What on earth are . . . youtiao?

It has been some time that I uploaded a ‘What on earth . . .’ post, so here is a new one. Youtiao literally means ‘oily stick’. That does not sound very appetizing, which would be inappropriate for a traditional food that virtually every Chinese likes. A rather long English rendition I have come across is ‘deep-fried bread stick’. This is more like a description than a translation. If I remember correctly, I have also once read ‘fritter’ as the translation for youtiao somewhere. That is certainly a convenient one, but our fritters are incomparable with youtiao. In line with the philosophy of this blog, let’s not translate this word then and get used to youtiao, as my regular readers should be used to mantou by now (in case you have forgotten this term, look it up using the convenient search function of this site).

Youtiao are deep-fried twists of dough. They are almost exclusively a breakfast food and are usually eaten with congee or with a bowl of steaming sweetened soy milk. The vendors get started at around 5 am and are still making them way past eleven, for all the late-risers. It’s so commonplace to see someone in pyjamas and flip-flops walking back home with a plastic bag filled with three or four youtiao for the family breakfast. The reason is that youtiao are delicious when then have just left the deep-fryer, but their texture quickly becomes rubbery with the lowering of the temperature. Making them at home is not a real option. It is a waste of oil and the oily fumes are not good for your walls, furniture, your clothes and anything else in your home. Better have a street vendor fry them for you in the open air.

Youtiao are fantastic when pulled fresh from the deep-fryer. The foot-long bread can be separated into two side-by-side pieces, with a crisp, almost waffle-like exterior, and a light and chewy interior. Like all fried things, the flavour depends entirely on the quality of oil being used and the freshness.

Youtiao are made from yeast dough, rolled flat, then cut into short narrow strips. Each strip is placed on top of a second, then pressed lightly together lengthways to make the join that can later be pulled apart after cooking. The baker then deftly twists and stretches them until they are the right length, and lays them side by side in the deep fryer until they are golden brown and nicely crisp.

                   

Here is a typical recipe for youtiao dough.

Ingredient dosage
wheat flour, sieved 500 g
yeast 1/2 teaspoon
sodium bicarbonate 1/4 teaspoon
water 1 1/4 cups
sugar, diluted in the water 1 teaspoon
salt 1/2 teaspoon

Special flour (improvers)

As I have reported in several posts on flour-based products, Chinese flour producers have developed specially formulated flours for youtiao. The motivation is not so much to encourage Chinese consumers to make their own youtiao at home, but to stimulate the industrial production of youtiao. The same applies to the development of flour improvers for youtiao. Several producers of flour improvers are offering improvers for youtiao, containing mixes of enzymes, improvers, starch, etc. A popular brand of youtiao flour is Beijing-based Guchuan.

This product lists the following ingredients:

Wheat flour, starch, sugar, salt, food additives (sodium bicarbonate, sodium pyrophosphate, calcium dihydrogenphosphate, calcium carbonate, citric acid)

Industrial production

The main challenge for industrial production is to retain the crispy texture of youtiao. Perhaps a workable solution would be a semi-finished youtiao that consumers can buy in their supermarket and heat in an oven or air-fryer.

There are several manufacturers of quick frozen classic youtiao. China’s leading producer of traditional snack food Sanquan, has developed a fennel flavoured youtiao. They are somewhat smaller than regular youtiao.

You can baked then off at home. Ingredients:

Wheat flour, water, vegetable oil, spring onions, fennel, salt, yeast, spices.

Whenever Sanquan comes up with a product, competitor Sinian can’t afford to lag behind. Sinian has launched a small type of youtiao that can be eaten with hot pot, hence the name Hot Pot Youtiao.

The ingredients listed are:

Flour, vegetable oil, water, salt . . .

That ‘. . .’ is not very nice to the consumers, but I will revert as soon as I have the entire ingredients list.

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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Belt and Road – Wheat and Yeast, and more

By now, the new motto of the Chinese government, One Belt One Road (OBOR), is known all over the world. Not only the national government, but also local governments in China, enterprises, and universities are rephrasing their goals and strategies in terms of OBOR. During my recent travels in China, I stumbled over an interesting story relating OBOR to the food industry.

