As a major egg-consuming country, China has a vast consumer demand base. The outbreak of the COVID-19 pandemic in 2020 made people pay more attention to food safety issues. At the same time, driven by factors such as consumption upgrading and the enhancement of consumer concepts, people tend to prefer branded products with quality assurance. The mid-to-high-end egg market has thus emerged and possesses a broad market.
China's egg industry
Eggs are the eggs of the pheasant family, specifically chickens. Also known as chicken eggs or chicken meatballs, they have a hard shell on the outside and contain air chambers, egg white, and yolk inside. Eggs are rich in protein, minerals, vitamins, and other trace elements. The amino acid ratio of their protein is suitable for human physiological needs and is easily absorbed. They have high nutritional value with an effective conversion rate of over 98%, making them one of the commonly consumed foods by humans.
The development process of the egg industry in our country can be summarized into four stages: traditional free-range farming, large-scale operation, corporatization, standardization, and branding.After experiencing large-scale production and model company operations, relying on the huge domestic demand for eggs, the egg industry in China has developed to a certain extent and has become the world's largest producer and consumer of eggs.
However, under the huge market scale of China's egg industry, there are still issues such as blurred category boundaries, lack of standardization and regulation, low brand recognition, and serious product homogenization. The vast majority of eggs on the market are still sold loose, with a branding rate of less than 5%. The industry is still in a low-level competition characterized by low prices, lacking overall innovation advantages. Currently, branded eggs in China are in the initial stages of development. In the future, they will continuously unleash market potential and expand in scale, guiding the industry towards standardized and branded development.
Source: Analysis by Frost & Sullivan
In recent years, egg prices in China have fluctuated cyclically, with an overall upward trend. In the first half of 2017, egg prices continued to operate at low levels due to the impact of H7N9 virus outbreaks. In the second half of the year, breeding profits increased and continued until 2019. In 2019, affected by African swine fever, poultry meat and egg prices soared, followed by a weakening in egg prices due to sufficient inventory and falling demand. The outbreak of the COVID-19 pandemic in 2020 prompted consumers to pay more attention to nutritional diets and physical health, leading to a significant increase in egg consumption demand. Egg prices rose from 0.49 yuan per egg in 2020 to 0.56 yuan per egg in 2021, a year-on-year increase of 15.4%.
Source: Analysis by Frost & Sullivan
China's mid- to high-end egg industry
According to the selling unit price and product positioning, eggs can be divided into mid-to-high-end eggs and mass-market eggs.
Mid-to-high-end eggs are mostly targeted at high-end consumers who value food quality, such as pregnant women and high-net-worth individuals. Their products feature higher-standard quality control and nutritional value, and they also have higher requirements for storage conditions. Building a complete full-chain cold chain transportation system requires significant capital investment from enterprises.
Source: Analysis by Frost & Sullivan
In the Chinese egg market, mid-to-high-end eggs, as a category that has emerged in recent years, have a relatively small base market size. In 2021, they accounted for only about 0.5% of the total revenue of the Chinese egg market. However, with the advancement of consumption upgrading, the proportion of mid-to-high-end eggs in national egg consumption has steadily increased in recent years. The compound growth rate from 2019 to 2021 reached 57.0%, far higher than the growth rate level of mass eggs, becoming an important component driving the growth of the Chinese egg market size. Due to the still vast potential market space and consumer demand, it is expected that mid-to-high-end eggs will reach a 5.2% share of the egg market by 2025, with a market size exceeding 207 billion yuan and a compound annual growth rate as high as 48.5%.
Source: Analysis by Frost & Sullivan
In 2021, the total scale of China's mid-to-high-end egg market was 2.255 billion eggs based on sales volume. From the consumer (C) side, mid-to-high-end egg brands have not only promoted themselves through traditional offline stores and supermarkets but also placed more emphasis on the layout of new retail channels, combined with live broadcasts and product recommendations for extensive consumer education. This has significantly increased the sales volume of mid-to-high-end eggs; from the business-to-business (B) side, after the pandemic, the rapid development of restaurants such as Sushi and Japanese cuisine has greatly increased the demand for mid-to-high-end eggs, especially raw eggs, driving up B-side demand. The compound growth rate from 2019 to 2021 reached 49.6%, far exceeding the growth rate of mass egg sales. In the future, there is still broad potential market space and consumer demand for mid-to-high-end eggs. It is estimated that the compound growth rate of mid-to-high-end eggs will reach 46.5% by 2025, with a market scale exceeding 118 billion eggs.
