EXPORT MARKET
DEVELOPMENT REPORT:
PISTACHIOS IN CHINA
Euromonitor International
January 2016
EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
LIST OF CONTENTS AND TABLES
Local Market Infrastructure ........................................................................................................... 1
Local Market Overview ............................................................................................................. 1
Table 1
Chart 1
Market Size and Potential 2011/2016/2021 .................................................. 2
Population by Age Segments 2011/2016/2021 ............................................ 3
Usage and Acceptance of Various Product Types in China ..................................................... 4
Table 2
Consumption and Expenditure on Food by Sector 2011/2014 ..................... 5
Pistachios: Production, Trade and Consumption in China ........................................................ 5
Table 3
Production, Imports, Exports and Domestic Consumption of
Pistachios 2009-2014................................................................................... 6
Customer Perception of Product Origin .................................................................................... 8
Table 4
Chart 2
Table 5
Table 6
Vegetable, Fruit and Nut Exporters to China 2014 ....................................... 9
Vegetable, Fruit and Nut Exporters to China 2014 ....................................... 9
Country Source: Pistachios to China 2014 ................................................. 11
Imports of Pistachios from USA 2009-2014 ............................................... 11
Regulatory Environment in China ........................................................................................... 12
Pistachios: Market Trends & Developments ............................................................................... 13
Pistachios: Market Size .......................................................................................................... 13
Table 7
Retail Market Size for Pistachios in China 2012-2017................................ 14
Pistachios: Main Varieties and Typical Retail Prices .............................................................. 14
Summary 1
Summary of Main Varieties for Pistachios .................................................. 14
Supply Chain and Retail Environment ........................................................................................ 15
Supply Chain Overview .......................................................................................................... 15
Summary 2
Summary of Key Companies for Pistachios ............................................... 16
Sales Through Retail Distribution Channels for Pistachios ..................................................... 16
Table 8
Sales of Pistachios by Distribution Format 2011/2014/2017 ...................... 17
Retail Distribution Channels Overview.................................................................................... 19
Table 9
Retail Distribution Channel Trends, Sites/Outlets 2011/2014/2017 ............ 19
Key Retail Formats in China ................................................................................................... 19
Table 10
Table 11
Leading Supermarket Chains in China, Sites/Outlets 2012-2014 .............. 20
Leading Hypermarket Chains in China, Sites/Outlets 2012-2014 .............. 20
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
EXPORT MARKET DEVELOPMENT
REPORT: PISTACHIOS IN CHINA
LOCAL MARKET INFRASTRUCTURE
Local Market Overview
Background on China
Occupying the entire 5,000 km spread from the Sea of Japan and the East China Sea in the
east, to the Afghan border in the west, China has one of the longest international boundaries in
the world. In the north and northwest, its border is shared with Mongolia, Russia, Tajikistan,
Kyrgyzstan and Kazakhstan. In the west, it meets Afghanistan and Pakistan, while India, Nepal,
Bhutan, Myanmar, Laos and Vietnam lie to the south.
China has evolved to be one of the major economy in the world
In the agriculture sector, rice is the main food crop, but tea, sugar and fiber crops are also
important cash earners. China is also the world‘s biggest producer and consumer of cotton.
Farm yield is expected to rise during this decade but looming water shortages could prove to be
a serious bottleneck. Nationally, the agriculture sector consumes about 70.0% of China‘s
surface water, but more than one-fifth of water resources are unfit even for farming.
Manufacturing accounted for 28.4% of GDP and employs 29.0% of the work force. China is
the world‘s largest car market. Car penetration in China is still modest, but sales have begun to
slow. Passenger car sales are expected to rise by less than 2.0% in 2015 – a sharp drop over
recent trends. Large amounts of excess capacity in other parts of the manufacturing sector
mean that many firms are not profitable. Yield fell sharply in the first half of 2015.
Services make up 47.2% of GDP. The value of bank loans has swelled to nearly 140% of
GDP and is even larger when the role of shadow banks is considered. In retailing, furniture,
household appliances, and audio-visual equipment are some of the fastest-growing markets.
Building more upmarket shopping malls is a key part of Beijing‘s strategy to boost consumption.
According to a recent study, more than two-fifths of all global shopping market completions in
2014 were in China. The real value of tourist receipts rose by 6.9% in 2014 and gains of 6.3%
are expected in 2015.
China decreasing after being the growth engine for the world
After nearly three decades of uninterrupted growth, the world became accustomed to China
serving as one of its major engines for growth. However, the economy has cooled in recent
years with real growth of GDP slipping to 7.7% in 2013 and 7.4% in 2014. The latter was the
lowest rate in 24 years.
Beijing faces some serious challenges. Officials intend to alter the model they have followed
for many years. On demand side, the shift in strategy depends on consumption overtaking
investment as the main economic driver. On the supply side, the service sector will replace
industry as the primary contributor to growth. Another challenge is to address the worsening
distribution of income. The division is sharpest when comparing rural and urban households.
Currency devaluation to boost economy further
Exports (in dollar terms) increased at 6.0% in 2014. In 2015, exports are expected to decline
by 0.4%. The share of exports in GDP dipped sharply during the global recession but has risen
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
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modestly since then. In 2014, exports amounted to 22.6% of GDP, compared with 31.4% in
2008. In a bid to boost its weakening exports, Beijing devalued its currency in August 2015.
China is also working to gradually reduce its dependence on the US dollar.
China‘s exports are well dispersed. In 2014, 42.9% of all exports went to other Asian
economies, 16.9% was shipped to the US and 15.8% went to the EU. The composition of
exports but is highly represented. 47.2% consists of machinery and transport equipment while
another 26.1% is miscellaneous manufactured goods.
Following accession to the World Trade Organization, China will automatically attain full
market economy status by 2016. A trade agreement between China and Taiwan came into
effect in 2014. The Economic Co-operation Framework Agreement (ECFA) cuts tariffs on 539
Taiwanese exports to China and 267 Chinese products entering Taiwan.
The current account surplus was 2.0% of GDP in 2014 and it is expected to widen to 3.0% in
2015. China suffered its largest capital outflow on record in the fourth quarter of 2014 (US$91
billion). The large outflow is expected to force officials to cut reserve ratios in the future in order
to maintain the system‘s liquidity.
Real estate bubble to hamper economic prospects
The economy will continue to slow in 2015 when real GDP grows by 6.4%. Domestic demand
and exports are the main drivers. Manufacturing and investment are struggling while the
property market is under stress. Growth in 2014 was the slowest in more than 20 years but this
outcome can be viewed (in part) as a by-product of Beijing‘s efforts to change its development
strategy. In the second quarter of 2015, the economy increased at 7.0% from a year earlier.
Prices should rise by 1.4% in 2015 after inflation of 2.1% in 2014. The Central Bank has cut
interest rates five times between November 2014 and September 2015. The latest reduction,
which cut interest rates to 4.6%, was taken after the plunging stock market sparked a global
meltdown. The Central Bank also is working to pump liquidity into a banking sector that has
become reluctant to lend. In August 2015, the bank devalued the national currency by about
2.9%.
Home ownership was negligible in 2000 but has soared to more than 80.0% 80.0% today,
spurred by rising incomes and cheaper credit. Housing sales fell in 2014 and the slide has
continued in 2015. Investment in real estate was rising at a double-digit pace, adding to the
already-existing oversupply. With more than 60 million empty apartments awaiting buyers,
prices will have to fall significantly. Fears are growing that China's economy is vulnerable to a
property downturn.
Beijing appears to be making progress in its bid to rebalance the economy toward domestic
consumption. The real value of private final consumption rose by 9.1% in 2014. In 2015, growth
of 7.4% is expected.
