China's Jinluo sees growth in 'no starch' ham

By Mark Godfrey

- Last updated on GMT

Higher income households in China have seen consumers become choosier with their food choices
Higher income households in China have seen consumers become choosier with their food choices

Related tags: Meat

One of China’s biggest traditional pork processors is crediting its repackaged ‘no starch’ ham sausages for strong growth in the company’s sales.

Jinluo (formally known as Linyi Xincheng Jinluo Meat Products Co) said it has seen a “burning momentum”​ in sales, which have trebled to RMB300 million in two years, and it will now launch similar youth-targeted chicken meat products.

Starches – like potato starch or wheat flour – are a frequently used ingredient in sausages and other meat products to add volume and bind ingredients while making mechanically-recovered meat trimmings more palatable.

Overuse of starch, however, has become an issue in recent years, particularly as Chinese consumers become choosier with higher incomes. Jinluo relaunched its Wang Zhong Wang range of heat-treated packaged ham sausages in 2014, ditching its familiar cartoon lion mascot and hiring several Chinese celebrities as part of a major branding campaign, stressing Wang Zhong Wang as a ‘no starch’ product.
 
Jinluo sells chilled and heat-treated pork and chicken through a network of 3,300 self-run stores and 9,000 distributors, managed by 42 sales offices across China. The Jinluo logo is a ubiquitous presence in supermarkets and convenience stores around China, and the Wang Zhong Wang range is a particular favourite as a convenient snack in railway stations and schools nationwide. A pack of 10 x 40g sausages sells for an average of RMB10 in stores around Beijing.

A Jinluo strategy paper shared with employees earlier this year stressed the importance of further “innovation”​ in product with heat-treated meat products in regional styles – the firm already has a popular Taiwan-style ‘fragrant’ sausage.

Marketing and product development have become crucial for firms like Jinluo. The financial performance of Chinese pork firms is dictated by cycles in pig prices – one reason why larger firms have sought to integrate their operations, breeding pigs while also looking for new value-added products to improve their sales margins.
 
Chinese consumers are rapidly becoming more sophisticated, noted a report entitled The Modernisation of the Chinese Consumer​, published by management consultancy McKinsey, earlier this year. It pointed to a trend of Chinese consumers, confident in future growth in household incomes, shifting up to premium products.

Recent visits to Beijing restaurants and supermarkets by GlobalMeatNews​ showed evidence of such shifts in the meat sector. Signage in restaurants suggests Chinese diners have also been turning away from monosodium glutamate (MSG), which gives food a meaty taste and consistency but is blamed by many diners for dehydration and flatulence.

Founded by brothers Zhou Lian Kui and Zhou Lian Liang, Jinluo operates nine production bases across China. Its home base is in Linyi and Dezhou of Shandong Province, where it has built piggeries as well as processing and large feed production plants. Jinluo also has built pig farms and processing plants in Meishan in Sichuan Province and Xiangtan in Hunan Province in the centre of the country. It also has 10 breeding operations spread across northern China.

Jinluo employs 30,000 staff and has processing capacity for 20 million tons of pork and poultry meat. But while it uses a very patriotic, Communist-sounding name, the firm is technically a foreign firm operating in China through a complex offshore structure. Established in 1994, Linyi Xincheng Jinluo Meat Products Co was incorporated in the British Virgin Islands in 1994 as a limited liability company. In turn, this firm is ultimately held by a holding company, People’s Food Holdings Limited, based in Bermuda.

Jinluo listed on the Singapore Stock Exchange in March 2001 as People’s Food Holdings Limited. But the company was taken private again in 2014: among the reasons given for the delisting were the low volume of shares traded, as well as high compliance costs associated with an overseas listing.

Related topics: Business, East Asia, Asian tastes, Meat, China

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