Written by Joel Bacall @TheSilkInitiative
Food and beverage manufacturers can leverage China’s growing appetite for nuts by creating value-added products suited to more affluent tier 1 cities.
Almonds are leading the way in the Australian nut industry, largely driven by growth in Asia, with total exports expected to hit $605 million by 2020.
As China’s population urbanizes, grows wealthier, travels more, and is exposed to more food options, consumers want greater access to these products at home. Chinese consumers have always considered eating nuts as healthy, but as they grow more affluent and health-conscious, we’re seeing almonds emerge as a common snack rather than just for special occasions or gifts.
There’s also strong interest in Asia in pecans and macadamias. China now accounts for 27 percent of all Australian macadamia sales, with the wholesale market valued at $75.9m last year. In-shell exports to China account for about 80 percent of the total market, according to the Australian Macadamia Society.
Macadamias are also a popular snack in China, most commonly eaten from the shell. With increasing health awareness, we’re starting to see the emergence of value-added categories like milks, oils, milled powder, and spreads, as well as more diversity in flavoured nuts as snacks. We’re also starting to see nuts used in baking.
We can only expect to see the demand for value-added nut products increase as the market matures and people become more aware of the different ways they can consume nuts.
The use of nuts in products like milks and spreads instantly adds a premium appeal and offers opportunities for manufacturers to drive new product innovation.
Australian macadamia industry research on opportunities in the global ingredient market confirms consumers believe adding macadamias to other food products instantly adds premium appeal, and they’re willing to pay up to 10 percent more for products with the sought-after nut as an ingredient.
While nuts are commonly added to chocolate, there is further opportunity for using nuts in other products, such as artisan crackers, yoghurt, cereals and frozen goods.
Chinese consumers shows they consider the original, natural nut flavour in foreign food and beverage products to be premium compared to the locally made imitation nut flavours.
“I would like to see more products containing natural nuts, with a subtle, sweet taste. Nut flavors created by artificial additives are a nightmare,” according to Ms. Lee, a college graduate in her 20s in Shanghai. “Premium means original flavour for me with no additives. That’s what makes the products look premium – not the various horrible flavours we have in China. I add nuts to yogurt but would like more options where they’re already part of the yogurt and ready to eat. I also really enjoy nuts in ice cream and various nut milks, like almond and peanut.”
The Australian Macadamia Society has invested about $1 million since 2015 promoting the macadamia nut to tier 1 cities, with the another $500,000 forecast over the next 12 months to position Australia as the best source for the nuts, capitalising on the country’s clean and green image.
According to Market Development Manager, Lynne Ziehlke, the campaign targets high-income professional women in top-tier cites to position Australian macadamias as the premium, trusted choice. The campaign also promotes the health benefits of macadamia nuts as best for infants, highlighting the benefit of high omega fatty acids for brain development.
Ms Ziehlke says, “We’re positioning the macadamias as the beauty nut, with a range of health benefits.
Macadamias are popular with Chinese consumers, they are interested in them, and the challenge now is education about origin and maximising demand for our product.”
Food and beverage manufacturers can capitalise on this investment, aligning their messaging with the growing awareness of the target population.
General marketing messages can also align with existing beliefs around traditional Chinese medicine, which considers various types of nuts beneficial for consumption in winter due to their “warming” qualities. Most nuts are also thought to nourish and strengthen kidneys, the brain, and heart. It’s also believed that eating nuts in winter helps a person keep warm and improve their overall physical wellbeing. Nut congee, a type of rice-based porridge, is popular with older Chinese for these reasons.
Smart brands will capitalise on the growing awareness of the health benefits of nuts in China.
Food manufacturers can not only use nuts to innovate and expand their product ranges, but also, by playing up the functional benefits of nuts and the premium perception of them in China, they can also elevate their brands and ultimately command higher prices.