Author Archives: Peter Peverelli

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About Peter Peverelli

I am passionate about many things, but the top three are: China, food and human organizing processes. I started learning Chinese when I was 14, spontaneously. In the end this resulted into a PhD in Arts (Leiden University; 1986), 10 years of working and living experience in China as a representative of a Dutch firm and a marriage with a Chinese partner (1984). During my work in a company (Gist-brocades, now part of DSM) and as an independent consultant, I became fascinated with organization theory. This has led to a second PhD in Business Administration (Erasmus University Rotterdam; 2001). I am currently combining both interests in a long-term research project studying Chinese entrepreneurship, with a number of Chinese partners. From the day I joined the company, I picked up an interest in food, not just the final product, but also how it is produced, with an emphasis on ingredients and formulation. Once more combining that interest with my China passion, I became an avid student of the cultural and societal function of food. In this blog, I hope to blend all those ingredients into a savoury soup about China, the Chinese food industry and how the organization of that industry differs from the West.

The Growth of China’s Tonic Wine Industry

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In 2022, the production and sales of Chinese tonic wine reached 5,896,000 and 5,893,000 hls respectively. The average price increased to RMB 0.61/hl in 2022. The value of China’s tonic wine market reached RMB 35.678 billion, of which medium and high-end accounted for about 49.10%, and low-end for about 50.90%.

Overview

Tonic wine is part of traditional Chinese medicine (TCM). It is prepared by soaking Chinese herbal medicines in distilled liquor, rice wine or other alcoholic beverages to extract the active ingredients of the herbs. Tonic wine is commonly used in TCM to treat specific diseases or symptoms, or for strengthening the health and immune system of the body. The preparation method and composition of tonic wine varies according to different formulas and uses. TCM generally divides tonic wine into nourishing tonic wine, blood circulation and stasis tonic wine, anti-rheumatic tonic wine and aphrodisiac tonic wine.

Zhangyu’s Three Wip Wine

Industry

China’s tonic wine industry has experienced a development process from traditional to modern, gradually moving towards the international market. Chinese tonic wine is becoming more and more popular in overseas Chinese communities and people interested in TCM. At the same time, the Chinese government has strengthened the supervision of the tonic wine industry by introducing relevant regulations and standards to ensure product quality and safety.

The value chain of tonic wine includes Chinese medicinal materials, liquor, rice wine, etc. China’s TCM materials and liquor production have a long history. Both belong to China’s traditional industries. In 2022, China’s TCM materials production reached 5.21 million mt and liquor production completed 67.12 mln hls.

The competitive landscape

Well known brands in the China’s tonic wine industry include: Zhangyu three whip wine (whip refers to an animal’s penis, the main ingredient of aphrodisiac wines), Guling Shenjiu, deer whip wine, Tongrentang, Ningxia Xiangshan Goji Wine, Zhizhonghe, Golden Wine. On the whole, the market concentration of China’s tonic wine industry is low, with a large number of small players.

Guling Shenjiu

Development

Tonic wine originates from the oriental TCM culture. Therefore, so far, the Asia is still the world’s largest tonic wine production and sales area. The Asia-Pacific tonic wine market accounts for more than 85% of the global market. However, with the continuous integration of Eastern and Western cultures, tonic wine is gradually accepted by Western countries. In recent years, the global tonic wine industry has developed rapidly. In 2021, the global tonic wine industry market size exceeded USD 6 billion, and it is expected to exceed USD 7.3 billion in 2023.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success

The Rise of Sesame: From Ancient Crop to Modern Delicacy in China

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In 2011, China’s sesame production was 457,600 mt. The overall sesame demand showed a fluctuating growth trend. In 2022, China’s sesame demand reached 1,461,100 mt, significantly higher than domestic production. China’s sesame planting area in 2021 reached 285.4 thousand hectares, a slight decrease from 292.07 thousand hectares in 2020

Overview

Sesame is an annual herb found mainly in tropical and some temperate regions of the world. Sesame seeds are an ancient species that has been cultivated for more than 5000 years. According to legend, it was introduced to China from the Western Regions during the Western Han Dynasty. Sesame seeds are one of the main sources of edible oils in China, with an oil content of up to 45% – 63%. Sesame seeds are rich in protein and unsaturated fatty acids, which have a high nutritional value. At present, domestic sesame is mainly used for the production of sesame oil, and its processing technology mainly includes water substitution, pressing and the enzymatic process, of which water substitution method is China’s traditional sesame processing sesame oil method. The water enzymatic method is a new extraction process with good prospects.

