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Consumer Lifestyles: Food Scares - China - September 2012

“As China’s food scares crisis persists, companies continue to seek effective strategies to ensure that their products do no harm. However, a food scare is a many-headed hydra – farmers, logistics suppliers, food manufacturers, packagers and retailers are all weak points in a very weak chain. Meanwhile, the central government is enacting new legislation and regulation but often struggles to follow up with effective enforcement. Chinese consumers cannot simply sit back and expect China’s farmers or politicians to act. People must adopt effective self-protection strategies. Brands can tap into this by ensuring their own supply chain is safe and that their customers’ trust is retained. The alternative is, at best, reduced sales and, at worst, criminal liability. Food safety in China is now a very serious business, not just for consumers but also for manufacturers, brands and the government.”

- Matthew Crabbe, Research Director, Mintel Asia-PacificAnalyst Title

Some questions answered in this report include:

  • What is China's history of food poisoning?
  • What segments of the food chain are causing challenges?
  • What have been the recent major food scares?
  • How is the government focusing on regulatory improvement?
  • How are consumers look to protect themselves?

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Table of contents

  1. Introduction

      • Research methodology
        • Abbreviations
          • Cleaning up China’s national food supply chain from farm to fork
            • Market background – the root of the problem
              • Exports still on the rise
              • Executive Summary

                • A brief history of food poisoning
                  • Figure 1: China’s Food Expenditure, 2005-10
                • Plotting China’s broken food chain – from farm to fork
                  • Figure 2: China’s Shrinking Farm Land – arable land capita, 1960-2030
                  • Figure 3: The rising power of the supermarket in China, 2007-11
                • Major recent food scare issues
                  • It is up to brands, manufacturers and retailrs to secure trust
                    • Figure 4: How likely are you to pay a premium price for fair trade, March 2012
                  • Consumers look to protect themselves
                    • Figure 5: Categories of “organic” food ever bought in the last 12 months, March 2012
                    • Figure 6: Preference for local or international brands, March 2012
                  • The future
                  • A Brief History of Food Poisoning in China

                    • Key points
                      • China’s consumers wake up to the danger on their plates
                        • Figure 7: China’s Food Expenditure, 2005-10
                      • SFDA set up to supervise the food industry
                        • Food scares go global – US pet food contamination
                          • Sanlu milk scandal
                            • Other scandals
                              • What it means
                              • Plotting China’s Broken Food Chain – From Farm to Fork

                                • Key points
                                  • Introduction
                                    • Stage 1 – the farm
                                      • The case of pork – the “people’s meat”
                                        • Pork consumption in China
                                          • Figure 8: Pork – The “People’s Meat”, at current prices, sales 2005-10
                                        • How epidemic can lead to contamination
                                          • Structure of the Chinese farming sector
                                            • Figure 9: Arable land per capita, in comparative countries, 2010
                                            • Figure 10: Breakdown of costs associated with running a Chinese farm, 2011
                                            • Figure 11: China’s Shrinking Farm Land – arable land capita, 1960-2030
                                          • Stage 2 – the logistics process
                                            • Getting end-to-end
                                              • Supply chain development key to reduction in food scares
                                                • Figure 12: China’s growing milk production, 2005-10
                                              • Melamine scandals
                                                • Modernisation of the dairy sector
                                                    • Figure 13: Comparison in spending on fresh milk this year vs last year, March 2012
                                                  • Stage 3 – production
                                                    • Too many companies, too thin margins
                                                      • Figure 14: China’s food manufacturing economy, 2006-10
                                                    • Stage 4 – retail
                                                      • Chain retailing now dominates but can you trust what’s on the label?
                                                          • Figure 16: The rising power of the supermarket in China, 2007-11
                                                        • What it means
                                                        • Major Recent Food Scares

                                                          • Key points
                                                            • Toxic Plasticiser
                                                                • Figure 17: China’s total carbonated soft drinks sales (on-trade and off-trade), by volume, 2006-10
                                                              • Steroids
                                                                • Figure 18: Meat Output in China, 2005-10
                                                              • “Gutter Oil”
                                                                • Figure 19: A most essential ingredient: China’s cooking oil market, 2005-15
                                                                • Figure 20: China: Volume year-on-year growth, 2005-15
                                                              • Dyed Steamed Buns
                                                                • China’s exploding watermelons
                                                                  • Bottled foreign nitrate
                                                                    • Figure 21: China’s growing taste for bottled water, 2004-15
                                                                    • Figure 22: China bottled water market share, 2009-11
                                                                  • Frozen dirty dumplings
                                                                    • What it means
                                                                    • Consumers Look to Protect Themselves

