INSIGHTS
Monthly Digest: China Food Sector in December 2020
BY Shine HuDec 31, 2020

Products Launched

Festive

Meco juice tea launched a new "Drunk Christmas" version, available in jasmine apple champagne and rose grape brandy flavors.

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Holiland co-branded with KitKat to roll out Christmas limited ranges, including cakes and desserts.

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RIO launched the mulled wine flavored alcoholic drink. The new product is a blend of cinnamon and orange apple aromas with an alcohol content of 5 degrees.

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Pizza Hut collaborated with Oreo to launch a Christmas themed pizza with Oreo cookies. The yogurt-capped pizza adds antler ice cream, and Oreo cookies.

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Chinese wine brand LadyPenguin rolled out self-heating wine blended alcoholic beverage. Press the button on the bottom of the bottle, shake it up and down and the hot drink will be ready within 1-3 minutes.

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Uni-President’s coffee brand “La Rive Gauche de La Seine” launched the gingerbread-flavored coffee latte to welcome Christmas.

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Store-made tea brand Taigai launched "Drinkable Christmas Tree." It adds matcha cream and candy toppings to make the milk tea look like a Christmas tree.

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Dairy & Milk powder

Yili's premium functional milk brand Shuhua co-branded with Zhima Health, a new retail brand under time-honored Chinese traditional medicine brand Tongrentang (同仁堂) to roll out lactose-free herbal milk products. The products use Shuahua lactose-free milk as the base and contain herbal ingredients such as goji berry, chrysanthemum, tuckahoe, etc.

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Wondersun launched the new Heiwo range covering four products: low-fat high calcium milk, organic milk, pure milk, and A2β casein organic pure milk.

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Junlebao launched a renewed version of Lechun milk powder. The new product adopts the new generation INFAT9.0 patented OPO from Advanced Lipids, the world's leading supplier of special nutritional lipids for infant formula.

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Yili Satine milk rolled out the self-heating version. The new product uses a wireless hot charging system mode, which can heat the milk to 55 degrees °C within 15 minutes for the best drinking taste and maintain a constant temperature for 3 hours.

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Nestlé launched the first non-allergic amino acid-based milk powder "Alfamino 1+" aimed at infants and children over 1-year-old with multiple food allergies and malabsorption.

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Yili launched three new children's milk powder products under its children's brand QQ Star, covering three popular segments of A2, organic and goat milk source.

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Mead Johnson Zhipei launched a new high-calcium milk powder for the middle-aged and the elderly. The new product meets the diverse nutritional needs of middle-aged and elderly people for immunity, intestinal digestion, and bone protection.

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Nestlé China launched its first product approved for health food: Yiyang Ammonia Calcium Milk Powder. The product has passed clinical inspections for the functions to improve the mobility of middle-aged and elderly people through fortifying bone health, muscle strength, and joint functions.

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Yili's high-end UHT milk brand Satine launched a winter limited Jersey milk. Each 100ml contains 4.0g protein and 130mg calcium. This winter limited version is only available for 100 days each year.

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Vitasoy launched a ginger-flavored, low-sugar soymilk. Ginger is a popular flavor in winter due to its warming effect.

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New Hope Dairy launched the Mimo stage formula series of children's yogurt. The product is the low-temperature yogurt, featuring no sugar.

Stage 1 is suitable for children aged 1-2 and contains DHA for intelligence improvement.

Stage 2 is suitable for children aged 2-4 and focuses on immunity enhancement through addition of probiotics and avocado.

Stage 3 is suitable for children aged 4-6, with blueberry and vitamin A, focusing on eyesight protection.

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Mengniu's high-end fresh milk brand Shiny Meadow launched Youhu A2β fresh milk, containing 3.6g protein and 120mg calcium per 100ml.

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Healthy

Health food brand ffit8 launched probiotic protein powder. The new product contains four protein essences, nine essential amino acids, four minerals, ten vitamins, and two billion CFU of active probiotics. It also uses the independent package of 12g per capsule.

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Boohee Health launched "High Protein Cheese Chicken Sticks," positioned as adults’ high-protein calcium-supplemented meat snacks. Each 100g product contains 30.9g of protein and 126mg of calcium, with no extra sugar, which is suitable for people demanding a healthy diet.

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Yuanqi Senlin launched a new chicken breast sausage product, featuring low-fat, low-calorie, that targets fitness groups with weight management demands.

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Nestlé's nutritional brand Yiyang launched Fuyi milk mate protein solid drinks, including morning and evening versions. The morning version adds black tea powder and polygonatum powder to support vitality during the daytime, and the evening version adds jujube seed powder and longan powder to assist sleep.

