili’s turnover of the same period. The turnover of 2002 was already RMB 2 billion, exactly half of Yili’s turnover of that year.

Foreign investment

A milestone in the history of Mengniu was its acceptance of foreign participation late 2002. Niu Gensheng himself had repeatedly stated in the national press that he was not in a hurry to follow Yili’s example in seeking registration on the stock exchange and expose Mengniu to the whims of speculators. It therefore was even a surprise to insiders when it was reported that Morgan Stanley, CDH Fund and China Capital Partners had signed an agreement with Mengniu to invest USD 26 million in Mengniu. As a result of that deal, the three foreign investors held a total share of 32%. According to a spokesperson of Mengniu, the Chinese side had attracted foreign participation to better compete with the other dairy giants like Sanyuan (Beijing) and Bright (Shanghai), that were heavily supported by their respective local governments. Morgan Stanley had already invested in a number of Chinese enterprises including Ping’an Insurance Company, Nanfu Battery Company and Heng’an International Group. CDH Fund had invested in 12 Chinese enterprises, also including Nanfu Battery and Sina.com, an important Chinese business Internet portal. China Capital Partners, a UK fund for investment in China, had invested USD 55 million in China since its establishment in June 2000. Following opening its door to foreign influence, Mengniu’s next step was to seek listing on the Hong Kong Stock Exchange in June 2004.

Cultural drivers of Mengniu’s success

Niu Gensheng’s strategy has never been to ‘push Yili from the market’, which would be the typical Western MBA textbook approach. Instead he kept praising Yili in his advertisements of Mengniu, position his company as a faithful follower of leader Yili.

He vouched in media interviews that Mengniu would not try to snatch raw milk sources from Yili and that Mengniu would never buy raw milk that did not comply with Yili’s specifications.

In the Chinese cultural context, Niu himself, and the Yili employees he had pulled from Yili, would still maintain friendly contacts with their former Yili colleagues. An aggressive strategy would not fit such relations. In the political field, the Huhhot authorities, while welcoming new entrepreneurial activity, would dislike a Western-style life or death fight between state-owned enterprise Yili and private newcomer Mengniu. Commercial competition must never harm the Confucianist ideal of harmonious society.

In short: Niu Gensheng’s entrepreneurial behaviour suited the Chinese communitarian culture and complied with the Confucianist principles of good governance.

Mengniu and Yili outside Inner Mongolia

During the following years and decades, Mengniu and Yili kept growing and expanding into other regions of China. In most regions, either Mengniu or Yili would be the first to enter, but the other would soon follow suit. While Mengniu kept profiling itself as the follower, in their de facto relationship they alternately acted as follower or leader (for concrete case studies see the above-mentioned book).

Mengniu turns SEO

The Chinese business world was shaken by the news that COFCO (see my post that positions COFCO as the next Nestlé) had acquired a significant share in Mengniu in 2009. The media, that had so far regarded Niu Gensheng as a favourite person to interview, now accused him of going against the tide. While privatization was the trend in Chinese economy, China’s most successful private company was now becoming a de facto state-owned enterprise. Niu was not shaken by the fierce criticism, as usual. He calmly replied that the real trend was that the differences between various types of enterprises in China (state-owned, private, foreign invested, etc.) were decreasing. He simply believed that Mengniu would be best off as a subsidiary of the emerging multinational COFCO. History has proven him right.

Food for thought

Mengniu Dairy’s entrepreneurial history provides a large bowl of food for thought. I will leave most of it for you, my readers, to think over. I will restrict to one challenging thought: considering the problems major dairy multinationals like Fonterra and FrieslandCampina are experiencing in China, how much could they learn from Mengniu, to grow roots in the Chinese cultural context? Nestlé, an early Western investor in China, seems to have done a good job in this respect. The key issue in embedding your Chinese subsidiary in the local society is forging valuable relationships, with business partners, but also with competitors.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975.

 

Shaji – seabuckthorn – the unknown superfruit

Shaji (sea buckthorn; Hippophae rhamnoides) is an indigenous fruit of North China. China is good for 90% of the world output of this fruit. It has been used as an ingredient of various foods and beverages in China for some time but is still not very well known abroad.