Source: Analysis by Frost & Sullivan
Driving factors for the development of the Chinese egg market
Consumers' demand and consumption habits for egg products:Consumers' preference for egg consumption will influence the direction of changes in egg product characteristics. For example, the increasing demand for gifts will promote the development of the high-end egg market, and the popularity of dishes such as runny egg leads to an increase in the sales of raw eggs.
Enterprise breeding technology upgrading and new product R&D technology:Cultivating standardized egg chicken breeds that meet diverse needs and are suitable for China's breeding environment is beneficial for enterprises to develop new categories of products and provide high-quality egg products. This further enhances the competitive edge of the enterprises themselves, thereby promoting the expansion of industry scale.
Macroeconomic and Policy Impacts:When the macroeconomy is in an upward channel or various economic indicators perform well, people's consumer demand becomes more robust, outdoor travel consumption increases, which in turn drives growth in the food industry, catering industry, and household egg consumption. Government policies that are favorable can promote the development of the egg industry towards scale and standardization, create a favorable business environment, and facilitate healthy competition within the industry.
The development of information technologies such as the Internet has brought new opportunities to the egg industry:During the pandemic, residents' travel, shopping, and dining consumption were restricted. Utilizing internet platforms for online sales will become an important channel to promote sales for egg production enterprises.
Source: National Bureau of Statistics, Frost & Sullivan analysis
Development Trend of China's Egg Market
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Concepts such as raw eggs and sterilized eggs are more popular among consumers, and egg consumption demand is trending towards higher quality.
With the improvement of living standards and the upgrading of consumption structure among residents in China, the impact of prices on consumers' choice of eggs has gradually decreased. Instead, consumers have higher requirements for product quality and brand awareness, leading to a trend towards high-quality egg consumption. Compared with traditional cooking methods, the new generation of consumers has more fresh preferences for egg consumption scenarios such as semi-cooked eggs, and raw or aseptic eggs are more in line with the quality requirements of diverse diets. The outbreak of the COVID-19 pandemic in 2020 has also prompted people to pay more attention to their own health and dietary safety. Eggs with good quality assurance and providing high-quality nutrition have become the purchasing choice for more and more consumers.
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The brand effect in the egg market is becoming increasingly evident, and branding will become one of the important development trends for egg producers in the future.
With the continuous development of the national economy and the continuous improvement of residents' living standards, residents' consumption has increasingly focused on traceable branded products. The change in consumption concepts has also made well-known brand eggs more popular among consumers, with regional brand eggs showing a good development momentum. Although the brand egg industry is still in its infancy and there is a lack of standards for brand eggs, branding remains an important trend for the future development of China's egg industry. Currently, large domestic egg chicken and egg production enterprises are also increasing their investment in brand building and brand management. Brand strategies, brand management concepts, and branded products are gradually gaining market recognition, gradually highlighting a clearer competitive landscape among brand egg enterprises.
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The standardization construction of laying hens and the egg industry has been continuously strengthened. The industry standard for raw eggs has been established and is gradually being improved.
In March 2020, the National Animal Health and Food Safety Innovation Alliance issued the 'Notice on the Establishment of a Research and Application Working Group for Edible Eggs', focusing on 'formulating standards for high-quality eggs and welfare eggs (edible eggs)'; in May 2020, Huangtian Swan introduced the Japanese 38-year-old edible egg standard and achieved the implementation of the first legally valid 'edible grade' fresh egg enterprise standard, leading to the establishment of China's first 'Edible Egg Research Institute', actively promoting the promotion of edible egg standards across the industry... The implementation of multiple industry standards will regulate the development of the industry.
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Online marketing channels and O2O sales models continue to develop
In the first half of 2020, affected by high egg chicken inventory and the prevention and control of COVID-19, the egg market remained sluggish for a long time. This led the egg industry to expand marketing channels, gradually shifting from traditional offline sales models to new sales methods such as e-commerce platforms, live streaming sales, and community marketing. In 2021, with the acceleration of life rhythms, the popularization of online shopping, and the implementation of government encouragement policies, more consumers are becoming accustomed to purchasing fresh produce and non-staple foods online. As consumers pay more attention to brand and price when shopping online for eggs, more breeding enterprises are also adapting to the changing situation, focusing on brand building and striving for more opportunities to participate in online sales.