A surge in outbound investment is targeting technologies that China lacks in its home market.
In 2015, outbound investment is expected to exceed incoming foreign investment for the first
time. A surge in China‘s manufacturing costs is also slowing inbound investments.
Unemployment in 2014 was 3.1% and it will rise to 3.2% in 2015. Efforts by firms to retain
workers have become increasingly elaborate as demographic changes such as the one-child
policy and the slowdown in rural-to-urban migration make staffing harder.
Table 1
Market Size and Potential 2011/2016/2021
Exchange rate (RMB per US$)
GDP (US$ billion)
GDP per capita (US$)
Private consumption per capita (US$)
© Euromonitor International
2011
6.5
7,881.5
5,877.7
27,50,592.2
2016e
6.3
11,802.6
8,597.2
45,87,420.4
2021f
6.5
17,501.9
12,532.9
71,89,379.9
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
Total population ('000)
No. of households ('000)
Occupants per household
Urban population (%)
Household penetration of refrigerators
(%)
Source:
Passport
13,40,910.0
4,24,898.3
3.2
49.9
81.3
13,72,839.1
4,58,984.4
3.0
56.1
81.3
Euromonitor International from IMF/national statistics
The most populous country is aging
In 2014, China‘s population was almost 1.4 billion – an increase of more than 385 million
since 1980. The population is growing, however, at a decelerating pace and should reach its
peak in less than two decades. China‘s stringent methods of population control have been
relaxed as the growth of population slows. The fertility rate is presently 1.3 births per female
(below replacement level). It is expected to remain at that level throughout the remainder of this
decade.
China is rapidly urbanizing. As recently as 1980, less than 20.0% of China‘s population lived
in cities but today more than half of all Chinese live in urban areas and to 70.0% are expected to
be urbanites by 2030.
The median age is steadily rising. In 2014, it was 40.8 years – 18.4 years greater than the
figure for 1980. Population aging is occurring more quickly in China than in most other countries.
In 2014, the number of those over 65 years had reached 158.6 million. This figure represented
11.7% of the total population, up from just 4.7% in 1980. In 2020, a projected 15.9% of all
Chinese will be over 65 years.
Chart 1
Source:
Population by Age Segments 2011/2016/2021
Euromonitor International from national statistics/UN
Spending on food surging
Rising affluence has made food, already an important element of Chinese culture, an
important status symbol in a country that has only 11.3% arable land, according to the World
Bank. In 2000, consumers spent US$263 per capita on food; by 2014, that amount increased to
US$648 per capita (in real terms).
© Euromonitor International
13,96,472.1
4,88,950.8
2.9
61.5
81.3
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
Demand for seafood is escalating
Demand for meat increased dramatically since 2000, with pork dishes the most popular.
There also was a significant surge in demand for fish and seafood with consumption doubling
since 2000. Luxury seafood is particularly popular, with the fishing industry worldwide
scrambling to meet rising demand. Levels of imported seafood such as shrimp, oysters,
lobsters, and salmon have all dramatically risen in recent years. For many people in China,
treating friends or clients to an expensive seafood meal is seen as a sign of affluence and
sophistication.
‗Earth beans‘ gaining popularity
Demand for dishes with potatoes or tudou (earth bean in Chinese)—has traditionally lagged
behind dishes with the more popular rice and wheat. Due to the country‘s lack of arable land,
potatoes which do not require much water to grow are being encouraged and consumers are
responding with increased demand for potato-based dishes. Potatoes are currently the fourth
most popular crop after rice, wheat, and corn, but that is expected to change as land dedicated
to potatoes reaches 10 million hectares by 2020.
Alcohol consumption consistently high
China, which traditionally had a rich drinking culture based on spending leisure time with
family, friends and work colleagues, saw consumption of alcohol increase by 21.6% between
2009 and 2014. (However, according to recent data from the World Health Organization, 42.0%
of men and 71.0% of women do not drink alcohol at all.) In China, alcohol is an important social
tool to develop and maintain friendships.
Usage and Acceptance of Various Product Types in China
Growing health awareness and leisure lifestyle is driving fresh food market
China is a major producer and consumer of fresh produce, thanks to the huge population
base, vast cultivation area, and improving agricultural skills. The standard of living in China has
been greatly improved in the past three decades, resulting in growing demand for fresh foods.
Per capita consumption of vegetables, fruits and nuts saw a continuous increase to 285.6 kg,
111.4 kg and 5.7 kg respectively in 2014. From 2011 to 2014, per capita consumption of
vegetables and fruits rose by 3.6% and 5.9%, while nut consumption grew the most rapidly by
11.4% during the same period.
The rapid economic growth has brought continuous increases in consumer disposable
incomes, which has had a significant effect on consumer lifestyles and consumption habits.
Chinese people are paying increasing attention to a healthier diet rather than eating whatever
they want, as much as they want. They are well aware of the importance of a balanced diet and
the benefits of fresh vegetables and fruits. Some people even eat only fruits and vegetables for
a week as a means of weight control. Nuts are becoming increasingly accepted as their benefits
in facilitating brain development, preventing disease and enhancing physical fitness are widely
recognized. As consumer purchasing power continues to rise alongside economic growth,
Chinese demand for fresh food is expected to be robust over the forecast period of 2015-2017
and beyond.
Another driver of consumption of fruits, vegetables and fruits is higher income from the
growing economy increasing demand for leisure time. In addition to 11 public holidays annually,
more companies now provide paid leave benefits to employees, and this stimulates consumer
demand for leisure foods. Some companies switched to a four-day work week in 2014. This
gradual lifestyle change could trigger increasing demand for fresh fruits and nuts, which are
considered important treats during leisure activities.
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
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Fresh fruits saw price increases and fresh vegetables posted lower prices in 2014
According to the statistical data released by China‘s National Bureau of Statistics, China‘s CPI
growth was stable and lower at 2.0% in 2014, down from its peak in 2011, which was in
accordance with the slowdown of global and domestic economic growth. The food category
registered a 3.1% price increase in 2014, higher than total CPI growth. The price growth of food
experienced a decreasing trend for three consecutive years.
In 2014, prices of fresh fruits and fresh vegetables went in the opposite direction. According to
the monthly CPI data, from January to October in 2014, monthly fresh fruit prices increased at
over 15.0% compared with the same month in 2013. The rising prices of fresh fruits were largely
attributed to the increasing price of mass-consumption fruits, such as apples, bananas, and
oranges. Fruit production costs were on the rise, including the costs of labor, fertilizer,
chemicals, etc. The growing adoption of green production also increased production costs to
some extent.
In contrast, monthly fresh vegetable prices decreased nearly 10.0% from April to November in
2014 compared with the same month in 2013. The expansion of production area and better
weather conditions compared to 2013 resulted in higher production volume of fresh vegetables,
which helped to control vegetable prices from continuing to increase in 2014. Prices for both
fresh fruits and vegetables fluctuated in accordance with regular seasonal variations.
Prices of fresh fruits typically rise in February, in response to the soaring demand during the
Chinese Spring Festival, one of the most important holidays in Chinese culture. Prices remained
high and peaked in summer, and then decreased in late summer and afterwards. Fresh
vegetable prices dropped in spring and fall, and rose in summer and winter.
Price volatility is primarily tied to supply, which is highly vulnerable to weather conditions.
Fresh food prices are also tied to the cost of production and distribution, which is rising due to
the higher costs of production material, logistics and handling. As food prices are closely tied to
social stability and consumer well-being, the government has made consistent efforts to better
control food prices through strengthening of rural cooperatives, enhancement of fresh food
distribution efficiency, and increasing the transparency of market prices.