Shaji is regarded as a medicinal herb in TCM, but has been put on the official list of ‘herbs that can be used in food and medicine’ in 1987. Medicinal ingredients, including TCM, are not allowed to be used freely as food ingredients, but plants on that list are exempted from that regulation. The same applies for other super fruits like the yangmei (yumberry) introduced in another post.

Shaji have a high content of vitamin C, about 15 times greater than oranges. The fruit also contains high contents of carotenoids, vitamin E, amino acids, dietary minerals, β-sitosterol and polyphenols. Seabuckthorn oil is a good source for omega-7 fatty acid.

Shaji fruit can be used to make pies, jams, wines, etc. Fruit drinks were the earliest seabuckthorn products developed in China. Shaji berries are edible and nutritious, though very acidic (astringent) and oily, unpleasant to eat raw, unless ‘bletted’ (frosted to reduce the astringency) and/or mixed as a juice with sweeter substances such as juice of other fruits.

Sea-buckthorn berries combine nutritious agents usually only found separately. Its list of vitamin C, vitamin E and carotenoids reads like the label on a pack of multi-vitamin pills. All of these components are classified as natural anti-oxidants, which form a vital part of the body’s defence system.

Main Biochemical Contents of Seabuckthorn Oil

Contents Pulp oil (mg/100g) Seed oil (mg/100g) Residue oil (mg/100g)
Vitamin K 110-230 54-59
Vitamin E 206.9 171.0 300-600
Carotene 2.0-4.0 10-80
Carotenoids 30-250 300-870 1280-1860
Protein 95.55 7.06
Total acid 10.7 37.6
Total sterol 1093.6 720.6
Unsaturated fatty acids 87.4 % 66.8 % 70 %
Saturated fatty acids 11.8 % 38.8 %  –
Oleic acid 20-25 % 20-25 % 33 %
Linoleic acid 37.0 % 5-10 % 4 %
Linolenic acid 27.6 % 2.1 % 5 %
Unsaponificable matter 1-3 % 0.5-2.5 % 2-5 %
Total flavonoids 0.55 %

Since the discovery of the nutritional value of sea-buckthorn, hundreds of sea-buckthorn products made from the berries, oil, leaves, bark and their extracts have been developed.

China has become one of the largest producers and consumers of sea-buckthorn products in the world. Fruit drinks were among the earliest sea-buckthorn products developed in China. They have rapidly gained a reputation as both a satisfying drink and a nutritional beverage that enhances stamina and vitality.

Though seabuckthorn has been grown for many years in India and China, and its healthy qualities are well known, but it languishes behind other superfruits. While it is gaining increased recognition, seabuckthorn is lagging behind other so-called superfruits, such as açaí.

This is possibly because it has just slipped under the radar: applications are growing in the cosmetics and pharmaceuticals industry, and it is likely that the fruit will gain in popularity in the next few years.

The reason for China’s domination of the fruit is that China has long used the plant for soil and water conservation purposes. They typically grow in dry, sandy area, are tolerant of salt in the air and soil, and demand good sunlight.

The common seabuckthorn is by far the most widespread, with a range extending from the Atlantic coasts of Europe right across to north-western China. In western Europe, it is largely confined to sea coasts where salt spray off the sea prevents other larger plants from outcompeting it, but in central Asia it is more widespread in dry semi-desert sites where other plants cannot survive the dry conditions.

The female plants produce soft and juicy orange berries 6-9mm in diameter, rich in vitamin C (average 600mg/100g and sometimes up to 1 500mg/100g). Some varieties are also rich in vitamin A, vitamin E and oils.

The berries contain about 56-70% juice. However, the fruits have some drawbacks as far as processing goes. First, the shrubs are covered in thorns, which makes picking difficult. The fruit falls off the branches of its own accord at temperatures below -20°C, but obviously this method of natural harvesting will only work in very cold regions.