I have already posted a number of stories featuring wheat flour in this blog, including texts focusing on flour improvers, bread, and steamed bread (mantou). This is certainly not overkill. China has been the world’s largest importer of wheat for a number of years. The import volume in the 2015-16 season is estimated at 2 mln mt, an increase of almost a third compared to the previous season.

An important reason for that increase is the growing consumption of bread in China. Chinese domestic wheat is relatively low in gluten, which is fine for traditional Chinese products like steamed bread, dumplings or noodles. Bread, however, requires wheat with a higher gluten content. China used to import such wheat from Australia, the USA and Canada, but an emerging source of high gluten wheat for China is Kazakhstan. Chinese wheat imports from Kazakhstan increased from 40,000 mt in 2010 to 250,000 mt in 2014.

KazakhFlour

The fact that China and Kazakhstan are neighbours makes them more obvious trading partners than those faraway Western nations. However, the story is more complicated, more related products are involved, in particular another essential ingredient of bread: yeast. The favourite staple of Central Asia, the nan, is also a baked product using yeast.

Yeast feeds on molasses and Xinjiang, the Chinese border region with Kazakhstan, is an important sugar region in China with 14 sugar plants producing 250,000 mt of molasses p.a. Along the region’s Uighur majority, Xinjiang is also the home of a considerable Kazakh minority. Moreover, Kazakhs and Uighurs share the same Muslim religion, so there is a mutual understanding regarding Halal food regulations. This motivated China’s top yeast producer Angel (Yichang, Hubei) to establish a subsidiary in Yining, a city in Xinjiang close the border with Kazakhstan. A considerable part of the produce of that plant is exported to Kazakhstan. According to one source, ‘Chinese yeast is a famous in Kazakhstan as Coca Cola or Marlborough’.

Angel

Meanwhile, China has started investing in the continuous supply of high gluten wheat from Kazakhstan through an intensive aid program. The country’s wheat output in 2011 was 26.9 mln mt, but was almost halved in the following year, due to severe drought. The average wheat output per hectare in Kazakhstan is about 1/5 of that in China. The Chinese authorities have organized a number of government agencies and companies to combine their expertise in helping Kazakhs to improve their wheat production. One tractor maker in Shandong has developed tractors specially geared to the conditions in Kazakhstan. Chinese experts believe that this development aid can unlock the potential of another 20 mln mt of high gluten wheat p.a. And yes, much of that will find its way to China.

Oil from Kazakhstan – from buying to producing

The Aiju Grain and Oil Industry Group (Xi’an, Shaanxi) imports cooking oil, wheat and flour from Kazakhstan. Aiju’s Chairman noted during his visit of a trade fair in Almaty in 2015 that a considerable acreage of rich arable land is left unused in Kazakhstan. Aiju is now building two factories in the region, which will process up to 1000 mt of wheat and 1000 mt of sunflower oil a day, as well as a base to plant wheat and sunflower seeds over 33 hectares. The base will be finished by 2020 and create 300 jobs. Aiju intends to bring high-efficiency planting and processing technologies to Kazakhstan, which will help with local economic development. The company also plans to start importing beef, mutton, honey and milk from Central Asia too. This includes other countries besides Kazakhstan. Bai Qinbin, deputy director of port management for the Xi’an International Trade and Logistics Park, said the city’s large transportation network can help boost trade and investment between China and countries involved in the Belt and Road Initiative. “We are working on starting a service between Xi’an to Teheran this year, as the Middle East is in great need of Chinese goods, especially food and commodities for daily use.” Xi’an is one of the most important multimodal infrastructure hubs in China.

Tomatoes and more

The role of Xinjiang in the development of Kazakhstan’s food industry does not stop at wheat and yeast. Xinjiang is already the world’s largest supplier of tomato paste. One of these companies has invested in a tomato processing plant in Almaty. Chinese companies have so far offered to invest USD 1.9 bn to upgrade Kazakh food processing industry with 19 projects such as tomato, chicken and meat processing plants. According to Gulmira Isayeva, Kazakhstan’s deputy agriculture minister, Beijing’s USD 40 bn Silk Road Fund is planning investments in three projects, including one to move three tomato processing plants from China to Kazakhstan. Investments under consideration in Kazakhstan’s agriculture sector include USD 1.2 bn by Zhongfu Investment Group into oilseed processing; USD 200 mln into beef, lamb and horsemeat production by Rifa Investment; and USD 80 mln into the production of tomatoes and tomato paste by COFCO, China’s state agriculture conglomerate.