Sesame paste is the most important condiment in Chinese hot pot meals. It is the base of the condiment mix in which you dip the boiled food, before eating it.

Wangzhihe sesame paste, one of the oldest brands of this product

Innovating with sesame

Sesame may be a very traditional product, its flavour keeps attracting even the young and hip consumers. Late 2023, coffee chain M Stand Coffee launched sesame latte. Chinese have a sweet tooth and most like their coffee sweet. So, why not use sesame as a sweetener and create a novel flavour at the same time?

The sesame value chain

In the sesame value chain situation, upstream mainly consists of sesame seeds, pesticide fertilizers, nutritional supplements, land, farmers and agricultural machinery, etc. The middle stream is mainly about the growing of sesame. The current overall domestic sesame planting is rather scattered. Downstream includes various sesame products: sesame oil, sesame paste, complex protein powder, etc. China’s sesame processing enterprises are mainly small individual workshops. There are only five brands with an economy of scale (Jinlongyu (COFCO), Totole, Dingzhi Food, Nanfang Black Sesame and Ruifu Oils. With the continuous expansion of downstream sesame applications, all kinds of snack foods including sesame are gradually increasing, which is expected to drive the continuous growth of sesame demand. In the future, sesame research and processing will gradually extend to fine chemicals, cosmetics and medicine.

Sesame processing

As a high value cash crop, sesame seeds have a wide range of application. Its fields of application can be divided into: oil, food, industrial, medicinal, and feed. In terms of the current situation of supply and demand of sesame seeds in China, the output has been stable at about 350,000 – 500,000 mt for many years. In 2022, China’s sesame production was 435,300 mt, up from 457,600 mt in 2021. The overall sesame demand shows a fluctuating growth trend. In 2022, China’s sesame demand reached 1.4611 ml mt, significantly higher than domestic output. The remaining demand needs to be fulfilled through imports.

Jinlongyu sesame oil

Impex

China’s sesame imports increased from 389,300 mt in 2011 to 1,173,500 mt in 2021. Imports in 2022 were repeatedly affected by the pandemic, combined with high prices. China’s sesame imports fell slightly to 1,070,900 tons in 2022. China’s sesame exports in 2021-2022 were 46,900 mt and 45,100 mt, respectively.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success

China’s Yak Industry Growth: Market Trends and Insights

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Yak is a characteristic breed of livestock in China’s higher elevations, mainly distributed in the Qinghai-Tibet Plateau and surrounding areas. More than 95% of the world’s yaks are produced in China. Yak meat, milk, bone, hair and other yak products have their unique characteristics or uses. In recent years, China’s yak breeding scale has continued to expand. In 2021, China’s yak slaughter volume reached 3.78 mln head. Regionally, the total number of yaks in Qinghai, Sichuan and Tibet accounted for more than 80% of the national total yak inventory in the country.

The value chain

The whole yak industry chain includes breeding, processing and sales, the upstream of the yak industry chain is feed, vaccine, veterinary drugs and other enterprises, feed enterprises from oil mills or dealers to purchase soybean meal, corn, etc. mixed into feed, for breeding to provide necessary food raw materials. Yak breeding related enterprises are in the middle of the industrial chain. The downstream processing and circulation links are specifically subdivided into primary processing and intensive processing products such as yak beef, milk, fur, etc., and flow into supermarkets, wet markets, catering industries and other distribution places, to finally reach consumer outlets.

