Mozzarella opportunities in Asia

Mary Morrissey, senior dairy manager with Bord Bia, spoke on the opportunities for Irish dairy to diversify in mozzarella and target the emerging Asian dairy markets.

In spite of an overall decline in Irish food and drink exports so far this year (-2%), Irish dairy exports have increased by 7.1% when compared to the same period last year. Dairy exports to the EU (+5.5%), Asia (+9.7%) and North America (+18.6%) are all in strong growth. Total Irish dairy exports stand at €2.05 billion – January to May.

Opportunities in mozzarella

Ireland is traditionally associated with cheddar production; however, the Irish dairy industry has been investing in production capacity for other cheese types, such as mozzarella.

Mozzarella is the cheese that is predominantly used in pizza and the highly developed markets of Western Europe and North America dominate with over 70% of mozzarella sales.

However, it is milk deficit countries that are leading the increases in demand for mozzarella. The Asia/Pacific region is forecasting consumption growth of 3.8% (during 2018-2023) between the region’s three leading importers of mozzarella: Japan; South Korea; and China.

It is important to note that all forecasts were prepared pre Covid. Food-service sales have gone through a major dip but delivery services and direct to consumer have mitigated to an extent in various markets.

Rising Asian demand

Diversification into high growth Asian markets will help to mitigate some of the longer term risks associated with a decline in UK exports.

Free Trade Agreements are also driving the demand for imported natural mozzarella in countries such as Japan and Korea as tariff rates continue to fall over the next three years.

The three leading importers of mozzarella in Asia are Japan, South Korea and China. China will overtake South Korea to be the second-largest importer in the world, behind Japan. Collectively, it is forecast that the three leading countries will import over 250,000t of industrial mozzarella in 2023.

Japan is currently the largest consumer of mozzarella in Asia and with limited capacity to produce cheese for itself, import demand is forecast to reach 96,600 million tonnes by 2023.

The Japanese, like other Asian countries where consumer wealth is increasing, are moving to a more western diet.

Today the retail pizza sector in Japan is domestically supplied and dominated by the top five pizza manufacturing companies: Meiji Holdings; Itoham Foods; NH Foods; Talona; and Maruha Nichiro.

Other Asian markets are also seeing good growth in the local production of frozen pizza – with natural mozzarella.

The Chinese market for mozzarella, driven largely by pizza consumption, has its origins in the expansion of US pizza chain Pizza Hut. China imported 63,200t in 2018 and this is forecast to increase to 82,400 by 2023.

With US chains leading the expansion, the cheese offering on pizzas globally has tended to follow US trends, rather than the more rustic Italian fresh mozzarella trend.

The US pizza phenomenon is a highly developed model and has been rolled out into international markets, making it a sort of global standard in the way McDonald’s has done with burgers.

China is also rapidly adopting western diets as its middle class continues to grow rapidly. This is reflected in increased consumption of all types of meat and is also influencing the demand for mozzarella.

Future growth

Growth in dairy exports to Asia provides encouraging evidence of how Ireland’s food and drink exporters have embraced market diversification.

Even in the midst of Covid-19 unpredictability, the factors driving demand for dairy produce in Asia remain robust.

Populations in Asia are growing, urbanising and demanding high-quality and safe food. The near 10% growth in dairy exports to Asia is unlikely to be sustained for the remainder of the year; however, Asian markets can continue to deliver growth in the longer term.

For further data on Irish food and drink exports, visit: www.bordbiaperformanceandprospects.com.