Table 2
Consumption and Expenditure on Food by Sector 2011/2014
Per capita consumption (Kg)
Vegetables
Fruits
Nuts
Total consumer expenditure ($US million)
Vegetables
Fruits
Total Food
Source:
Note:
Note:
2011
2014
% change
2011-2014
275.7
105.2
5.1
285.6
111.4
5.7
3.6
5.9
11.3
2011
2014
1,29,047.2
79,509.0
6,79,726.7
1,71,511.5
1,05,832.1
8,75,976.1
% change
2011-2014
32.9
33.1
28.9
Euromonitor International from trade sources
Industrial usage is not included
Total expenditure on food includes:
bread & cereal, meat, fish & seafood, dairy, oils, sugar, fruits
& vegetables, and other food
Pistachios: Production, Trade and Consumption in China
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Pistachios are quite popular among Chinese consumers
Pistachios are a popular leisure food among Chinese consumers because of their good flavor
and nutritional value. They are also known ―happy nuts‖ because of their cracked shells that
look such as smiles. Pistachios are primarily produced in the US and Iran. In China, cultivation
of pistachios is centered in the Xinjiang province. Due to the limitation of production area and
extensive requirements on growing conditions, domestic production represents only a small
share of total consumption. During the review period, domestic production of pistachios rose
steadily from 10,500 tonnes in 2009 to 12,000 tonnes in 2014 at a CAGR of 2.8%.
China is a net importer of pistachios. Imported pistachios represented the majority of domestic
consumption. In 2014, about 81.2% of local demand was satisfied by imports due to the limited
capacity of domestic production. Import volume fluctuated during the review period, increasing
from 50,000 tonnes in 2009 to 64,300 tonnes in 2014 at a CAGR of 5.2%. Imports fell slightly in
2014 mainly because the US, the principal supplier, reduced its exports to China in 2014.
Exports fluctuated from 2,500 tonnes in 2009 to 2,100 tonnes in 2014 at a CAGR of -3.5%.
Total consumption grew from 57,000 tonnes in 2009 to 79,300 tonnes in 2014 at a CAGR of
6.8%. The slowdown in growth especially in 2012-20214 was largely attributed to the slowdown
of economic growth in China, coupled with the government‘s anti-corruption campaign, which
has restrained consumption of premium products such as pistachios in the retail, foodservice
and food processing.
Table 3
Production, Imports, Exports and Domestic Consumption of Pistachios 20092014
In tonnes ‗000
Beginning stocks
Local production
Imports
Exports
Total consumption
Ending stocks
Source:
2009
2010
2011
2012
2013
2014
20.0
10.5
50.0
2.5
57.0
21.0
21.0
10.8
65.0
3.4
65.6
27.9
27.9
11.2
59.2
5.2
70.1
22.9
22.9
11.5
69.8
9.9
74.3
19.9
19.9
11.8
67.7
4.4
77.3
17.6
17.6
12.0
64.3
2.1
79.3
12.6
Euromonitor International from trade sources
Local production is centered in Xinjiang
Pistachio cultivation has a history of over 1,300 years in China. Restricted by variety and
production technique issues, the local pistachio industry lags far behind foreign competitors. It
was not until the last decade when premium trial varieties were introduced by local scientists
working to develop this industry in China.
Pistachios are not widely cultivated in China. The major production area is Xinjiang province,
which is China‘s most westerly region. The place is highly suited to production of fruits and nuts
due to its unique soil profile, abundant underground water and long exposure to sunshine.
These environmental conditions also make it ideal for the growth of pistachios. Pistachios
appreciate a desert climate and are therefore normally grown in arid and semi-arid regions
where the weather is generally dry and suitable for subtropical species such as pistachio to
grow. Pistachios are also resistant to drought and cold. They can survive in regions where
rainfall is only 200-400 mm per year and tolerate relative humidity of 50.0%. Therefore the land
and climate in Xinjiang province is the most suitable for the growth of pistachios within China.
Pistachios are now a principal cash crop in Xinjiang province. They bring higher economic
value for local growers than many other crops. They are a good soil and water conservation
species that is friendly to the local ecosystem. Despite the tempting economic value, growing
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
pistachios is not easy, as it requires intensive investment both in capital and time. The
productive life-span is long, but the first production normally takes place six years after the tree
is planted. In order to promote domestic cultivation of pistachios, both the central and local
governments have provided aid to pistachio production in many ways. They have invested
capital to introduce the most suitable imported varieties and provided technical guidance to local
growers to amplify the revenues of pistachio cultivation. Pistachios are expected to make
significant contributions to the gross domestic production value and local farmers‘ income levels
in Kashi, one of the key production sites in Xinjiang. Boosted by the huge market potential and
high profitability, cultivation of pistachios is also developing in other regions, such as Gansu and
Hebei provinces.
The common locally grown pistachio varieties are early-maturing pistachios, short fruit
pistachios and long fruit pistachios which are originated in central Asia. They are grown
throughout different areas of Xinjiang province. Early-maturing pistachio varieties are mainly
grown in Shufu County, short fruit pistachios are mainly grown in Shufu and Shule counties and
long fruit pistachios are mainly grown in Kashi city. Currently more foreign varieties can be seen
in Xinjiang as local growers seek the most productive and suitable varieties. Two of the most
common are Kerman and Peters, and they are of high economic value.
Domestic consumption relies on imports
China is a top consumer of pistachios with limited domestic production, so it remains a net
importer. Imports took up the majority of domestic consumption with average shares exceeding
80.0%. Import share of domestic consumption fluctuated during the review period. In 2014,
import share fell moderately to 81.2%, lower than the level observed in previous years.
Domestic demand for imported pistachios has slowed down due to more limited economic
growth and the country‘s anti-corruption campaign, which discourage the purchase of premium
nuts such as pistachios. However, the steady growth of local crops and their reasonable quality
makes them an alternative for imported pistachios for some consumers. Locally grown
pistachios gained advantage as they are exempt from importing duties and easier to store and
transfer. Supply from the principal foreign supplier decreased in 2014. The US, which
accounted for over 70.0% of the pistachios shipped to China, had a hard year and the
production was unsatisfying due to drought conditions in California, so US exports of pistachios
were negatively affected.
Export volume is insignificant compared to import volume, as China relies heavily on imported
pistachios to fulfill local demand. In 2014, 2,100 tonnes of pistachios were exported,
representing 17.2% of total production.
Retail sector is primary for pistachio consumption
The retail sector represented 88.6% of total domestic consumption in 2014. The growth of the
retail market is principally attributed to the growing base of retail consumers and their increasing
demand for nuts such as pistachios as snacks or gifts. The prevalence of internet sales also
plays a role in driving retail market growth. The fast development of the online sales and
delivery enable consumers to purchase a range of goods online with great convenience. This
also contributed to consumption of pistachios as consumers have easier access to flavorful
pistachios or their byproducts.
The remaining 10.0% went through foodservice and food processing. Many Chinese
restaurants, tea houses and recreation centers provide pistachios as a snack. Pistachios are
now also used as ingredients in a range of foods such as ice cream, butter, chocolate and
confectionery, as well as cooking oil to meet evolving consumer preferences. Use of pistachios
has even extended to the medical and beauty industries for use in hair oil and facial cream for
their beneficial effects. In China, pistachios are used as a sort of traditional Chinese medicine
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
because they are believed to have curative effects against heart disease, nephritis, hepatitis and
gastritis.
With the rising affluence and improving standard of living in China, the demand for pistachios
is anticipated to increase steadily. The nutritional value of nuts such as pistachios is widely
recognized by consumers, which is a major driver for the pistachio market. In addition, as
consumer demand becomes more diverse, more food products made with pistachios are
expected to appear in the market, therefore promoting pistachio use in foodservice and food
processing. In the forecast period of 2015-2017, the consumption breakdown among all three
sectors is expected to be stable with retail share increasing slightly.
