Consumers buy nuts at a stall in Heihe, Northeast China's Heilongjiang Province. File photo: VCG

While nuts have long been a favorable snack for festive seasons, China's growing demand for nuts has created new opportunities for global suppliers.

Between 2007 and 2017, China's nut industry increased at a compound annual growth rate of 15.7 percent, reaching 121 billion yuan ($17.2 billion) in 2017, according to the China Food Industry Association. Although inclement weather has driven nut prices higher this year, Chinese consumers have not been deterred in their enthusiasm for the snack. 

While the consumption of nuts per capita is still below the global average, experts say the growing demand in quantity and quality is beginning to open up opportunities for the global nuts business. 

Increased demand

Low temperature and rainfall in some nut producing areas in the US caused some apricot flower rots this spring, leading to a significant decline in US almond production. The US Department of Agriculture also lowered its almond output forecast for 2019. According to the department, the projected output in 2019 will be 2.2 million pounds in California, the key almond production region, down 3.5 percent from production last year. The average nut set per tree in 2019 is also down 17.8 percent from 2018.  

As a result, prices of almonds in the US rose from $7 per kilogram in June to $7.9 per kilogram in October, a nearly 14 percent increase. The current price is approximately $7.61 per kilogram, an increase of 15 percent, according to a report on toutiao.com, a popular mobile news app in China.

The price increase and additional tariffs on US-imported nuts have put pressure on US nut importers. According to the Hengyi Food Imports and Exports Company based in Shanghai, the prices have increased from 10 to 15 percent depending on variety, but demand continues to grow. 

"Pistachios, for example can have a price up to 160 yuan per kilogram at its best quality this year, compared to around 120 to 140 yuan last year," Hengyi's manager surnamed Huang told the Global Times. 

The sale of nuts in the company did not seem to be affected by the mounting price, Huang said, due to overall increasing demand, as well as the approaching Spring Festival when people consume an increasing amount of nuts. 

China is the world's largest importer of pistachios, and around 10 percent of the world's pistachios are consumed by Chinese buyers, according to a report by the growingproduce.com.  

"I think as the consumers in China are becoming more demanding of the quality of the nuts and less deterred by its price, the imports are still to increase in near future," Huang said. 

Growing potential

Behind the rising trend of nuts is the rising health awareness among Chinese consumers who see nuts as a healthy and flavorful snack. Middle class households have especially bought more nuts in recent years fueling unprecedented growth of the nut industry in China. 

Meiri Jianguo, a brand under Three Squirrels offering packets of nuts that claim to meet people's daily meets for nuts have had their sales soar. According to a report by Three Squirrels, the company had already sold up to 100 million packets of nuts by early May. During this year's online shopping festival, Double Eleven, it took less than twenty minutes for the brand to reach a sales volume of 100 million yuan. 

Three Squirrels' success is but a small part of the quickly increasing popularity of nuts with Chinese consumers. There is massive room for potential development as consumption per capita is still below the average consumption worldwide. 

According to a report by the market research website chyxx.com, the consumption of some of the most popular nuts are below global average and drastically lower than some Western countries. In 2017, the average consumption of pistachios recorded in China was only 0.05 kilograms per person, as opposed to around 0.1 kilograms worldwide and about 0.5 kilograms in the US. 

"As the household disposable continues to grow, the demand is also expected to near global average," said Zhu Danpeng, a Guangzhou-based food industry analyst. "Currently most of China's imports comes from the US, Australia and some countries in the South America, but it will in the future turn to other key suppliers as its demand grows."

According to Zhu, the growing nuts market will be the biggest target for global nut suppliers. 

"In terms of variety, there is also a huge opportunity. The most consumed nuts in China has traditionally been peanuts, but now people are trying new, more exotic varieties such as Brazil nuts and Macadamia," Zhu said. 

Another Shanghai-based company SPI West Port Corp, which specializes in selling imported snacks including nuts, said that the company has now started importing nuts from the US and Thailand to meet demand. 

"The most popular nuts are the honey roasted almonds from the US," SPI's manager surnamed Yi said, "but now we are also selecting some brands from Thailand to offer more options to the customers."