Development

Yak breeding is subsidized by the government and belongs to the construction of the national agricultural product quality and safety traceability management information platform and the development of the national agricultural product quality and safety traceability management information system. The State has issued the “Ministry of Agriculture Support for the Green Development of Agriculture and Animal Husbandry in Tibet” to assist farmers and herdsmen to increase their income. Yak raising in the unpolluted alpine area has become a symbol of natural green food, known as the crown of beef yak products in domestic and foreign exhibitions many times, including many awards, have won extraordinary evaluation, to yak fluff, fur made of items frequently appear in major fashion weeks, with its warmth and decorative advantages, internationally respected, with the attention of governments at all levels, scientific research workers and the continuous updating of research methods, modern biotechnology will play an increasing role in yak production.

Current state of development

With the popularization of the consumption concept of buying organic and green products, the global market will increase the demand for high-end meat products, yak meat as a high-grade meat product, with obvious high protein content, low fat content, low cholesterol, meat tender and other high-quality characteristics, at the same time, yak milk, yak skin, yak hair and other products are also welcomed by consumers in various countries. In recent years, global yak breeding has continued to expand. In 2021, the global yak stock reached 17.3465 million head, and it is expected to reach 18.9613 million in 2023. From the perspective of regional distribution, the yak is mainly distributed in China, Mongolia, Russia, Afghanistan, Pakistan, Sikkim, and Bhutan.

Market prospects

Yak as one of the world’s three major alpine animals, yak meat is known as the “crown of beef”, is semi-wild natural green food, yak meat protein content, low cholesterol content, rich in a variety of amino acids, vitamins and calcium, phosphorus, iron and other minerals, with the improvement of people’s living standards and the change of consumption concepts, yak meat market demand is gradually increasing, broad market prospects.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success

China’s butter market

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Just like cheese, Chinese consumers have never been fans of butter. This is not primarily based on health concerns. Most of them dislike the odour and flavour of butter

According to the ‘2021-2027 China Butter Industry Development Status and Development Trend Forecast Report’, butter in China has a small output, low market awareness and low per capita consumption. In 2020, China’s butter production was only 110,000 mt, up from 98,000 mt in 2016.

As one of the typical ingredients for Western meals, butter has gained a foothold in Chinese kitchens with the gradual popularity of Western pastries, in spite of the common dislike of butter itself. In 2020, China’s demand for butter was 195,000 mt; up from 160,000 mt in 2016.

Imports

China’s butter production is small, and the market demand mainly relies on imports. In 2020, China’s butter imports were 86,000 mt; up from 63,000 mt in 2016; China also exported 1000 mt of butter in 2020. In 2020, New Zealand accounted for the highest proportion of China’s butter imports, with 66,832.357 mt; followed by France with 5,633.668 mt; and Australia with 3,004.053 kg.

Trends

With increase of home baking, the demand among Chinese consumers for butter is bound to increase. When buying butter, consumers are most concerned about whether the butter is fresh, followed by the popularity and price of their brand. However, the higher the dosage, the higher the user’s requirements for whether the butter itself is rich in milk, beating state, and milk source.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success

Sheep Intestine Soup: A Unique Vending Machine Option in Beijing

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Recently, some Beijing subway stations have installed vending machines selling prepared meals: sheep intestine soup (yangzatang) and sweet corn, priced RMB 12 and 9 respectively.

A number of Chinese food manufacturers and restaurants have already developed vending machines for prepared meals and this is the next step in the process of relieving busy Chinese office workers from work in the kitchen.

Recently, a reporter from Beijing Business Daily found that yellow prepared meal vending machines had appeared in many Beijing subway stations such as Shilihe Station. On the machines, you can see texts like: “DT Canteen”, “breakfast and dinner are here”, “take away from work in the morning, heat up and eat in the office”, “take away after work at night, prepare breakfast for the next day”, etc. It is not difficult to see its intention is to target office workers and hope to solve their needs of breakfast and dinner meals.

