General review
In the first half of 2020, China’s FMCG industry was severely impact by the COVID-19 epidemic. However, as China is gradually back to normality, the consumption market is obviously rebounding. According to data from the National Bureau of Statistics, from January to May, the total retail sales of consumer goods reached 1.3873 trillion yuan, down 13.5% year on year and 2.7 percentage points less than in the first four months [1]. In May, retail sales of beverages and foods respectively rose 16.7% and 11.4% year on year [1]. Food enterprises accelerated product innovation and rolled out a number of new products in response to new consumer needs with more focus on health, nutrition, safety and natural ingredients.
Impressive new products
Children’s snack
In 2020 H1, a number of snack enterprises announced to launch children snack brands in the wake of the release of the "General Standard for Children Snack Food", which is the first standard in China specifically for "snacks" and the first standard for "snacks for children."
BESTORE launched the first children's snack sub-brand “FairyYummy” on May 20, 2020. According to the company, the newly established brand focuses on children between 3 and 12 years old. It has rolled out 42 kinds of snacks on its Tmall flagship store, covering cookies, candies, fish sausage, meat floss, milk, etc.
On May 25, Be&Cheery officially launched the children's snack brand "Tong An An Little Friend," mainly for children aged between 3-12 years old. The brand claims to produce snacks more suitable for children by adding nutrients and reducing additives such as oil, salt, sugar, etc. Products include hawthorn slices with dietary fiber.
On June 19, Three Squirrels launched the children's snack brand “DeerBlue,” covering children aged 6 months to 14 year old. Products are divided into three categories of baby food, baby snacks and children snacks, including walnut powder, melts, cheese, seaweed crisp.
Recently, snack brand LYFEN also announced that the first batch of 9 products planned for its children's snacks series will be available soon. New products include yogurt melts, lollipops (sugar free) and meat floss.
In addition, infant formula brand Beingmate launched a new children's health snack food brand “KidsClub” with "healthy, safe, delicious, nutritious, and fun" as the main concept. The brand rolled out two products including yogurt melts and puff.
Foreign snack brands HERSHEY'S also introduced two new products of biscuits, and positioned it as a healthy snack for children.
Related:
Snack Foods for Children in China: Market Scale and Investment Potential
China Releases First Association Standard for Children Snack Food
Sparkling water
Low-sugar and low-calorie beverages have been performing strongly in China in recently years. Leading this charge is sparkling water. The success of emerging sparkling water brand Yuanqisenlin has enticed many stakeholders to enter into this segment and rolled out bubble products.
Since March, new sparkling water products that have been launched include Coca-Cola Appletiser fizzy fruit drink, Yili Yiran honey pomelo corona flavored sparkling water, Tsingtao Beer “Qingling” sparkling water, Jianlibao “Weipao" sugar-free sparkling water, Parallel Universe sparkling water series, Yuanqisenlin "Alienergy" Bubble Energy Drink, Nestle “Youhuo” sparkling water, and Nongfu Spring TOT bubble drink, etc.
These sparkling water drinks all emphasize “clean label” features of zero sugar, zero calorie and zero fat, with various innovative flavors and functional ingredients to meet the growing healthy demand of consumers.
Related:
Sparkling Water, a Booming Segment in China’s Beverage Market
Probiotics
Consumption of probiotic foods is primarily being driven by an increased awareness amongst Chinese consumers of the role gut health plays in overall wellness. So far, probiotics have been widely applied in dairy products, beverages, health foods, infant formula, and snacks. As product development scope continues to diversify, novel applications and delivery methods hitting the market every day, which is leading to greater segmentation and even greater awareness of probiotics amongst consumers.
Snack enterprises Three Squirrels and LYFEN launched probiotics-added nut mix products. Dairy company Yili’s sub-brand Food Code launched freeze-dried yogurt cubes with Yili's exclusive BL99 Bifidobacterium lactis, providing high protein and probiotic in the form of milk-based snacks.
Chinese emerging meal replacement brand WonderLab launched a probiotics product called “Little Blue Bottle.” The product uses 6 strains of DuPont imported probiotics, including Bifidobacterium lactis B420, HN019, NCFM, Lpc-37, BI-04 and Lactobacillus plantarum Lp-115. The amount of probiotics added is 40 billion CFU/ bottle. It aims at young people who have intestinal problems or want to keep good shape. New Hope Dairy launched a probiotic yogurt using a special 3D embedding technology to improve the survival rate of probiotics by 1000 times.