Customer Perception of Product Origin
Product origin matters for purchasing decisions
Country of origin is considered important for fruits, vegetables and nuts. The majority of
agricultural goods in China have no branding and marketing. Therefore, consumers rely heavily
on origin to differentiate product quality and flavor. Country of origin involves different soil and
water characteristics, as well as climate conditions, which are closely tied to planting different
varieties and quality, and certain countries (and regions within these countries) have become
well known for particular fruits. Yantai Fuji apples, Shandong cherries, and Wuxi peaches enjoy
high recognition among Chinese consumers, who are willing to pay higher prices for these
products.
In contrast to local produce, imported fruits, vegetables and nuts are gaining rising recognition
and popularity among Chinese consumers. Consumers are starting to realize that imports are
often of higher quality and are far safer than local foods after a long series of Chinese food
safety issues. The growing availability of imported foods from both online and brick-and-mortar
stores, and consistent consumer education on their benefits, have both developed strong
consumer interest in imported foods. Furthermore, the rising purchasing power of Chinese
consumers makes imported products more affordable. Currently, more Chinese consumers buy
imported products for personal consumption rather than as gifts.
Origin plays an important role in the food processing and foodservice sectors as well.
Consumers are paying greater attentions to the products they eat, and raw materials and
additives used, especially for processed products. To this end, more food processors and
foodservice providers are advertising the sources of raw material to enhance consumer trust
and drive sales. Orchard Farmer, a brand of dried fruit snacks, establishes its premium image
by the use of imported raw material, such as US prunes, cherries and blueberries. In the
foodservice sectors, fresh juice bars usually display imported fruits in central areas clearly
marked with the country of origin. As consumers associate imported products with trustworthy
good safety, high quality and good nutritional value, imported products has great potential in the
sectors of food processing and foodservice.
ASEAN countries are the major trade partners
China maintains close relationship with Thailand, Vietnam, Myanmar, Philippines and Canada
in the trade of vegetables, fruits and nut. In 2014, these five countries represented 88.0% of
China‘s total import volume in these categories. Thailand was the largest partner, accounting for
52.7% of import volume. Vietnam ranked second, with a volume share of 18.2%. Myanmar
surpassed Canada as the third largest exporter, providing a volume of 6.1% of China‘s imports
in 2014. Thailand mainly exports durians and longan, while Vietnam provides dragon fruit,
longan and lychee. It is noteworthy that ASEAN countries play a critical role in China‘s import
market, attributed to favorable policies, diversified and quality products offerings due to tropical
climates, and reasonable prices. Since the establishment of the China-ASEAN Free Trade Zone
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in 2010, 90.0% of trading volume between China and ASEAN is free of tariffs, which greatly
encourages cooperation within the union. The tropical climate in ASEAN countries and their
long-traditional agricultural skills enable them to cultivate delicious and high-quality fruits that
are appealing to Chinese consumers. The low labor costs and geographical proximity to China
allow them to set lower prices than equivalent produce from the rest of the world.
Decreased volume but superior quality of US commodities
The US remained one of the China‘s top partners in the trade of vegetables, fruits and nuts.
However, US share of China‘s total imports decreased in 2014 compared to the previous year.
The improving local agricultural technology and production expansion in some categories, and
partnerships with more countries in the fresh food trade were the main reasons behind the drop
in 2014. Many categories saw decreasing volume of US imports in 2014, such as oranges,
prunes, almonds and walnuts. In spite of that, the US still recorded strong growth in some
categories. The US realized a volume growth of 71.8% in cherry exports to China and 42.5% of
pear exports in 2014. The US holds a more significant position in nut exports to China. The US
represented 99.4% of total almond imports in 2014, 72.5% of pistachios, 54.3% of walnuts and
49.9% of peanuts.
US commodities are highly recognized for their renowned excellent quality by Chinese
consumers, especially more affluent consumer groups. The US‘s advanced agricultural
technology, rigorous production standards and regulations, and excellent weather means many
Chinese consumers associate US produce with the image of natural, safe, high-quality foods.
The consistent marketing and promoting efforts on the part of the US has also played a critical
role in increasing awareness and repeat purchases of certain US categories, such as California
prunes and cherries. Moreover, the seasonality gap between China and the US provides
seasonal opportunities for US products, enabling Chinese consumers to enjoy certain US
varieties when domestic counterparts are out of season. For example, US cherries achieved a
dynamic volume CAGR of 34.1% over the review period, which was largely attributed to the
growing popularity of cherries and the season in which US cherries ripen. US cherries are
available from May to September while domestically grown cherries are available mostly from
May to June.
Table 4
Vegetable, Fruit and Nut Exporters to China 2014
Partner
‗000 tonnes
% share
7,624.2
2,632.8
886.8
855.3
734.9
285.4
248.9
232.4
180.8
792.4
14,473.9
52.7
18.2
6.1
5.9
5.1
2.0
1.7
1.6
1.2
5.5
100.0
Thailand
Vietnam
Myanmar
Philippines
Canada
Lao PDR
Indonesia
Ecuador
Chile
Others
World
Source:
Chart 2
Euromonitor International from United Nations Commodity Trade Statistics
Vegetable, Fruit and Nut Exporters to China 2014
© Euromonitor International
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
Source:
Euromonitor International from United Nations Commodity Trade Statistics
Imported pistachios are perceived as premium in quality
China imports a large volume of pistachios. Imported pistachios in China are mainly from the
US, which represented 72.5% of total import volume in 2014. The second largest supplier
country is Iran, which accounted for 27.1% of total import volume. The rest of the trade partners
include Australia, Greece, Thailand, and Turkey.
Despite US dominance of China‘s pistachio market, the US faces stiff competition from Iran.
In 2014, Iran‘s exports to China increased while supply from the US contracted.
Correspondingly, US share of pistachio imports dropped from 88.5% in 2013 to 72.5% in 2014,
while the share of Iran pistachios surged from 9.6% to 27.1%. Iran is currently a leading
pistachio exporter thanks to its premium quality of production and the largest acreage of land
dedicated to pistachio production, which is spread over more than 20 provinces in the country.
Up 70.0% of Iran‘s pistachio crop comes from the Kerman Province, which has an ideal climate
and soil for growing pistachios. In 2014, pistachio production in Iran ramped up significantly,
enabling the increase in export volume. In addition to being competitive in regards to supply,
Iranian pistachios are also a threat in regards to price. The US has long put economic sanctions
on Iran prohibiting Iranian exports which includes pistachios. As a result, many countries in the
EU have stopped importing pistachios from Iran. However, a deal was negotiated in 2015 that
this economic sanction might be lifted over the forecast period. If and when Iranian pistachios
re-enter the global pistachio market, prices will drop, making the competition even more intense.
Chinese consumers prefer imported pistachios, perceiving them as premium in both quality
and flavor. Among all sources, pistachios from the US are the most highly esteemed by Chinese
consumers who believe US produce is trustworthy. Therefore, US pistachios are generally more
expensive than imports from other countries. Iranian pistachios are not as highly thought of as
those from the US.
US pistachios remain the most popular
US pistachios led China‘s imports over the review period, rising from 37,000 tonnes in 2009 to
46,600 tonnes in 2014 with CAGR of 4.7%. However, the volume of US pistachios slipped from
59,900 tonnes in 2013 to 46,600 tonnes in 2014 due to limited supply in the US. Despite the
decrease in quantity, the US remained the main source and accounted for 72.5% of total
imports.
