Rising avocado sales point to shifting tastes
Executives at European fashion powerhouses may no longer be as cheerful about the Chinese market, but farmers in Peru are smiling.
"Definitely [Peruvian farmers] are very happy with the market in China," Juan Carlos Capunay, Ambassador of Peru to China, told the Global Times on Tuesday. "They pay higher than the U.S. and higher than Europe."
Capunay was talking about exports of Peruvian avocados to China, which have developed strongly since China opened the door in 2015 to its rapidly rising market for Peruvian agricultural products such as avocados. "It is very good and it's just the beginning for us."
As the size and the spending power of China's middle class continue to rise, a shift in spending habits is also taking place. Nowadays, wealthy Chinese consumers are keen to buy high-quality goods and pursue a healthy lifestyle, according to Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting.
As a result, while demand for luxury goods such as handbags and jewelry is shrinking, China's appetite is growing for agricultural products that are regarded as healthy in Western culture, with avocados being a prime example.
Imports of avocados rose to 25,000 tons in 2016 from just 153 tons in 2012, according to the United Nations International Trade Statistics Database. Meanwhile, luxury goods sales in China dropped by 2 percent year-on-year, reversing an average annual growth rate of 19 percent from 2007 to 2015, said a report from management consulting firm Bain & Company released in 2016.
Lu told the Global Times that while the demand for luxury goods remains strong, China's middle class is "upgrading" its approach to consumption.
"Most wealthy Chinese people are searching for a quality and healthy lifestyle. They are no longer just buying top brands. They are actually looking for something special," he said.
That trend is reflected in the case of avocados, which are known as "butter fruit" in China. Just a few years ago, many people had never tried the fruit, but now China's imports of avocados are rising so fast that some media reports even claimed Chinese demand might be the main factor behind a shortage of avocados and price increases in the U.S. and Europe.
"I think people are paying more attention to health and food, not like a few years ago when everyone was still competing to wear the best brands or something like that," said an employee of a five-star hotel in Beijing who only gives her name as Sandy.
Sandy, a well-dressed woman in her late 20s, said she eats avocado and exercises "almost every day." Even for water, she prefers bottles imported from France or Italy.
Because of people like Sandy, sales of avocados have been strong at Jenny Lou's, a high-end grocery store selling mainly imported products, according to Wu Feifei, manager of a Jenny Lou's grocery store in Beijing.
"About five years ago, people would always ask us what they are and how to eat them, but more and more people are used to avocados now," Wu said. "The store can sell more than 40 crates a day at about 10 yuan (.52) a piece."
The rise of supermarkets like Jenny Lou's also reflects the growing demand for high-quality, healthy food in China. Jenny Lou's used to be a small fresh food stall in Beijing's embassy area, catering mostly for foreigners. But riding on the rise of the middle class, Jenny Lou's has grown into a franchise with 10 stores in Beijing and one in Guangzhou, capital of South China's Guangdong Province.
Peruvian officials also saw the potential from changing tastes in the Chinese middle class. As one of the largest producers of avocados, the country pushed for market access for avocados and other agricultural products when signing an agreement with China in 2015.
"Definitely Chinese consumers' tastes are changing. And there will be demand for other new products as well as avocados. We have discovered that these products have big potential," Capunay said, adding that Peru's avocado exports to China could be worth to million at the end of this year.
Capunay, who was previously in China in 1976 and 1994 before taking his current post in 2014, has seen the rise of the Chinese economy and the changing business environment.
"We have the capacity to export to China whatever China needs," he said.