The reporter learned that among the products sold, sheep intestine soup is a DT Canteen’s own brand product. By the end of April, DT Canteen had put a total of 10 retail cabinets in Guomao, Shuangjing, Shilihe and other subway stations in Beijing.

According to Sun Wei, the head of Jilin Wanlongjia Technology Co., Ltd., the operator of DT Canteen, vending machines that provide drinks in the subway are more common, but not many provide meals. In order to cooperate with the subway’s strategy and meet the living needs of office workers and other subway customers through the promotion and sales of pre-made dishes, Jilin Wanlongjia Technology Co., Ltd. launched a new brand DT Canteen suitable for subways.

Regarding the future development plan, Sun Wei revealed that DT Canteen will introduce prepared dishes of major local cuisines, celebrity chefs, and well-known food brands. In addition to the subway scene, DT Canteen signed a cooperation agreement with Huazhu Group, and plans to enter into its youth apartment brand “Chengjia Apartment” in May 2023 to roll out the prefabricated meal there.

Wang Peng, a researcher at the Beijing Academy of Social Sciences, believes that with the rapid development of the prepared meal market, competition is becoming more and more fierce, and there are problems such as homogenization. We can expect more developments in the near future.

Comment

The sheep intestine soup is an interesting choice for the first batch of prepared meals offered through vending machines in Beijing subway stations. Beijingers are in general not so keen on mutton, with the exception of the traditional Mongolian Hot Pot (shuanyangrou) a fondue with thinly sliced mutton. Perhaps DT Canteen expects that many domestic imigrants, many of whom are Muslims, will buy this product.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success

The Chinese health food market in 2023

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Health food has been one of the fastest growing food industry sectors in China for many years. However, the COVID-19 pandemic has fastened the growth even more. The number of newly registered health food companies increased from 2,985 in 2017 to 13,893 in 2022. 2,082 new companies were registered in the first two months of 2023.

The following table shows the annual number of newly registered companies per year from 2017 up to the first two months of 2023.

The total value of the Chinese health food market in 2023 is estimated at 219.7 billion. The following table shows the development of this key figure from 2016 to 2013.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success.

China’s lactic acid industry in 2022

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An organic acid with a long history and importance, lactic acid and its salts are widely used in the food industry. The national and local governments in China are actively promoting their production. In January 2023, the Ministry of Industry and Information Technology, the National Development and Reform Commission and six other departments jointly issued the “Three-Year Action Plan for Accelerating the Innovation and Development of Non-food Bio-based Materials”, proposing to accelerate the construction of standards such as physical and chemical properties, different process performance, and degradation performance under different conditions around key bio-based materials such as polylactic acid.

Key facts & figures

During the period from 2017 to 2022, the average export price generally maintained a growth trend, and the average export price in 2022 was USD 1.71/kg, an increase of 13.79% year-on-year. According to statistics, the global lactic acid production capacity increased from 750,000 mt in 2021 to 995,000 mt in 2022, an increase of 32.67%; China is the world’s second largest consumer and the largest exporter of lactic acid, accounting for about 50% of the world’s production capacity.

Leading company: Jindan Technology

Jindan Technology has been focusing on R&D and production of lactic acid and its series of products for many years, including clean production of strains, the production of ethyl lactate, and the application research of new lactic acid antibacterial agents in the feed industry. In emerging fields, Jindan Technology has conducted research into green organic catalyst conversion, and biodegradable polymer technology to facilitate extending the company’s industrial chain to the downstream biodegradable plastics industry. In 2022, Jindan Technology further increased R&D investment, with a total of R&D expenses in the first three quarters of RMB 0.44 billion, up 18.34%。

Foreign trade

The export volume of lactic acid and its salts and esters in China is much greater than the import volume. During this period, China’s imports of lactic acid and its salts and ester products generally maintained a relatively stable growth trend, with a total of 16,200 mt in 2022, up 9.44%. The export volume of lactic acid and its salts and esters in 2022 totaled 88,100 mt, up 7.73%.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success.

