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日益紧密的全球及中国乳业市场

发展与展望、机遇与挑战

June 2014

Sandy Chen 陈炜 Senior Analyst

Food & Agribusiness Research and Advisory 食品与农业研究及咨询部 Rabobank International 荷兰合作银行

全球市场发展和展望 a

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Why is China important?

Source: Various

One of the largest dairy market Milk deficits rising in recent years Demand growing!

4

Strong growth in dairy imports in recent years

5

In 2013, increased Chinese buying from a shrinking pool left less product for other importers

Source: Rabobank

Prices rose to ration supply.

6

Global commodity prices have surged in 2013/14

7

We expect a 4% growth in milk supply in export regions in H1 14 (on weak comparables), then a slowdown

8

The increase in milk surplus in export regions will exceed China’s additional requirements in H1 2014

For the first time in 12

months, non Chinese

buyers get the chance to

increase imports

Prices will ease, as the

need to ration supply

reduces

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Global commodity prices: easing off, but not a crash

10

Growth in EM, and constraints on their ability to expand milk supply quickly, will fuel an era on strong trade expansion

Combining Rabobank forecasts, deficit regions around the world would import an additional 25 billion litres of imports by 2020 (CAGR 5.1% p.a)

Dairy export share 2012

Where will the export milk come from?

New Zealand 27.9%

EU 26.0%

US 11.8%

Australia 6.7%

Belarus 4.2%

Argentina 3.7%

Uruguay 2.1%

ROW 17.7%

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Rabobank believes this is credible scenario of trade growth to 2020

Real constraints exist on

growth in low cost regions

EU to provide the major

contribution as quotas come

off

USA will have to play a

bigger role

Meeting market

requirements will be a

stretch

12

Corporate responses

Margins have been defended (though pressure still on)

But companies more reliant on trade and acquisitions for growth

Consolidation, emerging market entry, co-op. capital raising remain prominent

A challenge will be to balance the quest for growth and returns in coming years

13

Processors and traders are building farms

Emerging market players: securing (safe) supply in the home market is a priority

14

Buyers are tying up with/acquiring offshore suppliers

While Brazilian companies consolidate

15

M&A’s in the global dairy sector in the recent past

Exposure to Italy, Portugal, Romania,

Canada, Russia, South Africa, Venezuela,

Columbia, Paraguay

Nestle acquired Pfizer Nutrition

(Wyeth) for infant nutrition

exposure in emerging markets

Lactalis acquired Parmalat for

exposure to global

markets/emerging markets

Saputo acquired DCI and

Morningstar in US, Warrnambool

Cheese & Butter (new categories

and global footprint)

FrieslandCampina acquired

Alaska Milk in the Phillippines and

dairy processors in Eastern

Europe

Arla consolidated Milk Link in UK

and MUH in Germany

Müller acquired Wisemans in UK

and set up JV with Pepsi in US

Bongrain invested in equity of

Mikaut in Argentina

Fonterra set up JV with A Ware in

the Netherlands, invested in

corporate farms in China

Pepsi acquired Wimm-Bill-Dann

in Russia

General Mills acquired Yoplait

Kirin acquired National Food and

Dairy Farmers in Australia

Mengniu acquired Yashili and

sizeable stake in China Modern

Dairy

…

中国乳业市场 – 需求 b

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One of the world's largest dairy markets and one of the fastest growing

Rising income of currently low income consumers will drive growth of dairy demand into the

next decade

Imbalance in the development of supply chains have led to a series of milk contamination

(deliberate or accidental) scandals in recent years and a rising wave of imports

Circa 80%+ self sufficient and struggling to maintain this level of self sufficiency given the

rapid market growth vs. structural developments in onshore dairy farming

Reliance on imported feed components will make it difficult to increase self sufficiency levels

quickly; with ongoing investments, local supply will rise over time, but at a cost

Product safety will continue to be a concern and will be an important factor in brand value

Trend of premiumisation increases demand for high quality raw milk

China’s dairy market at a glance

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Why is China important?

Source: Various

One of the largest dairy market Milk deficits rising in recent years Demand growing!