Entire branches can be removed, frozen, and then shaken to remove the fruits, but obviously this is damaging to the shrub. Mechanical harvesting, developed in the Baltic states, involves shaking the branches without freezing, but this method leaves half the berries unharvested and the shrubs can only be harvested every two years, so an effective annual yield is only 25%. In countries where labour is cheap, hand-picking remains the most effective way of harvesting seabuckthorn berries.

Must be blended

The other disadvantage is that pure seabuckthorn juice does not taste very nice. It has to be blended with other fruit juices in order to be palatable. It is also very high acid, so some form of sweetener (or a very sweet fruit juice) must also be added unless the juice is present in very small quantities in a blend. It lends itself well to being blended with pear juice, at a ratio of 30%. Seabuckthorn juice has a freezing point of -22°C, so it remains liquid even in sub-zero temperatures.

General consumer interest in seabuckthorn began about three or four years ago. China is ramping up its output of seabuckthorn. The total area in China under seabuckthorn is now a colossal 2.13 million hectares (ha), according to China’s National Administration centre on Seabuckthorn Development.

Of this total, 667 000ha are ‘wild’ trees and 1.5 million ha are cultivated, representing 90% of the world’s total population of such trees. The main purpose of seabuckthorn cultivation in China, as in India, is to control water and soil erosion and improve the ecological environment. The country is planting an additional 113 000 new seabuckthorn trees every year, as part of the Chinese government’s program to increase production of the fruit and its derivatives. The government is also funding schemes to develop new varieties which will require less or no watering during growth and which will produce much improved fruit yields.

Most seabuckthorn trees are planted in poor environments such as gullies and river beds. Fruit yields are very low. Under normal conditions, seedling plants begin to fruit in the third year and fruits will be harvested in the fifth year. Average yields are 0.75 mt/ha.

There are some 200 companies in China making seabuckthorn products, such as oils, pharmaceutical items and cosmetics. However, juice processing plants were first established in the 1980s, and plants to add the juice to other beverages appeared in the 1990s. In 2004, China produced about 10 000 tonnes of seabuckthorn juice.

Because of its healthy connotations, China sees it as an ideal fruit for organic production, and future development of seabuckthorn will move in this direction. Seabuckthorn is a key component in many health supplements and is now attracting attention as a component in juice drinks.

Shanxi-based enterprises unite

Shanxi province, China’s main producing areas of sea-buckthorn, set up an industrial association in Taiyuan, capital of the province, hoping to unite local enterprises to build their brands. This move came as most of the province’s sea buckthorn processing, production, and sales enterprises are facing operational difficulties. They hope to cooperate and adjust their industrial mode for future development. Statistics show Shanxi has more than 400,000 hectares of sea-buckthorn shrubs, accounting for nearly 70% of wild sea buckthorn across the country. Due to difficult harvest conditions and a long ramp-up time of 6 to 8 years buckthorn is a relatively expensive raw material.

However, in Shanxi, the fruits of sea buckthorn are commonly sold as fruit juice. The sea buckthorn industry is still at a very preliminary level as it has faced a series of problems, such as lagging scientific research, a lack of high-end products, small scale, poor marketing, and differentiated production standards. Other factors such as Internet sales and strong competition have squeezed the market share of Shanxi’s sea-buckthorn production companies. With its establishment, the association will help integrate industrial resources, give full play to their technology and talented people, and connect companies, bases, and farmers to form industrialization development modes.

Product overview

In this section I am introducing a few seabuckthorn-based products made in China to indicate how the fruit is currently used as a food ingredient.

Fine powder

Pure superfine seabuckthorn powder, void of any additive. Producer: Jinliang Food Technology Co., Ltd. (Shanghai).

Tea

Seabuckthorn tea produced by Wanmei (Perfect) China, Ltd. (Guangdong).

Ingredients: fructose oligosaccharides, seabuckthorn powder, black tea powder, citric acid, malic acid, Luohanguo (fructus momordicae ) extract, vitamin C, sucralose, lemon flavour,  ethyl maltol

Dried fruits

Dried seabuckthorn fruits, produced by Shihutang (Xinjiang). Consumption: put a few dried fruits in a cup of tea or glass of spirits (baijiu).

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975.