Yogurt
Differentiated innovation has become the main strategy for dairy enterprises to seek breakthrough. For example, strengthening and supplementing extra nutrients, such as probiotics, dietary fiber, etc., or highlighting the clean label aspects have become two major directions. Yogurt brand Simple Love is well-received by its extremely simple ingredient list, with major selling point of “no additives” and “no/low sugar.” In June, Simple Love launched a new 0% cane sugar coconut-flavored yogurt, continuing its simple ingredient style with only raw milk, coconut milk, and lactic acid bacteria.
Yili launched children's yogurt under its children's brand QQ Star. The product formula is simple, with only 4 ingredients, raw milk, concentrated milk protein powder, 4% sucrose, and active probiotics. The probiotic ingredients are BB infant Bifidobacterium infantis and Bifidobacterium lactis. According to the official introduction, the formula is suitable for children aged 3 to 6, as well as those who have weight loss and healthy demands.
Leading new retailer Fresh Hema rolled out Lemon turmeric flavored yogurt. The product added ≥10% lemon turmeric sauce. Turmeric is often regarded as a super food with the selling point of reducing inflammation, improving immunity and protecting liver.
Meal replacement
The development of the meal replacement market is in an upward trend, as meal replacement products meet the current demands of young people for health and fitness. Euromonitor predicts that the size of China's meal replacement market is expected to exceed 120 billion yuan in 2022. The booming market has attracted a number of entrants, including food giants Pepsi and Nestle, emerging brands Lepur, Wonderlab, and By-health and Keep, which are well-known in the fitness field.
In March, Chinese meal replacement brand WonderLab collaborated with HEY TEA (China’s No.1 tea drink chain brand) to launch a co-branded milk tea flavored meal replacement milkshake gift box. Within 15 days of its launch on the Tmall flagship store, the product was sold more than 100,000 pieces [2].
In June, Pepsi released a Quaker-branded meal replacement milkshake product, "Smart Calories." This is the first time Pepsi has launched a meal replacement product in the Chinese market. The new product adopts the bottled packaging and is available in four flavors of yellow peach & white peach, oat&quinoa, apple&red pomegranate, and strawberry&cranberry. It also adds freeze-dried fruit and cereal grains to enrich the taste. Pepsi said it will launch more forms of meal replacement products in the future [1].
Also in June, yogurt brand Lepur launched WELLBEING meal replacement milk tea, with clean label features of no added sucrose, preservatives, flavors, and colors as well as low calories. Additionally, the three flavors of jasmine milk tea, matcha latte and ceylon milk tea are blended with plant extracts of different functions, followed by moisturizing and antioxidant red pomegranate extracts, DHA algae oil for brain development and probiotics inulin for intestinal health.
Plant-based meat
Plant-based meat is also a booming sector in Chinese food market. In catering field, Starbucks, KFC, Papa John's and other major catering brands have successively launched plant-based meat products, spanning from pasta, spring rolls, salads, pizza, and fried chicken nugget, etc. Meanwhile, plant-based meat is also expanding to snack and other food categories.
In April, Ramen Talk, a Chinese instant food brand, launched a "plant-based meat spaghetti" in cooperation with HUICUI, a plant-based meat brand under Chinese plant-based technology company Vesta. During its online product launch ceremony, 20,000 pieces were sold out in one minute and 20 seconds [3]. Chinese meat brand Shuanghui launched a series of vegetable protein meat products online, including vegetarian sausage, protein meat pie, vegetarian snacks and other segmented products. Snack brand “Back” cooperated with Chinese plant-based meat brand STARFIELD and established Zongzi brand “Zhulaoda” to launch the world's first plant-based meat Zongzi available in five flavors. Snack brand Be&Cheery launched its second plant-based meat product “spicy beef” following the smoked sausage launched in January under the “New Era of Meat” series.
In May, Chinese tea drink chain brand HEY TEA also collaborated with STARFIELD to roll out a plant-based meat cheese burger.
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***Disclaimer: All images used in this article are from the internet.
