The company, which yesterday (8 November) signed an agreement to purchase $1.2bn (€1bn) in US pork and beef over the next three years, confirmed that it is also working to develop and strengthen supply relationships with European producers.
“We already work with European suppliers, such as Danish Crown and Cranswick,” Zhiqiang Wang, general manager of meat and poultry at JD Fresh, told FoodNavigator. “We would like to work with more suppliers including European suppliers. We are in talks with suppliers from France and other places in Europe.”
JD.com agreed to purchase a minimum value of $200m (€172m) in beef from US group The Montana Stock Growers Association (MSGA) for an initial three year period. The company also struck a three-year deal to procure pork from Smithfield Foods. The agreements were part of JD’s overall commitment to buy $2bn (€1.7bn) in US goods over a wide range of categories.
Commenting on the arrangement, JD.com chairman and CEO Richard Liu said that the company wanted to raise its international meat supply in order to deliver “safe, high-quality” imported meat products to Chinese consumers.
According to JD.com’s Wang, Chinese consumers favour producers from different regions for different cuts of meat. “Consumers have different preferences for brands in different meat categories. For example, European suppliers supply more bone products compared with American suppliers. So when customers shopping for bones (eg, for cooking soup), they would go to Danish Crown and other European brands.”
A meaty sales opportunity
Meat products are a fast-growing category for JD.com, the company noted. In the first half of 2017, volumes of direct meat sales on the website increased by more than 780% year-on-year. Currently, imported meat accounts for 30% of total meat sales on JD.com.
JD expects this demand to continue to rise apace. The e-commerce group noted that online orders for fresh and frozen meat currently come chiefly from first and second-tier cities. This leaves “huge potential” to expand online sales throughout the rest of the country.
Increased penetration and availability is supporting a boom in e-commerce sales. According to China’s National Bureau of Statistics, online sales increased by 26% in 2016. Food sales are growing ahead of the overall market. Research firm iResearch has forecast an 82% annual increase in online food sales in the country.
Growth is also driven by favourable meat consumption trends. Beef is the fastest growing meat sector in China and the imports to the country have increased rapidly. Last year, it became the world's second-largest importer of beef after the United States, bringing in more than 800,000 tonnes worth $2.6bn (€2.2bn). Chinese regulators lifted a ban on US beef imports – implemented over BSE concerns – earlier this year. However, beef from the EU is still prohibited.
China is also the world’s largest producer, importer and consumer of pork products. According to official estimates, Chinese pork imports more than doubled in 2016, reaching 1.6m tons.
Chenjun Pan, Rabobank’s senior analyst covering animal protein, noted meat imports are expected to continue to increase through to 2020. “Meat imports are expected to increase steadily, further cementing China's role as the world's most significant meat importer.”