

As protein demand slows and quality becomes more important, Chinese animal protein companies will likely focus outbound investment in the coming years on adopting best practices employed by global food processing companies, according to a recent Rabobank report.
In the China Animal Protein Demand Outlook to 2020 released last month, detailing the nation’s pork, poultry and beef markets, the Dutch bank noted that westernizing diets among middle class consumers continue to drive growth, albeit at a slowing pace.
“After experiencing rapid growth in the 1990s and steady growth in the 2000s, meat demand growth has slowed further this decade,” wrote senior animal protein analyst Chenjun Pan. “This is mainly because the previous rapid growth was based on a very low consumption level, but meat consumption has now reached a threshold level.”
The report predicts that Chinese pork and beef demand will grow 1 percent and 1.4 percent annually through 2020, respectively, while poultry demand will slow from its previous 1.9 percent pace to 1.1 percent.
As this occurs, and as the animal protein market matures, Pan noted that the quality of meat is becoming more important than quantity. In order to cater to this, she wrote that future outbound investments by China’s animal protein companies will likely focus on acquiring best practices — from processing to supply security and technology — from international food companies.
One firm well positioned to narrow that gap is New Hope Group, a Chinese food and agri conglomerate that is also the main investor in food-focused Hosen Investment Management, which closed its Hosen Fund III on $440 million earlier this month.
Earlier this week in Beijing, New Hope chairman Liu Yonghao told China Daily that he hopes to increase the percentage of the company’s offerings produced internationally by four times in the next 10 years through investments in global food companies that will give the firm access to advanced research, seeds, breeding and logistics.
“Nowadays, people are eyeing quality food but that’s in short supply, be it quality beef, lamb and premium seafood. Demand is massive and we need to meet people’s requirements,” he said. “To fill the demand-supply gap in the premium protein segment, we need to integrate our efforts in overseas and domestic markets.”
Existing private equity investments directly into China’s animal protein sector include KKR’s $400 million investment in vertically-integrated chicken meat producer Sunner Development, its $150 million stake in meat distributor COFCO Meat and Proterra Investment Partners’ majority stake in Riverstone Farms, a pork producer.