OBOR as milky way

Yili (Huhhot, Inner Mongolia; aka China’s Dairy Capital) has broken into the ranks of the world’s top 10 dairy makers in 2016, ranking 8th. The company is advertising its global strategy in terms of OBOR.

YiliOBOR

So OBOR really can create win-win situations.

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.

Bread in China – from snack to staple, though still for the young urban

Western style baked bread is not a staple of the traditional Chinese diet, but it has been quickly catching up among China’s urban middle class during the past 20 years, in which China’s baking sector has grown by 10% annually, and bread has been the main driver product.

According to a staff member of the bakery chain BreadTalk, 80% of their clientele were foreigners, when she started working there in 2005. This has changed completely, and now Chinese are the main customers.

A product for the young and the affluent

When you take the time to observe the activities at any bread store in a Chinese city, you can observe that at least three quarters of the regular domestic patrons are (young) professionals, white collar workers. Older people still regard bread as something that is foreign. They do not dislike it, but it is something you consume occasionally, as a snack.

Moreover, bread is still regarded as relatively expensive. Teenagers and students like to ‘hang out’ in and around bread and cake shops, because they like to cozy ambience that all chains like to create. However, they only occasionally actually buy Western style bread or pastry, because it is too expensive.

Chinese like it soft

When bread first started to come up in the mid 1980s, the preferred type was the soft, white bun, with a relatively sweet flavour. It had to be extremely soft. As one European bakery technician with whom I used to travel through China put it like this:

‘Chinese bread should be made of such a texture, that you can put it in an ordinary envelope, put a stamp on it and send it to your friend. When your friend opens the envelope, the bread should restore to its original shape’

This has started to change recently. Chinese consumers are gradually learning to appreciate more salty types of bread, bread with harder crusts, and whole grain bread.

Bread is also gaining ground in the breakfasts of more and more urban Chinese, replacing porridge, fried dough sticks (youtiao) and steamed bread (mantou).

The sandwich is starting to replace the bowl of (instant) noodles a Chinese office worker typically eats for lunch. The advantage of bread over these traditional breakfast and lunch items is time: you can buy a week’s supply of bread, while traditional breakfast and lunch need to freshly prepared.

Facts & figures

The Chinese consumed 2 mln mt of bread in 2016. That is a lot, but the per capita consumption of bread is approximately 2 kg p.a. (in the urban regions about 3.2 kg), compared to 10 kg in Japan and 9 kg in Taiwan. Insiders expect that the Chinese bread consumption will gradually rise to the level of Taiwan, which means that the growth potential is enormous.

According to the above estimates, the current Chinese bread consumption already exceeds 1 million mt p.a. This would grow to 9 million mt p.a., if the population would remain the same. If we apply the Chinese estimate for the population by 2020, the Chinese bread consumption would rise to 12.5 million mt p.a. The estimated development is reflected in the following table.

Image

Market structure

Bread is a localised business in China. There are very few regional suppliers, let alone producers that sell on a nationwide scale. It is also still a very Chinese business. Multinationals are present, but do not dominate. The largest bakery company in the world by far, Grupo Bimbo, has a very small presence in the market with just one plant.

One of the few companies with such a status is Mankattan Food Co., Ltd. Mankattan has been established by the Belgian Artal Group in 1995. Mankattan has achieved a large market share through direct distribution of bread products to retail, food service and school locations. The main company is located in Shanghai, with subsidiaries in Beijing and Guangdong, giving it production centres in China’s most densely populated regions.

Image

Another successful example is Taoli (Toly) Bread (Shenyang, Liaoning). However, Taoli also produces traditional Chinese bakery items like mooncakes and zongzi. Still, the fact that the word ‘bread’ is part of the company indicates that it is its leading product. Taoli was listed on the Shanghai Stock Exchange in December 2015.

