Tue. Jan 18th, 2022

Hot and spicy braised fish, stir-fried noodles and spring rolls are must-have dishes for moon-new year dining tables. The looming week-long Chinese holiday is just as well known for the large sums – about RMB1tn ($ 157 billion) – spent on shopping and dining, as for dragon dance parades. This year, a bigger piece than usual is going to a previously overlooked market: frozen food.

The upcoming festivities are likely to be overshadowed by China’s worst Covid-19 outbreak since Wuhan in major cities such as Xi’an. The governments of Shanghai and Beijing have warned against travel. Eating out is increasingly risky. While extreme restrictions continue, some residents of Xi’an complain food shortages.

This partly explains the rise in shares of local frozen food companies. That of Zhanjiang Guolian Aquatic Products on Friday alone received 20 percent – its daily limit. Peers Zoneco Group, Joyvio Agriculture and Shandong Delisi Food rose by a tenth even as broader markets fell.

Yet it is unlikely that the demand for frozen foods will decrease after the holidays. Beijing had already called for food supplies in November, highlighting supply challenges. In the longer term, the trend towards healthy, fresh food in China could take a hit due to rising inflation.

Local vegetable prices rose more than 30 percent in November, according to official data, which contributed to sharp rises in the previous month. Prices of eggs and fish rose by a fifth. Although supplies were picked up in December, frozen food may be the best way for the government to achieve greater food security. This may be the most important affordable option for some locals.

Shares of frozen food companies suffered last year over a Chinese theory that coronavirus was brought to Wuhan such products. Local port cities like Dalian have ordered all businesses that handle frozen food to suspend operations in November. The tables have now turned. Expect to see more appetite for the sector this year.

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