China has produced 32,504,405.3 mt of wheat flower in the first 5 months of 2020; Henan was the largest region good for 27.36%.
Flour is an important food ingredient in China, both for the industry and the consumers. The nation currently consumes 70 mln mt of wheat flour per year. However, with the increasing spending power, the per capita consumption of flour has started to decrease recently. According to the State Statistical Bureau, the per capita consumption of flour in 2018 was 109.7 kgs, down from 121.3 kgs in 2012.
When I first came to China to study in 1975, flour and flour based products were still distributed using a system of coupons. When you bought biscuits in a shop, or ordered a bowl of dumplings in a restaurant, you were not only required to pay with cash, but also with grain coupons denominated in the weight of what you had purchased.
Those days lie behind us and flour is now available in abundance. However, it is still regarded as a strategic product. This is reflected in the selection of flour as a key carrier of nutrients in the state sponsored public nutrition program.
China has produced 88,749,600 mt of flour in 2018; down 33.70%. The main reason for this sharp decrease is an overhaul of the industry in which part of the existing overcapacity has been reduced. The overall industry is in good shape. The country has produced 84,800 mt of premixed flour in 2018; up 15.37%. Insiders expect that the Chinese demand for premixed flour will increase to 165,000 mt in 2025. In 2020, China’s top three flour producers (Wudeli, Yihai and COFCO) combined are good for 30% of the national daily processing capacity.
The following table shows the regional breakdown of the 2018 production and the ratio of each region in the total national output.
|Region||Volume (mt)||Ratio (%)|
Decrease in demand deemed temporary
The demand for flour has been decreasing steadily during the past few years.
However, insiders name the gradual decrease of the population growth as the major factor behind this trend. They therefore expect that the demand for flour will start increasing again with the population growth that will be caused by the loosening of the family planning policy.
Formulated flours, i.e. flours specially formulated for a specific end-product like dumplings, fried dough sticks (youtiao), steamed bread (mantou), etc., are gaining popularity in China. This makes the country a market that suppliers of various flour ingredients cannot afford to ignore. Apart from enzymes, emulsifiers and other ingredients commonly used internationally, a number of vitamins and minerals are also allowed to be added to flour.
This chain comprises four main types of companies, which we will indicate using single letters:
|E||End-users, the companies that produce bread and other products, and consumers|
|I||Producers of compound flour improvers|
|A||producers of addtives and ingredients|
In situation 1, by far the most common chain, the flow ends at the end-users, that receive premixed flours, which contains various ingredients. The end-users only add yeast (when needed), and ingredients as required by their recipes. The end-users in this situation are typically smaller companies, producing more standard products, and consumers.
The larger end-users prefer to assign the millers to produce tailor made premixes based on their own recipes. The top millers can also assist the end-users in optimizing their recipes.
Small and most medium sized bakeries do not buy single ingredients. They buy flour improvers and selected the improver that suits each of their recipes best, usually by a trial-and-error. Small bakers are open to exchange their experience with flour improvers when they meet during conferences, trade fairs, etc., and nowadays also on the Internet in one of the numerous trade related chat rooms.
In both situations, the improver manufacturers are the main target for suppliers of ingredients. Improver companies are usually established by scientist with specialist knowledge needed to select the ingredient for their flour improvers. Using this same knowledge and experience, they can help end-users optimizing their recipes. A very practical side of this is that it makes manufacturers of improvers relatively easy to talk with for suppliers in general and non-Chinese ones in particular.
The second in line as target for suppliers of flour ingredients would be the top millers, with sufficient in-house R&D capabilities.
Eurasia Consult’s database includes 641 producers of flour.
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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.