 

Tomatoes in the Chinese kitchen and even more for export

The tomato belongs to a large group of plants of the nightshade family. Its cousins include potatoes, aubergines and bell peppers, all popular ingredients in China.

No one can pinpoint the exact dates these vegetables were introduced to China, but the general consensus is that they came through both the overland and maritime trade routes. The national output of fresh tomatoes for 2017 is estimated at more than 56 mln mt.

There is a chicken dish cooked by the Uyghurs in the north-western entry point of Xinjiang Uygur autonomous region that combines almost all of them. Known as “big pan chicken” or dapanji, it is a rich, tomato-based stew with chunks of potatoes, lots of onions and plenty of bell peppers. That probably gives us a hint on the early beginnings.

Good ingredients are treasured by Chinese chefs who often go out of their comfort zones to seek them out. Foreign imports such as potatoes are now staples, and the chili pepper, too, has been naturalised.

The tomato’s brilliant colour and natural umami flavour have made it another essential ingredient. In fact, the classic sweet and sour dishes of southern China now depend mainly on the tomato, where it used to be the hawthorn fruit that coloured and flavoured in the past.

It used to be harvested only in summer, although it is now available all year round, thanks to bigger, better greenhouses and a countrywide logistics network that connects north to south and east to west. Xinjiang is currently by far the largest production region of tomatoes in China. This product has become so important, that China has started investing in tomato production in neighbouring Kazakhstan.

The northern Chinese mainly consume tomatoes raw, in thin slices liberally covered with caster sugar. More than a few Europeans have to grow accustomed to eating sweetened tomatoes. The most favoured hot dish with tomatoes is tomatoes with scrambled eggs (xihongshi chao jidan), which is everybody’s favourite. I used to travel in China with a Dutch client who was not a lover of Chinese stir fried dishes, but he did like scrambled eggs with tomatoes.

Tomatoes are now used to stuff dumplings, pairing with such stronger-tasting meats like beef and lamb, and is cooked down to a sauce for hand-cut noodles. It is not only used to accompany noodles, but is actually worked into the noodles themselves, like spinach.

The love of tomato-flavoured stews in north-eastern China can also be traced to the Russian influence of the past. For certain older generations, the only Western restaurants in the capital at that time served Russian food. For them, Russian food meant a strongly tomato-flavoured borscht, a hearty tomato and beef stew and minced-meat-stuffed cabbage rolls slowly stewed in a thick tomato sauce. That was the pinnacle of gourmet eating in restaurants with names like Old Moscow, or Kiev.

Times have changed. Modern Beijingers still love their tomatoes, but they are more likely to consume them as pizza sauce or over spaghetti. Modern chefs, many coming from overseas, have also introduced other new ways of eating tomatoes.

Tomato paste

The top industrial tomato product is tomato paste. If your mind connects tomato paste with Italy and Italian cuisine, you need to update your settings. China, in particular Xinjiang, has the world’s prime production region for tomato paste for a number of years. Several Italian companies import it in bulk an can the Chinese product in Italy, to export again as a ‘typically’ Italian product. However, the exports of tomato paste have been dropping, partly due to adverse weather conditions and partly to regional protectionism that is on the rise globally. China has exported appr. 852,000 mt of tomato paste in 2017. That is considerably lower than the top year 2011, when China exported 1,128,459 mt.

Tomato-based ingredients

Although exported could increase again, the Chinese tomato processing industry needs to look for tomato-based ingredients with a higher added value. One such product is lycopene. It is offered as a dietary supplement claiming to aid the prevention of cardiovascular diseases and prostate cancer.

A good indication of the current situation of any food ingredient in China is looking at the participants of the Food Ingredients China (FIC) 2018 trade fair (March 22 – 24, Shanghai). The following table shows exhibitors of various tomato-based products at that fair.

Product number
Sun-dried tomatoes 1
Dehydrated tomatoes 1
Tomato paste 3
Tomato powder 7
Lycopene 9

It seems that suppliers of tomato paste or dried tomatoes do not regard FIC as their typical trade fair. However, FIC is clearly the place to look for tomato powder and lycopene.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975.