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The rural-to-urban income divide has fostered inward focus

711 Million 642 Million

0% 20% 40% 60% 80% 100%

1978

1980

1985

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Urban Rural

Source: China Statistics Yearbook, Rabobank

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1978

1980

1985

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

US$

Urban Rural

Source: China Statistics Yearbook, Rabobank, Rmb6.22/USD constant for prior years

Urban / rural population balance in China

Urban vs. Rural per capita disposable income

3.1 x

20

Protein-ization as urban, rural migrants climb the income curve

Source: China Statistics Yearbook, Rabobank

Urban per capita consumption by income

0 5 10 15 20 25

Tea

Beer

Fruit Wine

Liquor

Yogurt

Milk Powder

Milk

Eggs

Mutton

Beef

Pork

kg Top 10% Bottom 10%

X 2.5

X 2.2

X 3

21

-

10,000

20,000

30,000

40,000

50,000

60,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

US$m

Other Dairy

Yoghurt

Milk powder

Long-Life/UHT Milk

Fresh/Pasteurised Milk

Flavoured Milk Drinks

Cheese

Infant Milk Formula

Dairy retail sales value in China, by category

Source: Euromonitor, Rabobank estimates

CAGR

’00-’06 ’06-’12

Overall

6.2% 7.2%

19.7% 15.8%

46.6% 9.3%

10.1% 7.6%

31.8% 19.8%

17.5% 18.9%

27.5% 13.7%

Dairy retail sales value quadrupled over the last decade

8.2% -1.8%

18.1% 26.7%

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Infant milk formula shelves in a Shanghai hypermarket

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The Chinese Infant Formula industry in a state of flux

The government’s perception/intention:

Local industry seen as unsafe by consumers

Face issue with ‘suitcase’ imports

Pricing seen as too high

Wants viable local players Government responses to date

Crack down on ‘suitcase’ trade

Forcing local consolidation

NDRC launched a review of monopolistic pricing

Changes to regulations around acceptable supply chain practices

Registration of overseas IMF plants required (May 1, 2014)

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Premiumization Food safety Healthiness/ Functionality

Trends and observations

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Crossovers

Trends and observations: managing costs, new categories

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Anchor UHT milk in China

Retail price equivalent to NZ$4.50-5.00/L

中国乳业市场 – 供应 c

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China’s dairy deficit in the Central, East and South supports farmgate milk prices in those provinces

Dairy demand is

calculated based on

a provinces ‘official’

population

multiplied by per

capita consumption

Source: Rabobank

Note: Dairy demand is calculated based on a provinces ‘official’ population multiplied by per capita consumption. With Shandong’s industries attracting migrant workers from other provinces, dairy demand is likely

higher than the figures show, ie, the deficit is more negative

Henan Gansu

Heilongjiang

Jilin

Liaoning

Hebei

Shandong

Fujian

Jiangxi

Hubei

Hunan

Guangdong Guangxi

Shanxi

Inner Mongolia

Shaanxi

Ningxia

Qinghai

Guizhou

Yunnan

Tibet

Xinjiang

Jiangsu

Tianjin

Anhui Shanghai

Sichuan Zhejiang Chongqing

Taiwan

Hainan

Beijing

Dairy surplus region

(local consumption < local production)

Dairy deficit

(local consumption > local production)

Surplus/Deficit

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Declining self sufficiency in China

Source: China Dairy Association, China Customs, Rabobank estimates

Chinese milk deficit has

experienced a structural lift

post melamine in 2008

The industry is being directed

to build larger, vertically

integrated farms: not without

challenges

We assume that milk

production stabilizes in 2014

Consumption to expand at

low single digit rates

Imports will need to rise by

another 10-20% in 2014 to

balance the market

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China’s dairy farming is under rapid “transfarmation”

Source: China Dairy Statistical Report, Rabobank estimates

Farm Number by Dairy Farm Type Fresh Raw Milk Supply by Farm Type Composition of milk sources

Domestic raw milk

80%

Imported powder 20%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2008 2011

Million

1-4 heads 5-19 heads 20-99 heads

100-199 heads 200-499 heads 500-999 heads

1000 heads+

-15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2011

1-4 heads 5-19 heads 20-99 heads

100-199 heads 200-499 heads 500-999 heads

1000 heads+

-11% pts

+0% pts

+2% pts

+ 6% pts

+ 3% pts

+ 1% pts

-1% pts

+124%

+102% +47% +18%

+16% -16% -16%

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Structural and temporary developments lead to shortage and soaring milk prices in China

