Coronavirus impacts online dairy ingredient foodservice sales
It said that adoption of online shopping in China has been increasing significantly this past decade both in terms of consumer retail shopping and also wholesale/food service channels, particularly for dairy ingredients, where it serves as an indicator to overall demand for products such as butter and dairy cream across all distribution channels.
Proteus estimates online sales of UHT dairy cream account for up to 20% of total volume consumed in China, while butter is between 12-15%.
Demand for Western style cakes/baked goods has been increasing markedly, with corresponding demand for products such as butter approaching 100,000 tonnes in 2019. Online sales portals such TMall and JD represent important channels for wholesale/food service providers supplying their clients.
Proteus said the restrictions put in place in China during the peak of the Covid-19 outbreak had many dairy ingredients suppliers reporting an understandable drop in demand in January and February 2020 as people stayed indoors, stopped visiting cafes and public gatherings for Chinese New Year festivals were cancelled. The impact has been significant as demand for Western style cakes and baked goods declined.
Proteus said sales of butter across the wide sample of different e-commerce platforms were down 19% month to month between January and February 2020. UHT dairy whipping cream more than doubled in March 2020 on levels of Jan and Feb 2020, with Chinese food service companies looking to again build stocks of ingredients following the easing of restrictions towards the end of last month and early April.
As the vast majority of butter and dairy cream are imported in China, the slowdown in Q1/20 has been particularly felt by suppliers of these products in Europe and Australia/New Zealand.