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Although US imports dropped significantly in 2014 and the economic growth in China is
moderate, US pistachios still have opportunities to broaden their business in China.
Consumption in China is expected to continue to grow, driven by population growth and the
continued urbanization trend. US pistachios are more expensive and target premium consumer
groups such as urban residents. With the progressing of urbanization in China, US pistachios
are expected to benefit as the customer base expands.
US pistachios also have opportunities through intensive marketing campaigns. The American
Pistachio Growers received over US$309,000 in federal grant funds for promotion of US
pistachios in China in 2015. The association plans to use the funds to host a series of culinary
and baking seminars that will promote pistachios as an ingredient to the hotel industry in China
and Hong Kong. It has already hosted a series of activities in China to broaden recognition of
pistachios among Chinese consumers. American Pistachio Growers invited Miss California to
tour several Chinese cities to promote the nutritional health benefits of California-grown
pistachios every year, to describe the current and future state of the pistachio farming industry
and to explain why US pistachios are perfect for Chinese consumers. Meanwhile, a series of TV
conferences and other media events were held to report on this tour and attract more public
attention.
As the major suppliers of pistachios are the US and Iran, the Russian ban of European
agricultural products did not affect pistachio exports to China.
The Trans-Pacific Partnership (TPP) is expected to have no material influence on US imports
as China is not a member of the TPP. The TPP may affect the route by which US pistachios
reach mainland China. Some US pistachios are first imported to Hong Kong and then to
Vietnam, and finally enter China through the China-Vietnam border to save costs. As Vietnam is
a member of the TPP, US pistachios can be shipped to Vietnam directly without any tariff.
Therefore, this importing arrangement is expected to be used more often.
Table 5
Country Source: Pistachios to China 2014
Partner
‗000 tonnes
% share
46.6
17.4
0.2
0.0
0.0
0.0
0.0
64.3
72.5
27.1
0.4
0.0
0.0
0.0
0.0
100.0
USA
Iran
Australia
Greece
Thailand
Turkey
Others
World
Source:
Euromonitor International from UN/national trade statistics
Table 6
Imports of Pistachios from USA 2009-2014
tonnes ‗000
Imported pistachios total
Imported pistachios (USA)
USA % share of imports
Source:
2009
2010
2011
2012
2013
2014
50.0
37.0
73.9
65.0
21.2
32.6
59.2
45.0
76.1
69.8
55.6
79.6
67.7
59.9
88.5
64.3
46.6
72.5
Euromonitor International from UN/national trade statistics
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
Regulatory Environment in China
Continued perfection of laws and regulations
To supervise the safety of imported food, Chinese authorities have enacted a series of laws
and regulations, which include the Supervision and Administration Measures for Inspection and
Quarantine of Fruit at Entry, Measures for Inspection and Quarantine of Vegetables at Entry and
Exit, Republic of China Import and Export Commodity Inspection Law, GB16326-2005 Nuts
Food Hygiene Standards, GB 2763-2005 Pesticide Maximum Residue Limit in Food, GB27622005 Limit of Contaminants in Food, GB2760-2007 Food Additives Health Standards, GB148821994 Standards of Radioactive Substances Concentration Limit in Food and the licensing
system for imports of fruits, the Inspection and Quarantine System, etc. The General
Administration of Quality Supervision, Inspection and Quarantine has not issued import permits
for US apples since 2012 due to disease interception at ports of entry. In November 2014, China
lifted its ban on apples from Washington.
The Ministry of Commerce, the General Administration for Industry and Commerce, the
General Administration of Customs and Entry-Exit Inspection and the Quarantine Bureau
Monitoring departments are currently responsible for the regulatory control of imported fresh
fruits, vegetables and nuts. Various regulatory authorities cooperate with each other in import
process. Business bureaus are in charge of import/export approval; local Customs offices are
responsible for approval of Customs registration certificates; the inspection and quarantine
agencies set up by the State Inspection and Quarantine Bureau supervise entry fruit quarantine;
and industrial and commercial administrative bureaus monitor product quality after entry.
Regulation departments collaborate in import process
Importers must follow the rigorous procedure under the supervision of various regulation
departments. Importers must declare to the goods inspection and quarantine institutions once
the goods arrive in China. The waybill, commercial papers, food sanitation and other related
documents have to be submitted and verified. Then the goods are accepted. After clearing
Customs, the goods must be detained in containers or in refrigeration houses for a period of
time to undertake on-site inspection and assessment. The quarantine officers will randomly
select samples from the goods to test the safety in the laboratory. If the sample successfully
passes the test, inspectors will provide certification so that the goods may be sold in China.
Otherwise, the goods will be destroyed, returned or diverted for other purposes.
VAT and tariffs
Import tariffs in China are divided into general Customs tariffs and preferential tariffs. Goods
from countries without signed reciprocal tariff agreements will be levied general import tariffs.
Otherwise, goods will be charged with preferential import tariffs. For vegetables, fruits and nuts,
the preferential tariff is usually 10.0% to30.0%, while general tariffs are usually 70.0% to
100.0%.
According to regulations of the General Administration of Customs of the People‘s Republic of
China, the tariff for both shelled and in-shell pistachios is 5.0%, effective from January 2015.
The value added tax (VAT) is an additional 13.0% for all categories.
Under the China Australia Free Trade Agreement, signed on 17 June 2015, tariffs on a
number of products will be progressively eliminated, which includes the elimination of the tariff
on pistachios and many other nuts by 2020.
Strict food labeling regulations
The PRC Food Safety Law issued on February 29, 2009 regulated food labeling. Article 66
states that imported packaged food labels and instructions should be available in Chinese. The
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labels and instructions should contain the information about the origin, the agent‘s name,
address, and contact information. They also have to be consistent with the PRC Food Safety
Law and other relevant laws and administrative regulations and the requirements of national
food safety standards. Packaged food without Chinese labels and instructions or whose labels
and instructions do not comply with regulations shall not be imported. Article 16 in the Food
Label Regulation issued on August 27, 2007 states that genetically modified products should be
clearly marked in Chinese on the labels.
The Minister of the General Administration for Quality Supervision, Inspection and Quarantine
and the State Administration Bureau for Inspection and Quarantine are responsible for the
regulatory supervision and management of national food trademarks, labeling of national
imported and exported food and for the audit, approval, and certification work of food labels.
The Price Look-Up code (PLU) is placed on the labels of imported agricultural products. It is
an internationally applied code. Common products will have four-digit codes which indicate the
variety, grade, size and producing area. For organic products, figure 9 is added in the front,
while for genetically modified products, figure 8 is added. The PLU code is not compulsory in
practical use. In addition, the PLU code label is easily imitated, so it is not reliable to distinguish
fruit varieties according to the PLU code.
PISTACHIOS: MARKET TRENDS & DEVELOPMENTS
Pistachios: Market Size
Retail market for pistachios grew steadily
Retail consumption increased from 65,900 tonnes in 2012 to 70,200 tonnes in 2014 at a
CAGR of 3.3%. Pistachios are popular among local consumers as nutritious and delicious
snacks, as well as ideal gifts for the holidays. Chinese consumers used to purchase pistachios
more often at festivals. Now, with increasing affordability and leisure hours, they buy pistachios
more often as daily casual snacks.
Three key factors drive domestic consumption of pistachios. First, consumer disposable
income keeps rising due to China‘s continuous economic development, and therefore more
consumers can afford to purchase snacks with higher prices such as pistachios. With the rising
numbers of Chinese people, the consumer group for pistachios will continue to expand and
more consumers may choose pistachios over other less premium nuts or snacks. Second, the
expansion of retail channels to lower-tier cities, combined with development of the online retail
channel, enable more people to have access to pistachios, therefore driving consumption.
