Consumption upgrade spurs Cargill expansion

Cargill Inc, the Minnesota-based agricultural giant, plans to invest more in China's value-added oil, animal protein and beauty care sectors.

The decision comes in the wake of China's multiple measures to diversify the supply of quality products and services to drive its economic growth, Cargill executives said.

Cargill's first beauty care regional office for Asia-Pacific opened with the launch of an application lab in China in late February.

The lab will deliver nature-derived, label-friendly and functional ingredients to Asian personal care markets. It has made strong investments in agricultural supply chain, starch sugar production and meat production this year.

Urban residents tend to reduce carbohydrate intake and increase their protein intake, and as income levels rise, they are concerned about the quality of food, and the consumption of healthy convenience foods and animal protein is increasing, said Ma Zheng, vice-president of Cargill China.

"This trend has become fairly clear in China," he said, adding one of the company's major challenges is how to work with its business partners to meet the changing and escalating needs of consumers.

Demand for certain foods is driven by factors like taste, nutrition and food safety, as well as other consumer preferences, he said.

"As more consumers are aspiring for a better life, and chase high-quality cosmetics products than ever before, Cargill's forays into the beauty business will help deliver products that can meet consumer preferences for natural and sustainable ingredients, said Ma.

Cargill selected Shanghai as its regional headquarters for its new personal care platform - Cargill Beauty for Asia. Launched in April 2017, the Cargill business unit, which supplies ingredients and materials to cosmetics manufacturers, has expanded its team fast.

They perform functions from marketing and sales to product management and application in China.

After six months of preparations and construction, its first personal care lab has been set up to advance research and applications. The food hub, called the Cargill Shanghai Innovation Center, will underline learning and sharing of food industry expertise.

The new application lab aims to better meet Chinese consumers' needs by adding Cargill's sustainable, label-friendly and nature-derived portfolio, said Tony Jaillot, general manager of Cargill Beauty.

He said Chinese culture has a long history in botanical and traditional Chinese medicine. Consumers in this market prefer nature-derived formulas in skincare products.

In a survey-based report published by Beijing-based China Youth Daily in early March, about 43 percent of 1,865 Chinese female respondents said they spend an average of 500 yuan to 2,000 yuan ($74 to $298) every year on makeup.

Nearly 27 percent of respondents said they spend 2,000 yuan to 5,000 yuan a year on makeup.

Over 70 percent of those surveyed said it was necessary to apply makeup for events such as important meetings or gatherings. Over half of them said makeup was necessary when they go to work.

"Owing to this long-standing tradition, the new natural ingredients concept and offerings truly resonate with Chinese consumers," said Jaillot. "With increasing air pollution in Asian countries in recent years, people look to ways to anchor themselves in nature to find balance in their everyday lives."

As China continues its supply-side structural reform, consumption has been playing an increasingly important role in the economy, contributing 76.2 percent of GDP growth in 2018.

With a big consumer base and an expanding middle-income group, consumption will remain a major driver of growth, while policies to increase people's incomes, improve the quality of products and services will further unleash its potential, said Guo Xin, a marketing professor at Beijing Technology and Business University.

After bringing a wide range of products, including beef, cocoa, chocolate, edible oil and other goods, to the first China International Import Expo, Cargill has signed a contract to participate in the second in early November this year.

Cargill currently has 155,000 employees across 70 countries and regions, with its revenues and earnings reaching $114.69 billion and $3.2 billion in 2018. Supported by more than 10,000 employees in China, Cargill operates in over 50-plus locations on the mainland.

Its businesses in China include grain and oilseed supply chain, animal nutrition, animal protein, starches and sweeteners, edible oils solutions, texturizing solutions, structured finance, metals and shipping, beauty and personal care.