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Imports still attractive – high local milk prices and import preference

Source: Chinese Customs, Rabobank

China - Monthly Milk Powder Import Parity

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Jan

-08

Jun

-08

No

v-0

8

Ap

r-0

9

Sep

-09

Feb

-10

Jul-

10

De

c-1

0

May

-11

Oct

-11

Mar

-12

Au

g-1

2

Jan

-13

Jun

-13

No

v-1

3

Ap

r-1

4

TonnesUSD/tonne

China montly powder import - right axis

Est WMP Import Price (C&F, ex-tariff & VAT)

Est WMP Import Price (C&F, cum-tariff & VAT)

Est Cost of Making WMP in China with Average Raw Milk

Est Cost of Making WMP from Quality Milk Supplied by Corporate Farms

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Imports of key product categories by origin

Source: China Customs Statistics, Rabobank

US and EU: major players in China’s whey import New Zealand: a dominant player in China’s powder import

NZ

86%

Aus

3%

US

3%

Germany

2%

France

2%

Others

4%

US

46%

France

15%

Netherlands

7%

Argentine

6%

Germany

6%

Others

21%

Total import at circa. 378,380 tonnes in 2012 Total import at circa. 578,000 tonnes in 2012

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To build milk capacity, China will continue to import the herd

Source: China Customs, Rabobank 2013 Source: China Customs, Rabobank 2013

Origin of imported cows over the past decade China’s dairy cow imports (heads)

Over 345,000 since 2009, two-thirds of which have come from Australia

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Australia

66%

New

Zealand

31%

Uruguay

1%

Canada

1%

USA

1% South Africa

0%

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The food story driving the feed story

Source: China Customs Statistics

Alfalfa (and pellets) import has been surging since 2008 US is THE supplier of alfalfa to China (2011)

China has become a net importer of corn China has been a major importer of soybean

US 96%

Australia 4%

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

2006 2007 2008 2009 2010 2011 2012

tonnes

-6

-4

-2

0

2

4

6

2006 2007 2008 2009 2010 2011 2012

m tonnes

-60

-50

-40

-30

-20

-10

0 2006 2007 2008 2009 2010 2011 2012

m tonnes

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Challenges and opportunities in China’s Dairy Market

What China Needs/Lacks

Opportunities

Rapid ‘transfarmation’ of China’s

dairy upstream

Eager to boost milk yield and

quality

Technical expertise in managing

large scale dairy farms

Availability of arable land

Environmental protection

Gap between dairy supply and demand

Milk powder

Whey (cheese?)

IMF/Premium/Functional

Liquid UHT milk import?

Breeding technology

High quality dairy cattle feed

Expertise in dairy cattle nutrition

Farm equipment

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China already dominates the global traded market for dairy commodities

Small changes in China’s demand and supply balance have a large impact on the global market

and therefore commodity prices – producers should endeavour to keep up to date with Chinese

market trends

Near term demand slowdown due to pricing, needs prices to be right to lure back demand

Mutual concentration risk exists (particularly between China and New Zealand for whole milk

powder) and diversification will be a mitigating strategy

High milk production costs in China will result in imported product remaining attractive and

continuing to play an important role in fulfilling demand

Regulatory changes in China will continue to impact the supply chain and all participants will

need to keep informed and adapt quickly

Chinese dairy consumers are already sophisticated and place high expectations on milk

producers for quality, food safety and sustainability characteristics – providing a high level of

evidence in these areas will become increasingly important

Implications for producers in and outside China

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Important notice

Rabobank International Disclaimer

This presentation has been prepared exclusively for the Sino-Dutch Dairy Forum in Xi’An on June 13, 2014. Neither this presentation nor any of its contents may be used for any other purpose

without the prior written consent of the Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank” or “Rabobank International”).

The information in this presentation reflects prevailing market conditions and our judgement as of this date, all of which may be subject to change. This presentation is based on public information.

The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or implied is made as to

their accuracy, completeness or correctness. The information and opinions contained in this document are wholly indicative and for discussion purposes only.

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Contact

Rabobank International

Wholesale Clients International

Sandy Chen

Senior Industry Analyst

Food and Agribusiness Research

(Shanghai Office)

Telephone +86 21 2893 4691

E-mail sandy.chen@rabobank.com