Healthier Alternatives to MSG: Totole’s Innovation Journey

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After the development of industrially produced MSG, China soon became the world’s largest producer and consumer. However, MSG also has certain health hazards (like the so calle ‘Chinese restaurant syndrome’), so the search for healthier flavour enhancers continued. Chicken powder, actually a combination of powdered chicken meat, salt and MSG, was launched in China towards the end of the previous century as a new generation flavour enhancer. Taitaile (literally: “the lady (of the house) is happy”) became the leading producer. It adopted Totole as its official English name.

Established in 1988, Shanghai Totole Food Ltd. is one of the parties involved in drafting the national industrial standards for chicken bouillon and chicken powder in China. In 1999, Totole linked up with Nestlé to take full advantage of international resources to accelerate product and technology research and development. Adhering to the corporate vision of “Totole Makes Life Better”, Totole has been committed to the research and promotion of umami science, driving the technological innovation of umami industry, and constantly bringing healthier and tastier condiments to the consumers. A Totole Sales Conference was held in Shanghai in February 2023, on which the firm confirmed its goal of achieving sales of RMB 10 billion in 2023.

第一支柱产品：三鲜鸡精

2022 has been a challenging year for Totole and a year of accumulation and breakthroughs – Totole keeps pace with changes in consumer demand and continues to innovate in diversified categories and international market development. The company also engaged in the field of sustainable development, helping green public welfare projects.

Two-wheel drive

Since its establishment more than 30 years ago, from the initial production of umami products represented by chicken essence, Totole has developed into a diversified condiment enterprise covering two categories: solid compound flavour seasonings and liquid freshening seasonings. The strategy is referred to as “two-wheel drive”. Chicken powder (essence) will remain its flagship product, but most R&D effort will go to developing liquid and finished products. These includes ranges of instant soup, compound spices for home cooking (e.g. yuxiang

太太乐产品全家福

Domestic marketing

At present, some emerging channels such as O2O, group buying, and e-commerce are playing an increasingly important role in the Chinese condiment industry. In terms of O2O, Totole takes “fast response, multi-innovation and high efficiency” as the criterion, focuses on cross-brand joint activities, fully explores the application scenarios and convergence points between various brands and products, and customizes a total of 12 joint activities on Meituan, Yonghui, Hema and other online platforms. With the help of on-site media tools like DTC (direct consumer)/community group buying, Totole can accurately reach the consumers and accelerate the integration of product and application.

International marketing

Totole is also committed to spreading the concept of “umami” to all parts of the world. At present, its products have been exported to more than 70 countries and regions such as the United States, Canada, Indonesia, the European Union and the United Kingdom, Japan, South Korea, Singapore, Malaysia, Cambodia, the Middle East and Africa. The company is set to improve its Halal certification, and has obtained the European Shandong Halal, the American IFANCA Halal, the Asian Halal and the MUI (Indonesia) certifications to effectively compete in the Muslim nations. Totole mushroom essence, the next generation of flavour enhancers after chicken powder, has won the title of Top Brand in the Indonesian market.

I am sure that I will be able to extend this post soon with new developments at Totole.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success.

China’s Top Milk Tea Brands Embracing Health Trends

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It is not news that milk tea is outrageously popular in China. Young people are at times willing to line up for ours to sample a new flavour of a newly opened shop. However, there is clash of interests in the popularity of the colourful beverages. Chinese consumers are talking all day about more healthy eating and drinking milk tea definitely does not fit into that realm.

The various brands are engaged in a murderous competition and the less than healthy image of the product does not make that battle easier. Recently, the brands have started to work on that image and their competition for the healthiest version has become as fierce as the one for market share.

A relatively easy aspect to work on is sweetness. In line with the ongoing no sugar no salt no fat vogue in the food and drinks markets, many top brands have started advertising with their favourite sugar substitute. In this post, I am showing a few of these ads.

