From December 30, 2022, the products such as cheese sticks and cheese slices officially implement the new national standard of the Process(ed) Cheese and Cheese Products. According to the new standard and policy of the State Administration for Market Regulation, the products with more than 50% cheese added are clarified as process(ed) cheese, and the products with only 15% to 50% cheese added should be called cheese products, and the product package label should clearly mark the use proportion of cheese, the old version of packaging materials can apply for extension of use until June 30, 2023.
Industry insiders believe that the new national standard will promote the product upgrade of the cheese industry, industry differentiation will be further accelerated, the price system and profit level is expected to gradually improve, 6-month package transition period for most enterprises is sufficient. In the short term, though the classification of cheese market is not obvious, the industry is still looking for a second blockbuster beyond the cheese sticks.
The new national standard implemented
Before the implementation of the new national standard Process(ed) Cheese and Cheese Products (GB 25192-2022), the process(ed) cheese products commonly exposed to consumers include cheese sticks, cheese slices and smoked cheese, in which the added proportion of cheese is greater than 15%, and there is no clear standard division of products with different cheese content.
The National Health Commission and the State Administration for Market Regulation issued the new national standard Process(ed) Cheese and Cheese Products in June 2022 and implemented it on December 30, 2022. Its biggest highlight is dividing the "process(ed) cheese" category of products in the old standard into "process(ed) cheese" and "cheese products".
Based on cost and taste factors, in the past, the content of cheese in process(ed) cheese products is about 20%-30%, which is generally not high. The new national standard defined process(ed) cheese and cheese products respectively by the amount of cheese, so as to improve the quality level of process(ed) cheese.
As a supporting policy of the new national standard, on December 26, 2022, the State Administration for Market Regulation issued the Notice on Clarifying Matters Related to the Production Permit of Process(ed) Cheese and Cheese Products, clarifying that process(ed) cheese products produced before December 30, 2022 can be sold until the expiration date, and old packaging materials can apply for extension of use until June 30, 2023. The Administration also asked local market regulation department to urge enterprises to strictly implement the new standard.
Most cheese products have not changed package yet
A recent survey of 13 cheese products from 8 brands found that many brands still use the name "process(ed) cheese". From the perspective of ingredient labeling, about 90% of products are marked with cheese content, and several major brands have launched cheese sticks with more than 50% cheese content, and product classification has been started.
Market classification is not obvious
China is Asia's largest consumer of cheese, according to Euromonitor International. From 2017 to 2021, China’s cheese retail channel sales increased from 5.2 billion Yuan to 13.1 billion Yuan. The retail sales of process(ed) cheese, which is represented by cheese sticks and cheese slices, grew at a compound annual growth rate of 34.9% and is expected to maintain a growth rate of 14.5% from 2022 to 2026.
The continuous growth of market data attracts various brands to enter the industry, so that the industry competition continues to intensify. From 2020 to 2021, a price war broke out in the cheese stick market, with many brands offering promotion prices of 9.9 Yuan and 12.9 Yuan for a long time. In 2022, due to the impact of COVID-19 and the rising price of international bulk commodities, the profit margin of the cheese market was compressed and the price war was weakened.
At the height of competition in 2020, there were no fewer than 50 cheese brands on the market. From 2021 to now, at least a half of small brands disappeared within a year. At present, the growth rate of cheese stick category has slowed down, but the cheese industry still maintains rapid growth, and the market concentration is improved. It is expected that the industry pattern will be basically formed in the next five years.
The biggest change brought by the new national standard to the cheese industry is product upgrading, and the industry differentiation will be further accelerated. Cheese products suitable for Chinese people’s consumption habits will have a big market in the future, and the next super category will also make a breakthrough in this direction.
In comparison with the history of cheese development in Japan and Korea, the proportion of cheese is rising. The future market share is expected to further concentrate to the head enterprises, and the industry price system and profit level are also expected to be gradually improved.
After the implementation of the new national standard, the market for process(ed) cheese and cheese products will be clearly divided. In the case of similar product prices, consumers will inevitably prefer products with higher cheese content. However, at present, the actual sales price of process(ed) cheese and cheese products is only two or three Yuan difference, and the market classification is not obvious in a short term. In terms of trends, cheese sticks will remain in the mainstream of the cheese market in a short term, with brands looking for new hits, which so far have not performed as well as cheese sticks.
Source: BJNEWS
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