In 2012, U.S. almonds and walnuts remain the top imported items in South China’s tree nut market.
THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY
USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT
GAIN Report Number: CH11829
China - Peoples Republic of
2012 South China Tree nut
Market Development Reports
Summary: In 2012, U.S. almonds and walnuts remain the top imported items in South China’s tree nut
market respectively accounting for 268 and 140 percent increase in shelled products compared to same
period last year. Though demand for imported tree nuts is precipitously strengthening year-on–year,
availability of supplies and prices are a major factor in determining market gains. China will continue to
rely on imports as output for domestic crops are of lower quality and insufficient to meet demand. An in
depth market analysis of various U.S. tree nuts is contained in this report.
South China’s Tree Nut Market: Market demand has increased in tandem with local consumers’
understanding of the nutritional benefits associated with tree nut consumption. The development of the
processing industry has greatly contributed to the strengthening overall demand. Wholesalers,
distributors, retailers, importers and processors are interdependently centered in the Pearl River Delta:
China’s imported tree nut trade hub for close to 40 years. Imported tree nuts, widely consumed across
the country, rely on an efficient and widespread distribution network to reach markets. In 2012, U.S. tree
nut exports to South China, mainly walnuts and almonds, were valued at $112 million. Tree nut
consumption in South China continues to grow alongside incomes and demand is coming from the retail,
hotels and food service sector.
Consumption trends: The Mid-autumn Festival and Lunar New Year are the best seasons for imported
tree nut retail sales and consumption. Tree nuts are marketed in adorned gift packages to friends, clients,
or other business associates. The first week of May and October are also peak tourist seasons for
tourism. Middle class and young adults in China’s first and second tier cities favor year-round tree nut
consumption. Though many still believe the myth that tree nuts are “hot” food and eating too much in
the warm seasons will hurt one’s health, younger consumers as well as the emerging educated middle
class lend greater credence to nutritional benefits supported scientific research rather than relying on
The cartel’s impact on trade: Tree nut consumption is also impacted by large wholesalers control of
the supply chain- including producers/processors and importers. Since nuts available on the market are
mainly processed and dried, preliminary processors are considered producers in China’s tree nut supply
chain. Additionally, processed imported tree nut products are not required to be marketed as tree nuts of
U.S. origin. The cartel has a greater impact on prices in China than U.S. producers. A series of examples
of the cartel struggling to corner the imported tree nut market include the 2008 pistachio import surge
(which has something to do with a temporary low import tariff policy). In 2009, it happened again with
walnuts increasing 200 percent; and in Jan-July 2012, almond imports hit the new record with an over
82 percent increase compared to same period in 2011.
Because imported tree nuts are mainly consumed as snack food in China, mass consumers do not have
sufficient education nor pay attention to identifying the differentiation in terms of health function and
nutrition-- they purchase imported tree nuts without any judicious standards mostly motivated by prices
or retail promotions. This boom economy is looking for the next big thing in the market but is
overlooking the differences in tree nuts. The market needs education on the differentiation of the
nutritional aspects of all imported tree nuts and it behooves the U.S. industry associations to pool
resources to reach out to nutritional opinion leaders in China to carry out these messages.
Retail market: All categories in grocery retailing, including supermarkets/ hypermarkets and
convenience stores, have experienced a fast increase in pricing over the two years. According to the
industry statistics, current value growth in retailing remains 7-9 percent increase in 2009-2011. As
increasing numbers of people flood into cities and towns from China’s vast countryside, the overall
demand for grocery products is expected to increase rapidly. Meanwhile, China’s central government
also continued to express its unshakable attitude towards the transformation of its current mode of
economic development, shifting away from investment and export-driven growth models toward a
consumption-driven growth model. As a result, grocery retailing is forecast stable growth during 2013.
Nut quality, appearance, and packaging all impact retail Wal-Mart Pr sales. ivate label for nuts
Higher end packaging and larger sized tree nut kernels are Source: ATOGZ used
in gift sets and occupy larger market share in first tier cities, like
Beijing, Shanghai and Shenzhen; while simple lower quality Wal-Mart Private label for nuts
kernels in smaller sizes are mostly favored by households Source: ATOGZ
in second or third tier cities.
Local brands for tree nut are now growing stronger in the
retail sector such as Tianhong (Rainbow), Kaixin (Happy
Nut), Fujin, and Fengye (Maple). Moreover, new retail
giants are able to economically provide healthy private
label competition to household branded products.
Examples of this trend are the Wal-Mart group’s private
label tree nut products. Potential exists in the future as
market share and brand awareness continue to increase
among the larger domestic and international grocery
chains. Retail chains can potentially topple the cartel’s
control of the market in direct purchasing trends proof successful.
