Sunday 20 October 2019

Food scandals in China open the door for big surge in Irish exports

Q: How do you get a consumer to pay extra for a food brand when the cheaper own-brand or local alternative promises to do the same thing?

A: Sell it in China.

It seems counter-intuitive that an economy famed for churning out the cheapest of the cheap products the rest of the world gorges on would be a real honey-trap for expensive imported food brands.

After all, if one of the biggest problems for Irish food brands is the competition from the supermarkets' own-brand lines, how could their products command huge mark-ups in the world's most cost-competitive economy?

This week's story about China's hair-raisingly dodgy meat trade puts things in perspective however.

Reports from that country's public security ministry revealed that 20,000 tonnes of counterfeit and diseased meat was confiscated during the first three months of 2013. It certainly puts our horsemeat 'crisis' into perspective.

Among the 900 arrested were 63 members of a gang that made €1.2m from selling fox, mink and rat meat at farmers' markets over the last four years. Ten tonnes of meat and chemicals, including gelatine, colouring and nitrate was seized at the gang's premises during the raids.

Another case involved the sale of duck meat as beef and lamb jerky with dangerously high levels of deadly E-coli bacteria.

In Shaanxi province, mutton that turned black and reeked of agricultural chemicals killed one person and poisoned others.

In Fujian, five people were arrested after it was discovered that they were selling diseased pig carcases that they were being paid to collect from farms and dispose of properly by the agriculture ministry.

All of this comes hot on the heels of the discovery in March of 16,000 pig carcases in a river in Shanghai.

China's huge poultry industry is also reeling in recent weeks after 26 people died from the latest virulent strain of avian flu. Other recent food scandals include glow-in-the-dark pigs and exploding watermelons. It'd be hilarious if it wasn't so serious.

But herein lies a massive opportunity for Irish food exporters. Foreign brands that gain a reputation as trustworthy command extortionate premiums over the local competition.

Take infant milk formula, for example. It sells for over €50,000 a tonne in China, despite the fact that the same product is selling for less than half of this on western shelves.

This is driven by the fallout from a huge infant formula scandal in China in 2008 when six babies died and 50,000 fell ill after consuming locally produced product laced with industrial proteins.

Of course, the stakes are much higher in China on what is placed in a child's mouth. This is 'inverted pyramid' effect, where the one child policy has resulted in all the dreams and expectations of two parents, four grandparents and possibly more great-grandparents resting on the well-being of a single child.

Happily, Ireland currently produces over 15pc of all of the world's infant formula – an amazing achievement by any standards.

But there is a similar opportunity for our multi-billion meat business. For example, Ireland's largest pig processor, Rosderra, has already seen an exponential increase in sales in China. And the sky is the limit in terms of volumes.

It is a slow process. Breaking into China is all about building relationships and trust. You may have the finest product on the planet, but nobody there simply takes your word for it. You've got to prove it over time.

Every additional food scandal to hit the Chinese headlines should be an extra digit on Irish food exporters'' bottom lines.

Irish Independent

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