Finally, rising awareness of the importance of leading a healthy lifestyle is affecting interest in
pistachios among Chinese consumers. Local consumers, especially those in the major
population centers, purchase pistachios as healthier snacks.
In the forecast period, these three factors will drive retail pistachio consumption. However the
slowdown of the country‘s economy may have an adverse effect on institutional purchases to
cut costs. In addition to the economic issues, state-owned companies and government
administrations are restricted by China‘s anti-corruption campaign from sending gifts which
include pistachios. Therefore, the development of domestic retail consumption is expected to be
driven by increased retail demand for personal consumption.
In-shell and packaged pistachios predominant
Most of the pistachios available in retail channels are the in-shell type. Plain, roasted and
salted flavors are the most common in all channels. Due to the diversified palates of Chinese
consumers, more flavors are being developed. Imported pistachios come in even more flavors
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such as pepper, garlic and fruit. Pistachios are mainly sold in packages or cans. However, in
open markets and independent food stores, pistachios are still sold loose in bulk bins. Loose
pistachios have become far less popular after a scandal involving bleach came to light. Since
packaged pistachios are normally branded, they are perceived to be more trustworthy and safe.
In general, in-shell pistachios that are packaged and branded are the most common.
Table 7
Retail Market Size for Pistachios in China 2012-2017
Pistachios
Market size in US$
million
Market size in LC million
Market size in tonnes
(‗000)
Source:
2012
2013
2014
2015e
2016f
2017f
1,399.6
1,351.6
1,466.5
1,569.2
1,663.3
1,746.5
8,537.8
65.86
8,245.0
68.37
8,945.9
70.2
9,572.1
72.0
10,146.4
73.6
10,653.7
75.0
Euromonitor International from trade sources
Pistachios: Main Varieties and Typical Retail Prices
Limited varieties available in China
Pistachios in China mainly come from Xinjiang province, the US and Iran. The number of
varieties available is limited in the retail market. There are about five different varieties currently
cultivated in Xinjiang: Kerman, Peters, early-maturing, short fruit and long fruit. The Kerman
variety, which originated in Iran, is expected to become the major one produced in Xinjiang.
Pistachios are generally sold dried after simple processing. They have a long shelf life and are
available year-round, unaffected by seasonal factors.
Prices are affected by origin, season, brand and distribution channel
Pistachios are more expensive than most nuts due to their limited production. The average
retail price for pistachios was US$20.89 per kg in 2014, and is expected to reach US$23.28 per
kg in 2017. People of moderate to high income are normally the key consumers of pistachios,
especially imported products. However, with the rising income level of Chinese consumers,
more consumers can afford pistachios.
The price of pistachios varies according to retail outlet. Pistachios in traditional channels such
as open markets and independent food stores used to be the least expensive. Supermarkets
and hypermarkets offer pistachios in a wide price range as there are plenty of products available
in various formats. Pistachios in convenience stores are the most expensive. The online channel
offers the greatest price variety. Both expensive premium pistachios and the cheapest lowquality pistachios can be found in this channel.
Season, country of origin and brand are the other three principle factors influencing the price
of pistachios. Although pistachios are available throughout the year due to the modern
preservation technologies, the price is normally higher during Spring Festival when nuts are in
high demand. The origin also affects the price as consumers are willing to pay more for US
pistachios, which they trust to be of good quality and flavor. The Kerman variety from the US
has a higher price than the same variety from China and Iran. The brand can also establish a
premium price for pistachios due to the perceived safety and quality associated with brand
names. Prices also vary according to inflation rates, fuel and transportation costs, etc.
Summary 1
Summary of Main Varieties for Pistachios
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EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
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Variety
Country of origin
Availability
Price range (US$/Kg)
Kerman
USA
Year-round
22.90-42.95
Kerman
Iran
Year-round
19.85-31.19
Kerman
China
Year-round
17.21-30.29
Short Fruit
China
Year-round
11.83-20.38
Long Fruit
China
Year-round
15.12-24.32
Source:
Euromonitor International from trade sources
SUPPLY CHAIN AND RETAIL ENVIRONMENT
Supply Chain Overview
Importers and manufacturers play key roles within pistachio supply chain
The pistachio supply chain starts from growers, goes through processors, then wholesalers
and manufacturers, and finally retailers. For imported pistachios, the supply chain moves from
producers to importers, and then onward. The role of importers can be categorized into two
types depending on the format of pistachios. The first type of importers import pistachios as raw
material and sell them processors or to consumers directly. The second type of importers offers
processed final products which can be sold to customers directly. In this type, importers usually
undertake the role of distributor or retailer.
Importers play a significant role in the supply chain as imported pistachios represent a
considerable percentage of domestic consumption. There are typically two kinds of route to
market. In the first, imported pistachios are directly imported from the US and Iran, and arrive in
coastal cities in China where they tested by Customs and finally penetrate inland areas through
wholesalers and distributors. In the second route, pistachios enter China through the border
between China and Vietnam. Imported pistachios are normally exported to Hong Kong and then
to Vietnam and finally go into China‘s market through the port in Guangxi Province, which is
next to the border of China and Vietnam. The Chinese and Vietnam governments have reached
an agreement to set up the Guangxi Vietnam Border Trade Channel, aiming at favoring local
residents and small companies with small-volume trading, which will be duty-free and not
included in the Customs statistics. Some importers take use of this channel either for cost
savings or for simplicity of importing procedures.
Manufacturers are also key players within the pistachio supply chain. They either have
contracted with processors that are in charge of processing and packaging or they have their
own processing plants. They also have their own retail brands, such as Ten Wow and Hua Wei
Heng, and some of these brands are promoted well and have a strong national presence. They
normally rely heavily on distributors to achieve this national presence and currently they can
even sell directly to end-consumers through their online stores.
Some manufacturers and retailers are large nationwide companies
Most local pistachio growers are from Xinjiang in northwestern China. Food processors are
centered mainly in Xinjiang, Guangdong, Guangxi and Zhejiang. Importers are mostly located in
Guangdong and Guangxi province, which is near Hong Kong or Vietnam. Wholesalers and
distributors are usually located in either the major production areas or consumption areas. Most
growers, processers, importers, wholesalers and distributors are smaller regional companies.
There is no major trade association for pistachios due to limited domestic production.
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Some manufacturers, such as Ten Wow, Hua Wei Heng, Bestore, Qia Qia, are large in scale
and they usually have extensive distribution networks across the country. They often provide a
range of nuts and snacks under the same umbrella brand. Some manufacturers such as Lai Yi
Fen sell their snack food including pistachios through their own retail distribution channel, which
consists of over 2,000 stores in East, North and South China. With the increasing development
of internet retailing, some online brands have emerged such as Three Squirrels, a startup from
Anhui Province that launches in 2012. Three Squirrels has become the largest retailer of snack
food on Taobao and Tmall, the two largest internet sales platforms in China. The supply chain of
online companies is much shorter than traditional ones as distributors and wholesalers are
omitted. Their retail network is theoretically nationwide as long as the destination can be
reached by third-party delivery companies.