                                                                      • Key points
                                                                        • Self-protection strategy 1 – opt for the supermarket: adopting chain retailing
                                                                            • Figure 23: Where to buy? Main weekly shopping and top-up shopping destination, March 2012
                                                                            • Figure 24: Main weekly grocery shop by age and gender, March 2012
                                                                          • Self protection strategy 2 – study the label: consumer use of packaging information
                                                                              • Figure 25: Consumer likelihood of checking packaging information and labelling, March 2012
                                                                              • Figure 26: Label checking: the case of infant formula, March 2012
                                                                            • Self protection strategy 3 – living the green life: go organic
                                                                                • Figure 27: Categories of “organic” food ever bought in the last 12 months, March 2012
                                                                                • Figure 28: Where to buy “organic”?, March 2012
                                                                                • Figure 29: Is “organic” and “green” worth paying more for?, March 2012
                                                                                • Figure 30: The non-specific vs. the scientific - claims worth paying more for, March 2012
                                                                                • Figure 31: The non-specific vs. the scientific - claims worth paying more for, March 2012
                                                                              • Self protection strategy 4 – buying international: rejecting domestic brands for foreign ones
                                                                                  • Figure 32: Preference for local or international brands, March 2012
                                                                                • Self protection strategy 5 – cutting out the bad stuff: opting out of food and beverage categories
                                                                                    • Figure 33: Reasons for buying less than last year, March 2012
                                                                                  • What it means
                                                                                  • The Future

                                                                                    • Key points
                                                                                      • Problems remaining local but Chinese food is going global
                                                                                        • Changing the way China farms
                                                                                          • Signs of progress? China is now a low trust society, not a no trust society
                                                                                          • Appendix – Places to Buy

                                                                                              • Figure 34: Shopping destination, March 2012
                                                                                              • Figure 35: Most popular main weekly grocery shopping destination, by demographics, March 2012
                                                                                              • Figure 36: Most popular top-up shopping destination, by demographics, March 2012
                                                                                              • Figure 37: Next most popular top-up shopping destination, by demographics, March 2012
                                                                                              • Figure 38: Other top-up shopping destination, by demographics, March 2012
                                                                                          • Appendix – Food Purchase this Year Compared to Last Year

                                                                                              • Figure 39: Comparison in spending on food this year vs last year, March 2012
                                                                                              • Figure 40: Comparison in spending on frozen food this year vs last year, by demographics, March 2012
                                                                                              • Figure 41: Comparison in spending on fresh food this year vs last year, by demographics, March 2012
                                                                                              • Figure 42: Comparison in spending on cooking oil this year vs last year, by demographics, March 2012
                                                                                              • Figure 43: Comparison in spending on pork this year vs last year, by demographics, March 2012
                                                                                              • Figure 44: Comparison in spending on beef this year vs last year, by demographics, March 2012
                                                                                              • Figure 45: Comparison in spending on chicken this year vs last year, by demographics, March 2012
                                                                                              • Figure 46: Comparison in spending on fish/seafood this year vs last year, by demographics, March 2012
                                                                                              • Figure 47: Comparison in spending on infant formula this year vs last year, by demographics, March 2012
                                                                                              • Figure 48: Comparison in spending on fresh milk this year vs last year, by demographics, March 2012
                                                                                              • Figure 49: Comparison in spending on milk powder this year vs last year, by demographics, March 2012
                                                                                              • Figure 50: Comparison in spending on bottled water this year vs last year, by demographics, March 2012
                                                                                              • Figure 51: Comparison in spending on chocolate confectionary this year vs last year, by demographics, March 2012
                                                                                              • Figure 52: Comparison in spending on savoury snacks this year vs last year, by demographics, March 2012
                                                                                          • Appendix – Reason for Buying Less this Year Compared to Last Year

                                                                                              • Figure 53: Reasons for buying less, March 2012
                                                                                              • Figure 54: Reasons for buying less frozen foods, by demographics, March 2012
                                                                                              • Figure 55: Reasons for buying less fresh foods, by demographics, March 2012
                                                                                              • Figure 56: Reasons for buying less cooking oil, by demographics, March 2012
                                                                                              • Figure 57: Reasons for buying less pork, by demographics, March 2012
                                                                                              • Figure 58: Reasons for buying less beef, by demographics, March 2012
                                                                                              • Figure 59: Reasons for buying less chicken, by demographics, March 2012
                                                                                              • Figure 60: Reasons for buying less fish/seafood, by demographics, March 2012
                                                                                              • Figure 61: Reasons for buying less infant formula, by demographics, March 2012
                                                                                              • Figure 62: Reasons for buying less fresh milk, by demographics, March 2012
                                                                                              • Figure 63: Reasons for buying less milk powder, by demographics, March 2012
                                                                                              • Figure 64: Reasons for buying less bottled water, by demographics, March 2012
                                                                                              • Figure 65: Reasons for buying less chocolate confectionary, by demographics, March 2012
                                                                                              • Figure 66: Reasons for buying less savoury snacks, by demographics, March 2012
                                                                                          • Appendix – Likelihood of Using Packaging Information