Nayuki

Nayuki (Naixue) has chosen the monk fruit (luohanguo or arhat fruit, in Chinese). This gives its sweetening a very Chinese image. The ad claims 0 calorie sweetener and also adds that it is ‘vegetable sweetness’, which sounds very natural.

Hi Tea

Hi tea (Xicha) is is sweetening with stevia. This, according to the ad, decreases the energy content with 90%. The ad also tells us twice that stevia is a natural sweetener. This is supported by the Chinese name for stevia: tianjutang, literally ‘sweet chrysanthemum sugar’.

Baifen Tea

Baifen Tea (Baifencha) has selected a less common sweetener: L-arabinose. The add uses a pun ‘pa tang bu pa tang’ ‘afraid of sugar not afraid of sugar’. This is based on the fact that the final character of the Chinese translation of arabinose (alabotang ‘arabian sugar’) is tang. A minor problem with arabinose is that Baifen Tea cannot claim zero calories, as this sweetener is low caloric.

Anyway, Chinese milk tea companies keep looking for more alternative sweeteners as well as alternative ingredients for the fatty ingredients. I will keep you abreast on this page.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success.

The Chinese creatine industry (2022)

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Creatine is an amino acid located in the body’s muscles as well as in the brain. Most people get creatine through seafood and red meat. The body’s liver, pancreas and kidneys also can make about 1 gram of creatine per day. The body stores creatine as phosphocreatine primarily in the muscles, where it is used for energy. As a result, body builders take creatine orally to improve athletic performance and increase muscle mass.

Overview

Creatine is made up of arginine, glycine and methionine The substances synthesized by three amino acids can be synthesized by the human body itself or ingested from food, and the common creatine on the market currently includes creatine monohydrate, complex creatine and creatine compounds. Creatine not only provides energy quickly, but also increases strength, builds muscle, and speeds up fatigue recovery. The more creatine is stored in the body, the more energy is supplied, the faster fatigue recovery and the stronger the exercise energy. Creatine can be used as a nutritional enhancer, food additive, pharmaceutical raw material and health care product additive, and can also be directly made into capsules and tablets for oral administration; In addition, creatine can also be used as a cosmetic surfactant, feed additive and creatine derivative.

The industry

Compared with overseas markets, the Chinese creatine industry has certain advantages in raw materials, energy and environmental protection. Driven by the downstream market, the capacity growth of the domestic creatine industry is high, but the overall capacity utilization rate leaves to be desired, with a capacity utilization rate in 2021 ofchina approximately 67.3%. In 2021, the domestic creatine production capacity was 43,000 tons. Actual production was 28,949 tons, with a compound growth rate since 2016 of 6.52%。

Demand

At present, Chinese creatine is mainly exported as primary product. Foreign markets are more mature, domestic market consumption is still in the development stage, but with the growth of demand for creatine downstream applications, the creatine market is expected to grow in the near future. The domestic demand for creatine in 2021 was 7808 mt, with a compound growth rate of demand since 2016 of 7.78%.

Creatine is widely used in medicine, food, health products, feed, chemical industry and other fields, in 2021, the demand for creatine in the fields of medicine, food and health products in China was 3425 tons, and the demand for creatine in feed, chemical industry and other fields 4383 tons.

Prospects

With the issuance of the Opinions of the State Council on the Implementation of the Healthy China Initiative and the Healthy China Action (2019-2030), a disease management and health service model of combining medical and physical education is currently being promoted at full speed. This has become a new trend of cross-integration of the big health industry and the big sports industry and is expected to give a big boost to China’s sports nutrition industry. With the improvement of the living standards of Chinese consumers, the demand for sports nutrition products is rising, and a large number of people want to take sports supplements to improve sports performance or improve physical condition. 30% of Chinese (urban) citizens were regular exercisers in 2020, though only a minority of them were members of a local gym. Still, the number of Chinese who frequent fitness centres increases steadily.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation. He is a co-author of a major book introducing the cultural drivers behind China’s economic success.