Summary 2
Summary of Key Companies for Pistachios
Company name
Type
Location(s)
Website
Lin‘an Xiaoxiao Food
Co Ltd
Producer
Lin‘an
wclcly.cn.alibaba.com
Xinjiang Production
and Construction
Corps Fruit Industry
Co Ltd
Producer
Kashgar
www.xj359.com/web/
shop/home/a6f630de
51384834a66f4d8824
2df4b3
Anhui Three Squirrels
Online retailing Co
Ltd
Retailer
Wuhu
http://www.3songshu.
com/
Hubei Bestore Food
Co Ltd
Retailer
Wuhan
http://www.517lppz.c
om/
Jiexi County Mianhu
Ruisheng Food
Factory
Wholesaler
Jiexi
jsfoods.1688.com
Xinjiang Kashgar
Kadina Agriculture
Technology Company
Producer
Kashgar
N/A
Shanghai Luole Food
Trading Co Ltd
Importer
Shanghai
wonderfulpistachios.c
om.cn
Tenwow Group
Producer/Distributor
Shanghai
tenwowfood.com/abo
ut.aspx
Lanzhou Zhenglin
Farming Food Co Ltd
Manufacturer
Lanzhou
www.lzzhenglin.com
Ningbo Hengkang
Food Co Ltd
Manufacturer
Ningbo
www.chinahengkang.com
Source:
Euromonitor International from trade sources
Sales Through Retail Distribution Channels for Pistachios
Supermarkets, hypermarkets and independent food stores dominate retail sales
Supermarkets/hypermarkets and independent food stores are the two leading retail channels
for pistachios in China, representing 72.1% of retail market volume in 2014. While the share of
supermarkets and hypermarkets increased from 39.6% in 2011 to 40.4% in 2014, the share for
independent food stores slipped from 36.0% to 31.7% during the same period. Among all the
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retail channels, other channels, consisting mostly of online retailing, saw the strongest growth.
Its retail volume share almost doubled during the review period, surging from 6.4% in 2011 to
11.5% in 2014. The rapid growth enabled other channels to replace convenience stores as the
third largest retail channel following supermarkets/hypermarkets and independent food stores in
2014. By 2017, these three channels are expected to keep their leading positions, whereas
open markets will be the smallest retail channel for pistachios. All of these retail channels
provide pistachios year-round.
Table 8
Sales of Pistachios by Distribution Format 2011/2014/2017
% retail volume
Supermarkets/hypermarkets
Independent food stores
Convenience stores
Discounters
Open markets
Others
Total
Source:
2011
2014
2017f
39.6
36.0
8.2
4.3
5.5
6.4
100.0
40.4
31.7
8.4
3.9
4.2
11.5
100.0
40.6
26.5
8.5
3.8
3.2
17.5
100.0
Official statistics, trade associations, trade press, company research, store checks, trade interviews,
Euromonitor International estimates
Supermarkets and hypermarkets are main distribution channel for pistachios
Supermarkets and hypermarkets represented 40.4% of retail sales of pistachios in 2014 and
this share is expected to rise to 40.6% by 2017. The advance of this channel is mainly attributed
to the swift expansion of supermarkets and hypermarkets in China. After taking a significant role
in large cities, these stores are now accelerating their penetration into lower-tier cities and rural
areas, which will contribute to their increase in retail market share.
Supermarkets and hypermarkets provide a wide range of pistachio formats, both loose and
packaged, throughout the year. While loose pistachios are normally unbranded and lower in
price, packaged ones are usually branded and have higher prices. More premium and imported
produce is available in this channel. Most imported pistachios are from the US. Kerman is the
most common variety for both locally produced and imported pistachios due to its good flavor
and appearance. Long Fruit is also common in this channel. Pistachios are available year-round
in this sales channel.
The price in this channel covers a wide range. Package, origins and brands all affect the
pricing of pistachios in this channel. Imported pistachios from renowned producers are usually
more expensive. Products with boutique packages are also sold at a higher price as they are
targeted at the more affluent consumer group. Prices ranged from US$17.21 to US$71.37 per
kg.
Independent food stores lost share
Independent food stores represented 31.7% of retail sales of pistachios in 2014 and this
share is expected to fall to 26.5% to by 2017. Consumers traditionally buy foods and snacks in
such stores, and many of them still have this habit. Before the prevalence of modern retailers in
China, independent food stores were where Chinese residents normally did their shopping.
However, with the penetration of supermarkets and hypermarkets which offer a wider selection
and better shopping environment, open market share is falling.
Independent food stores are inferior to supermarkets and hypermarkets in terms of the
diversity of products. Pistachios are sold both loose and in packages, but the brands are limited.
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High-end nuts are less often seen. Common flavors are roasted and salted, and the most
popular variety is Kerman. Pistachios are available year-round, at prices ranging from US$15.04
to US$30.81 per kg.
Convenience store share is fairly stable
Convenience stores represented 8.4% of retail sales of pistachios in 2014 and this share is
expected to rise to 8.5% by 2017. Convenience stores managed to maintain its market share
due to its location advantage, as convenience stores are usually set up in areas with high
population density. Due to limited retail space, products available in this channel are
exceptionally limited. Pistachios are normally sold in packages with high prices. The flavor is
always roasted and salted, and the variety is always Kerman. Pistachios are available yearround in this sales channel. Prices ranged from US$20.65 to US$44.75 per kg.
Discounter share is falling
Discounters represented of 3.9% retail sales of pistachios in 2014 and this share is expected
to fall slightly to 3.8% by 2017. Discounters saw no strong development in China, while
supermarkets, hypermarkets and convenience stores are all expanding. Pistachios in this
channel are all packaged, after simple processing and flavoring. Kerman and Long Fruit are the
most popular varieties. Some discounters provide imported pistachios, but they are less
premium and expensive than those in supermarkets and hypermarkets. Seasonality has no
effect on availability. Prices ranged from US$16.34 to US$34.28 per kg.
Open markets gradually losing customers
Open markets represented 4.2% of retail sales of pistachios in 2014 and this share is
expected to fall to 3.2% by the end of the forecast period. Open markets are losing popularity,
especially in major cities because of their unpleasant shopping environment and untrustworthy
quality. Lower price is the primary attraction. However, consumers currently pay more attention
to the safety of foods. The varieties available in this channel are locally grown ones, such as
Kerman and Long Fruit in loose format. Seasonal factors do not affect sales in this channel.
Prices ranged from US$13.11 to US$24.32 per kg.
Sales in other channels are rising due to swift development of online retailing
Other channels represented 11.5% of retail sales of pistachios in 2014 and this share is
expected to see strong growth to 17.5% by 2017. The robust growth of other channels is greatly
attributed to the fast development of online retailing. Increasingly, Chinese consumers are
willing to shop online for the lower prices and convenience. The expansion of the internet and
delivery systems has allowed this customer base to increase even larger. Other channels also
include the TV shopping channel and specialty snack stores, which are becoming more popular.
Online stores offer a wide range of pistachios, in both loose and packaged format. Both locally
grown and imported pistachios are available. Aside from the common Kerman and Long Fruit
varieties that are available in all the channels, online retailers also sell Peters, Short Fruit and
other rare varieties. Online prices cover a wide span due to the diversity of goods, ranging from
US$11.76 to US$75.74 per kg in 2015. Some luxury products with extremely high prices can
also be found in this channel.
Specialty snack store chains also grew significantly in urban areas in recent years. They
provide a large variety of different snacks in small packages, often in single-serving sizes. All
snacks are sold by weight. There are normally one or two selections for each type of snack.
Pistachios in this channel are usually the Kerman or the Long Fruit variety. They are priced
higher than those in independent food stores, open markets and some supermarkets and
hypermarkets. Seasonality does not affect availability in other channels.
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Retail Distribution Channels Overview
Grocery retail value growth continues to decelerate
Grocery retailers registered value growth of 5.0%, to reach US$0.7 trillion in 2014. Retail
value growth decelerated in 2014, thanks to rising purchases of food in internet retailing, and
rising store rentals which slowed new outlet expansion. The number of outlets recorded a
negligible decline in 2014. China Resources Enterprise led grocery retailers with a value share
of 3.0% in 2014, in an extremely fragmented channel. Grocery retailers are forecast to see a
value CAGR of 4.0% at constant 2014 prices from 2014 to 2019.