                                                                                              • Figure 67: Likelihood of using packaging information, March 2012
                                                                                              • Figure 68: Likelihood of using most popular packaging information (any likely), by demographics, March 2012
                                                                                              • Figure 69: Likelihood of using popular packaging information (any likely), by demographics, March 2012
                                                                                              • Figure 70: Likelihood of using packaging information (any likely), by demographics, March 2012
                                                                                              • Figure 71: Likelihood of using other packaging information (any likely), by demographics, March 2012
                                                                                              • Figure 72: Likelihood of using packaging information like sell by date stamp, by demographics, March 2012
                                                                                              • Figure 73: Likelihood of using packaging information like net content, by demographics, March 2012
                                                                                              • Figure 74: Likelihood of using packaging information like country of origin, by demographics, March 2012
                                                                                              • Figure 75: Likelihood of using packaging information like name and address of manufacturer and distributor, by demographics, March 2012
                                                                                              • Figure 76: Likelihood of using packaging information like industry certification label, by demographics, March 2012
                                                                                              • Figure 77: Likelihood of using packaging information like storage instructions, by demographics, March 2012
                                                                                              • Figure 78: Likelihood to of using packaging information like consumption instructions, by demographics, March 2012
                                                                                              • Figure 79: Likelihood of using packaging information like cooking/heating instructions, by demographics, March 2012
                                                                                              • Figure 80: Likelihood of using packaging information like list of ingredients, by demographics, March 2012
                                                                                              • Figure 81: Likelihood of using packaging information like ingredient claims, by demographics, March 2012
                                                                                              • Figure 82: Likelihood of using packaging information like allergy information, by demographics, March 2012
                                                                                              • Figure 83: Likelihood to use packaging information like food sensitivity advice, by demographics, March 2012
                                                                                              • Figure 84: Likelihood of using packaging information like nutritional information, by demographics, March 2012
                                                                                              • Figure 85: Likelihood of using packaging information like nutrition claims, by demographics, March 2012
                                                                                              • Figure 86: Likelihood of using packaging information like dietary information, by demographics, March 2012
                                                                                              • Figure 87: Likelihood of using packaging information like brand name, by demographics, March 2012
                                                                                              • Figure 88: Likelihood of using packaging information like product claims, by demographics, March 2012
                                                                                          • Appendix – Types of Food or Drink that Consumers Check Packaging Information For

                                                                                              • Figure 89: Types of food or drink that consumers check packaging information for, March 2012
                                                                                              • Figure 90: Most popular types of food or drink that consumers check information for, by demographics, March 2012
                                                                                              • Figure 91: Next most important type of food or drink that consumers check information for, by demographics, March 2012
                                                                                              • Figure 92: Other types of food or drink that consumers check information for, by demographics, March 2012
                                                                                          • Appendix – Stores Where Organic Food is Bought

                                                                                              • Figure 93: Stores where organic food and drink is bought, March 2012
                                                                                              • Figure 94: Most popular stores where organic food and drink is bought, by demographics, March 2012
                                                                                              • Figure 95: Next most popular stores where organic food and drink is bought, by demographics, March 2012
                                                                                          • Appendix – Types of Organic Food and Drink Bought

                                                                                              • Figure 96: Types of organic food and drink bought in the last 12 months, March 2012
                                                                                              • Figure 97: Most popular types of organic food and drink bought in the last 12 months, March 2012
                                                                                              • Figure 98: Next most popular types of organic food and drink bought in the last 12 months, March 2012
                                                                                              • Figure 99: Other types of organic food and drink bought in the last 12 months, March 2012
                                                                                          • Appendix – Organic or Product Process Based Claims Worth Paying Extra For

                                                                                              • Figure 100: Claims worth paying extra for, March 2012
                                                                                              • Figure 101: Most popular claims worth paying more for (any likely), by demographics, March 2012
                                                                                              • Figure 102: Other claims worth paying more for (any likely), by demographics, March 2012
                                                                                              • Figure 103: Organic claims worth paying more for, by demographics, March 2012
                                                                                              • Figure 104: Green claims worth paying more for, by demographics, March 2012
                                                                                              • Figure 105: Fair trade claims worth paying more for, by demographics, March 2012
                                                                                              • Figure 106: All natural claims worth paying more for, by demographics, March 2012
                                                                                              • Figure 107: Light claims worth paying more for, by demographics, March 2012
                                                                                              • Figure 108: Premium/gourmet claims worth paying more for, by demographics, March 2012
                                                                                              • Figure 109: Healthy claims worth paying more for, by demographics, March 2012
                                                                                              • Figure 110: Quality-approved claims worth paying more for, by demographics, March 2012
                                                                                          • Appendix – Preference for Local or International Brands

                                                                                              • Figure 111: Preference for local or international brands, March 2012
                                                                                              • Figure 112: Most popular preference for international brands, by demographics, March 2012
                                                                                              • Figure 113: Next most popular preference for international brands, by demographics, March 2012
                                                                                              • Figure 114: Most popular preference for local brands, by demographics, March 2012
                                                                                              • Figure 115: Next most popular preference for local brands, by demographics, March 2012
                                                                                          • Appendix – Food Allergies, Sensitivities and Special Diets

                                                                                              • Figure 116: Food allergies, sensitivities and special diets, March 2012
                                                                                              • Figure 117: Food allergies, sensitivities and special diets (myself), by demographics, March 2012
                                                                                              • Figure 118: Food allergies, sensitivities and special diets (someone else in my household), by demographics, March 2012

                                                                                          Companies Covered

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                                                                                          Consumer Lifestyles: Food Scares - China - September 2012

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