World's top pork producer scurries to please China's picky eaters

WH Group shifts away from cheap sausages as 'slaughterhouse boss' seeks global growth


Nikki Sun, Nikkei Asian Review

January 12, 2018


LUOHE, China -- As a child growing up in the Chinese city of Qingdao, Wu Qionglin would curl up on a sofa watching television before dinner and munch on her favorite snack: a red plastic-wrapped sausage called wangzhongwang, or "king of the king," a processed-pork stick.


That was then. As a graduate student of nutrition in the U.K. now, Wu gave up the snack when she discovered the amount of food additives and starch used in the product. "I only eat it occasionally now to get a taste of childhood," the 26-year-old Wu said. "I'll never give it to my children, though. I would rather cook fresh meat."


That sentiment is shared by many Chinese who are abandoning the sausage stick as they grow wealthier and pursue healthier lifestyles. And that shift in diet has posed challenges to WH Group, producer of the sausages.


WH Group, formerly known as Shuanghui International and based in Luohe in China's Henan Province, built a fortune selling the ready-to-eat sausages.


The products' popularity transformed the company from a small state-owned slaughterhouse to the world's largest pork manufacturer following its $4.7 billion acquisition of Smithfield of the U.S. in 2013. With annual revenue of $22 billion in 2016, it was added as a component of Hong Kong's benchmark Hang Seng Index.


Inexpensive, tasty and convenient, the 30-gram sausage was once an ideal staple a generation ago for people on limited incomes in an under-developed country. Today, sophisticated Chinese consumers prefer fresh meat over processed-meat products for their nutritional value.


Improved living conditions in China also has played a part. With the popularity of refrigerators in lower-tier cities, fast-growing food-delivery services, and greater penetration of overseas products, the Chinese appetite has grown far beyond what the sausage stick could offer.


Sales of what WH Group calls "high-temperature sterilized meat products" -- which have a longer shelf life, but less nutritional value -- had been a drag on its revenue in China, falling three consecutive years from 2014 to 2016...


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