- We’d hoped Chinese sugar consumption would recover alongside its vaccine rollout.
- However, the emergence of the Delta strain means restrictions are tightening again.
- Sugar consumption may struggle to strongly rebound until the outbreak is contained.
The Delta Variant is Spreading Fast in China
- We previously thought Chinese sugar consumption would recover due to the pace of vaccination.
- However, the highly contagious Delta variant was recently identified in Nanjing (Jiangsu Province).
- In just 10 days, it had been identified in a further 22 cities, splayed across 10 provinces.
- This has resulted in more lockdowns and we’ve seen hospitality venues close in these areas, in an effort to reduce the spread.
- Movement in and out of Nanjing City has also been minimised through renewed travel restrictions.
- We therefore no longer think Chinese sugar consumption will rebound strongly until the outbreak is under control again.
Chinese Sugar Consumption Going Forward
- Fortunately, a large-scale outbreak is unlikely, as China’s vaccination programme is being carried out at a world-leading rate.
- However, sugar consumption may dip in the remaining summer months and forthcoming public holidays as social gatherings reduce.
- In the short term, all eyes are on China’s mooncake producers, which usually require 100k tonnes of sugar a year.
- Some of these have already cut their production targets as they anticipate weaker demand on the back of fresh restrictions.
- Mooncake sales were impressive in 2020, totalling RMB 20.52 billion (up 4.3% year-on-year), with most restrictions eased.
- We don’t think demand will be as strong this year, given the current situation.
- China’s catering revenue, which had recovered to pre-COVID levels prior to the surge in cases, may in fact slow as other settings that provoke sugar consumption also quieten down.
- Of course, it all depends on how long it takes the Government to get this latest outbreak under control.
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