Selling Cheese to the Chinese

Savvy businesses target the emerging middle class in emerging market countries whose income elasticity of demand for consumer goods and services is strongly positive. The FT reports today that “British dairy producer Milk Link owner of the Stilton brand, has signed a two-year deal with Yili Group to export Stilton – the first direct exports of the cheese to China. The cheese will be sold in supermarkets along the Chinese east coast, including branches of Tesco, Wal-Mart and Carrefour , while quarter-wheels will also be sent to upmarket hotel chains.”

Two balance of payments aspects here

1/ The direct export of tangible products to the Chinese economy - China accounts for only 2 per cent of total UK exports overseas at present

2/ The use of Tesco (UK), Wal-Mart (USA) and Carrefour (France) as distribution channels - made feasible by direct investment into the Chinese economy

Also worth mentioning that Milk Link is a cooperative of dairy producers - so successful export promotion into emerging markets will provide a flow of extra revenue for UK farmers who are licensed to make Stilton.

There is still a long way to go! Total cheese exports from the UK to China – mostly (processed) cheddar – accounting for just three tonnes in 2008.

More cheese please Gromit