Growing price-sensitivity among consumers drives sales in internet retailing
Due to low disposable incomes compared with other developed countries, most consumers in
China are still price-sensitive, and prefer to shop in supermarkets and hypermarkets, where
promotional prices can always work to boost volume sales. However, explosive growth in
internet retailing in the country has also persuaded many people who normally shop for food in
physical stores to become active online purchasers of grocery products, particularly dry food
items.
Forecourt retailers seeing rapid growth
Forecourt retailers enjoyed the fastest value growth in 2014, benefiting from the rise in private
car ownership in China and the penetration of chained operators across the country,
represented by state-owned China Petroleum & Chemical Corp and China National Petroleum
Corp, which jointly accounted for a 93.0% share of overall retail value sales in forecourt retailers
in 2014.
Growth of modern retailing over traditional
Grocery accounted for the lion‘s share of value sales in 2014, with a 60.0% share in
hypermarkets and 95.0% in supermarkets in 2014. The dominance of grocery retailing in these
modern retail channels shows that more Chinese consumers have changed their shopping
habits from traditional grocery retailers to modern grocery retailers. The expanded product
portfolio in hypermarkets has attracted consumers to buy more non-grocery items for better
prices, such as furniture, electronics and appliances, apparel and toys.
Table 9
Retail Distribution Channel Trends, Sites/Outlets 2011/2014/2017
Sites/Outlets
Supermarkets/hypermarkets
Independent food stores
Convenience stores
Discounters
Open markets
Other channels
Source:
2011
2014
2017f
1,06,845
14,65,608
62,589
854
40,518
n/a
1,30,621
15,85,985
83,393
900
39,382
n/a
1,54,376
16,60,055
1,04,760
933
37,979
n/a
Trade associations, trade press, company research, trade interviews, Euromonitor International
estimates
Key Retail Formats in China
© Euromonitor International
19
EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
Passport
Supermarkets
Supermarkets were the biggest channel in value terms in 2014, representing a 47.0% share
of total retail value sales in grocery retailing. As the earliest market entrant in modern grocery
retailers, and the widest in terms of market presence, supermarkets are the most familiar
channel to consumers in China. Medium in size and more convenient in location than
supermarkets, hypermarkets are an indispensable part of grocery shopping for many locals.
Hypermarkets
Hypermarkets saw healthy growth in 2014, outperforming the average for grocery retailers in
value terms. To many consumers of lower income, hypermarkets are just department stores
where they can shop for almost everything at competitive prices, in addition to their daily grocery
products such as rice, vegetables and fruits.
Table 10
Leading Supermarket Chains in China, Sites/Outlets 2012-2014
Brand
Lianhua Supermarket
CR Sugo
CR Vanguard Supermarket
Wenfeng
Wuhan Zhongbai
Jia Jia Yue
Hualian
NGS-mart
JOY Mart
Interspar
Jiadeli
Silver Plaza
CBEST
Wumart
Super-Mart
Others
Total
Source:
Company name
2012
2013
2014
Lianhua Supermarket
Holdings Co Ltd
China Resources
Enterprise Ltd
China Resources
Enterprise Ltd
Wenfeng Great World Chain
Wuhan Zhongbai Group Co Ltd
Shandong Jia Jia Yue
Group Co Ltd
Lianhua Supermarket
Holdings Co Ltd
Shanghai Nong Gong Shang
Supermarket
Hefei Department Store
Group Co Ltd
Internationale Spar
Centrale BV
Shanghai Jiadeli
Supermarket Co Ltd
Silver Plaza Group Co Ltd
Chongqing Department
Store Co Ltd
Wumart Stores Inc
Better Life Commercial
Chain Share Co Ltd
Others
Total
1,949
1,943
1,953
1,100
1,200
1,290
897
970
1,020
810
579
560
860
625
571
890
665
591
561
526
516
490
485
495
170
178
185
145
156
175
160
160
160
109
92
136
97
156
102
93
75
94
77
96
88
1,02,864
1,10,654
1,09,658
1,17,736
1,16,418
1,24,800
2012
2013
2014
468
512
530
Trade associations, trade press, company research, trade interviews, Euromonitor International
estimates
Table 11
Leading Hypermarket Chains in China, Sites/Outlets 2012-2014
Brand
Company name
CR Vanguard
© Euromonitor International
China Resources
Enterprise Ltd
20
EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
Walmart Supercenter
RT Mart
Wuhan Zhongbai
Yonghui
Carrefour
CR Sugo
Beijing Hualian
Century Mart
Sanjiang
Renrenle
Tesco Legou
A-Best
Hyper-mart
Wushang
Others
Total
Source:
Walmart (China)
Investment Co Ltd
Sun Art Retail Group Ltd
Wuhan Zhongbai Group Co Ltd
Yonghui Superstores Co Ltd
Carrefour (China)
Hypermarket Co Ltd
China Resources
Enterprise Ltd
Beijing Hualian
Hypermarket Co Ltd
Lianhua Supermarket
Holdings Co Ltd
Sanjiang Shopping Club Co
Ltd
Renrenle Commercial Group
Co Ltd
Tesco China Co Ltd
Shenzhen A-Best
Supermarket Co Ltd
Better Life Commercial
Chain Share Co Ltd
Wuhan Department Store
Group Co Ltd
Others
Total
Passport
347
383
400
219
244
189
218
264
264
233
236
317
284
268
255
207
224
240
180
195
205
157
156
161
146
148
158
123
121
123
116
113
121
110
58
77
97
100
92
95
2,100
4,872
2,322
5,340
2,457
5,821
Trade associations, trade press, company research, trade interviews, Euromonitor International
estimates
Independent food stores
Independent small grocers are not competitive at all in terms of value sales compared with
modern grocery retailers. However, these stores are able to survive in the market due to their
complementary nature to the mainstream channels. These independent small grocers are
usually conveniently located in or near residential areas, offering fresh fruits and seasonal
vegetables, with no long lines for the cashier or maze-like corridors, as in supermarkets and
hypermarkets.
Convenience stores
With the faster pace of life, more consumers demand convenience in their grocery shopping.
Convenience stores are forecast to record a stronger value CAGR than the average for grocery
retailers, driven by their customer-centric services and the convenience of shopping around the
corner for nearby residents or office workers.
Discounters
Discounters are expected to experience a sluggish value CAGR in the forecast period, due to
the fierce competition from supermarkets and hypermarkets, and its ambiguous market
positioning in China. Among all modern grocery retailers, discounters are expected to register
the lowest value CAGR over the forecast period at constant 2014 prices.
Open markets
Despite the strong competition from modern grocery retailers such as supermarkets,
hypermarkets and convenience stores, traditional grocery retailers are expected to survive,
maintaining the same 1.0% value CAGR at constant 2014 prices in the forecast period as seen
© Euromonitor International
21
EXPORT MARKET DEVELOPMENT REPORT: PISTACHIOS IN CHINA
in the review period. This is mainly because traditional grocery retailers play an important role of
complementing modern grocery retailers in the local market.
Other formats (as relevant)
Internet retailing of grocery products is expected to see robust growth in China in the forecast
period, fueled by the rising acceptance of online shopping among local consumers, and the
rapid growth of grocery products distributed by pure internet retailers or by the online sales
departments of store-based grocery retailers. The convenience trend is expected to be the most
important factor behind the buoyant growth of internet retailing of grocery products, as just a few
clicks can complete the whole process of grocery shopping for time-pressed consumers, which
can take more than an hour including waiting in a long line for the cashier.
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