Whole sale market: The wholesale market is complex with various grades of nuts, domestic and
imported available for all national needs. As the largest dried fruit and tree nut supplier market in the
world, Yidelu Street of old Guangzhou has over 2,000 shops across a 2-mile stretch selling tree nuts and
dried fruit and other dry goods. Nuts account for 30 percent of the goods sold in this market and can be
found in many presentations such as roasted or salted, shelled and in-shell, loose and packaged. In 2012,
the most popular nuts were U.S. almonds and walnuts, Australian from Iranian pistachios and Turkish
hazelnuts. Price still is a key factor in the wholesale business.
Bakery market: Increased disposable incomes and retail
bakery promotions have raised the bar for baked goods.
In 2011, baked goods as a whole witnessed rapid growth
in value terms, including bread, cakes and pastries, to reach
$1.5 billion according to national industry statistics.
Consequently imported nuts’ usage in baked goods
also grew rapidly in first and second tier cities as bakery
cha Baked goods added imported nuts ins such as Bread Talk and Donghaitang grew rapidly.
S Source: ATOGZ ince 2008, imported tree nuts usage in the bakery sector
increased an average of 10-20 percent every year. Even
experiencing the economic slowing in 2012, the first and second quarter sales of import baking
ingredients, including nuts and dried fruit have steadily risen by 15-20 percent, according to South
China largest baking ingredient importer.
Additional Market Analysis for U.S. tree nuts
Pistachios: Last year, U.S. exported $42 million pistachios to China, a 37-percent increase due in part
to a temporary low tariff policy effective since 2008, and the U.S. industry’s efforts in raising awareness
for toxic food bleaching agents in China’s food processing sector. As a result, China’s Ministry of
Health has tightened the policy of additives usage into foods since early 2011, and hydrogen peroxide as
a food bleaching agent has been removed from the additives list. This policy adversely impacted Iran
pistachios given their lower quality darker yellow shell was bleached in the past to meet local
consumers’ preferences. U.S. pistachio exports to China are expected to benefit from this new policy as
the naturally whiter shell, larger size, and overall higher quality kernels are favored by local consumers.
Almonds: U.S. shelled almond exports to South China increased 269 percent in 2012 due to its
favorable price relative to other imported tree nuts. Price sensitivity remains the primary concern in
China’s tree nut market. The Almond Board of California (ABC) has periodic contact with traders and
media to ensure the end users and consumers understand the different varieties of the California crop as
well as their health and nutritional features. ABC has devoted the greatest amount of resources to
develop distribution channels and relationships with all of the major national and regional chain stores.
A series of marketing promotions were launched during the off-holiday season to strengthen sales and
the relationship with retailers.
Walnuts: China’s annual domestic consumption of walnuts is largely due to its recognized nutritional
and medicinal aspects associated with consuming this tree nut. Locals mainly consume walnuts as
snacks via the retail sector, in side dishes or in baking ingredients via the food processing sector.
Industrial manufacturers process walnuts into many other forms of food and drinks, such as cakes,
biscuits, mixed nuts, walnut-flavored snacks and food, milk, oil, etc.
According to China Customs statistics, South China imported U.S. shelled walnut increased 269 percent
well above the industry forecast. Walnut consumption will maintain an upward trend, driven mostly by
growing demand in the consumer market and food processing industries, with industrial processing
channel accounting for more shares in total consumption. The California Walnut Commission (CWC)
played a strong role in developing China market in terms of launch chef competition, media promotion,
trader gathering and trade show participation.
Pecans: Pecans had the fastest growth area in the “other nuts” category. Before 2007, there was hardly
an American pecan in China. However, consumer demand for pecans exploded in 2007 when the price
of walnuts soared to record levels, which made pecans a good substitute at a great bargain. China's
pecan boom is a result of over a decade of an emerging middle-class consumer base increasingly keen
on walnuts, and pecans are similar to walnuts in taste and appearance. Most consumers believe they
have higher nutritional value than walnuts. In 2011, pecan prices stabilized and volume increased when
compare to the previous year.
Dried Peas: Dried peas are widely consumed in China and are a new snack substitute to imported tree
nuts. U.S. dried peas are imported and processed in South East Asian countries and some domestically
and have flooded the retail sector. According to industry research, the retail market accounted for half of
the dried pea consumption. The food service usage accounted for 10 percent of total consumption. Peas
are mainly used in preparing meals or soups by food processors. In fact, a large proportion, around 40
percent, of U.S. dried peas are reserved for industrial processing and added as mixed vegetables,
processed into pea flour, or manufactured into dried pea snacks. Peas are mostly processed and packed
as snack food and displayed along with tree nuts in supermarkets. Retail and food service consumption
of dried peas is mature with steady growth. The improved living standards in China and increased food
consumption have also stimulated demand for pea flour, directly leading to increased industrial usage
for dried peas. According to industry forecasts in 2011-2013, the consumption of dried peas will
maintain a stable and upward growth trend.