TaoliBread

Several domestic and foreign bakery chains are gaining ground on large Chinese bakery companies like Christine and Holiland. The South Korean chain Paris Baguette now has 37 stores in China, the Taiwanese chain 85°C Bakery Cafe has about 145, the Singaporian venture BreadTalk 170, and the South Korean chain Tous les Jours 140. Starbucks Coffee is also developing in this direction in China. A good sign of the growth potential of this sector is that BreadTalk’s net profit increased 91% in 2017 to RMB 21.85 mln.

Some experienced players from Hong Kong have also expanded to the Mainland, like: Queen’s Cake Shops, Maxim’s and Aji Ichiban, which may sound Japanese, but has Chinese founders.

A common feature of all chains in this category is that they tend to be located in office buildings and high end shopping centres, close to their largest market segment.

Image

Case study: Euro Bakery, an ambitious Dutch investor

Euro bakery, a 130 staff bakery in the Beijing region founded by Dutch investor Henny Fakkel, recently received a loan from the Netherlands Finance Development Company (FMO). The bakery is now expanding its business with a long-term EUR 2 mln loan from FMO.

Euro bakery specialises in traditional as well as new-style bread and cake variations, from European-style big loaf bread, rolls, whole wheat sourdough breads to pastry varieties, muffins and cookies, Danish pastry and also cheese savoury cookies. The bakery did well over the past years to tap into the growing popularity of bread products in China’s capital. The bakery factory of 135 staff caters for cafes like Costa coffee, Pacific coffee, and for companies like IKEA, International schools, Compass Group, Sodexo, airport catering, Pizza Express, embassies, hotels, restaurants and wholesalers.

EB2

 

Euro bakery has come a long way since Henny Fakkel and Grace Wang started the business in 2006. The bakery has managed to extend its large-client base to 60, and with a staff of 135, the bakery produces seven days week and distributes its products all over China via 450 delivery points.

Euro bakery wants to expand to 4000 m2 and build its own bakery education institute to train itd staff and disadvantaged young people to give them the chance to follow a baking course.

Frozen technologies

Insiders believe that the penetration of frozen technologies in baked goods will increase in the future. In China, where labour is abundant and cheap, it may be counterintuitive to see penetration of a high-end technology for production of baked goods growing. However, increasing complexity and diversity of products in industrial bakeries is driving the requirement for frozen solutions. It is already deployed in 20% of western style baked goods in the country.

In the artisanal sector, which is about 56% of the Chinese bakery industry by value, the penetration of frozen technologies is very low. The highest penetration of frozen technologies is in branded/packaged baked goods. This trend is changing and we are seeing many local and medium-sized bakery companies also interested in frozen technologies. Ingredient manufacturers should be wary not to miss these opportunities for specialist ingredients for frozen bakery products.

 

Key target for food ingredients

Bread is pointed out by Northern Sunlight, China’s largest distributor of food ingredients, as one of the most interesting growth markets.

This is corroborated by a the Director of the China Food Additives Association (CFAA), who claims that he regards Bakery China as the most prominent competitor of CFAA’s Food Ingredients China (FIC). Bakery China is organized annually in May, covering 9 halls of the Shanghai New International Exhibition Centre. Apart from baking products, it  also covers ice-cream and pasta and all ingredients for the entire product range.

Virtually all Chinese bakers are using bread improvers, compound ready-to-use ingredients, comprising enzymes, emulsifiers and a various other additives. I have already introduced the structure of the market for flour and baking ingredients in a previous blog. You can see more details there.

Here is the ingredients list of Mankattan Coarse Grain Toast Bread:

Wholegrain wheat flour, water, HFCS, shortening, yeast, bran, salt, gluten powder, flavour, additive [bread improver (starch, vitamin C, enzymes, calcium propionate)].

The way the ‘additive’ is broken down in individual ingredients is prescribed by law. Although not stated verbatim, it indicates that the producer does not purchase those ingredients separately, but buys a ready-to-use bread improver.

Other ingredients include various shapes and textures of fruits (e.g. dates), vegetables, nuts and meat, cheese powder, yeasts, nutrients for fortification, flavours, special oils or fats, fresh butter, cream, shortening, starch and modified starch, chocolate in various presentations, dairy based ingredients, and much more.

Eurasia Consult’s database includes 941 industrial producers of bread.

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.