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The customized vitamin brand LemonBox opened the Tmall Global flagship store and launched three types of nutritional gummies: turmeric gummies, lutein gummies, and melatonin gummies. LemonBox will also launch six types of customized daily nutritional supplement packs.

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Trending

FamilyMart rolled out plant-based meals, including tomato sauce plant-based chicken chop omelet rice, cheese plant-based chicken chop pasta, plant-based chicken chop fried egg French sandwich, and plant-based fried chicken rice roll.

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Coffee brand Coffee Box launched three new oat lattes under the brand “OAT MY FRIEND!”, available in original, vanilla, and caramel flavors. The products mix fresh coffee powder and enzymatic oatmeal powder into a bottle, with people needing to add water and shake to drink.

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Instant coffee brand Yongpu rolled out flash brew tea concentrate, available in matcha and momo oolong flavors. The new products feature 0 fat and 0 sugar with portable and independent packages.

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Yili's plant-based milk brand Plant Selected will launch two new products, oat drink and plant-based yogurt, in 2021. Both products use plant-based materials and do not contain milk.

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Unilever's plant-based meat brand "the Vegetarian Butcher" officially entered the Chinese mainland market and released a plant-based hamburger with Burger King.

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Nestlé's high-end coffee brand "Gan CAFÉ" launched the "gold dust" range. The new product is a nutty chocolate flavor, with a unique sparkling golden powder texture and a lipstick-shaped package.

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Company Dynamics

1. Nestlé launched a plant-based food brand Harvest Gourmet into the Chinese market. The brand rolled out 6 products for the consumer market and 4 products for the professional catering market. Products for the consumer market are Chinese-style cuisines, such as the vegetarian crispy chicken nuggets and vegetarian Kung Pao chicken.

2. China Mengniu Dairy is planning to increase its stake in cheese enterprise Milkground from 5% to 23.8% by subscribing to new stock issuances worth RMB 3 billion. The deal would make Mengniu the controlling shareholder of Milkground. In January this year, Mengniu had purchased an RMB 745 million stake in Milkground.

3. China's emerging sugar-free beverage brand Yuanqi Senlin increased its offline channel sales target from 2.1 billion this year to 7.5 billion in 2021. It also revealed it would accelerate the launch of new products in 2021.

4. According to Starbucks China, physical retail stores are the main drivers of Starbucks China’s growth. Starbucks expects to open 600 new stores in China in the fiscal year 2021 (as of September 30, 2021) and make its presence known in 230 cities, and own 6,000 stores nationwide by the end of the fiscal year 2022.

5. Danone's China (Qingdao) plant expects to go into production in March 2021. The company has invested 80 million yuan, with the intention to build an infant milk powder production line with an annual output of 10,000 tons.

6. Fonterra's catering service team in Greater China planned to launch more than 300 innovative products in the fiscal year 2021 (From August 2020 to July 2021).

7. Yipin Dairy invested RMB 1 billion to build a goat milk powder processing project for its goat milk powder brand Bekari. The new project expects to have an annual capacity of 50,000 tons and a stock of 2 million goats.

8. The a2 company lowered its fiscal year 2021 revenue forecast from AU$1.8 billion – AU$1.9 billion to AU$1.4 billion – AU$1.55 billion. The main reason is that the COVID-19 has severely affected the Daigou channel, making its performance recovery slower than previously expected.

9. Coca-Cola launched its first WeChat applet store in China. The store provides Coca-Cola brand side-line range of products with a total of more than 400 SKUs.

10. McDonald's China planned to invest 1.5 billion yuan to build a McDonald's Hubei Supply Chain Smart Industrial Park. The park covers the whole industrial chain of food production, environmental protection packaging, and cold chain distribution, with an estimated annual output value of nearly RMB 1.5 billion.

Industry focus

1. Nayuki Tea released the "2020 New Style Tea Drinking White Paper," showing that the market size of new-style tea drinks will exceed RMB 100 billion by the end of 2020.

2. Firmenich unveiled the flavors of the year 2021: ginger and yuzu. According to Firmenich, ginger’s demand has been steadily increasing in the past decade. In the past five years, the use of yuzu in new products has more than doubled.

3. The China Dairy Association issued the "National School Milk Program Promotion Plan (2021-2025)." According to the plan, in 2025, in addition to UHT milk and sterilized modified milk, pasteurized milk, fermented milk (yogurt), and processed cheese will be available as student milk products.

4. Imported "niche milk" brands accelerated their entry into the Chinese market through Tmall Global, with the brand entry growth rate reaching 140%. In the past year, the turnover of imported plant-based drink increased by 176% year-on-year, and imported goat milk powder increased by more than 50% year-on-year. The Dubai camel milk 2020 Double 11 sales volume increased by 400% year-on-year.

5. From January 2021, more than 6,900 KFC China restaurants will completely stop using plastic straws. More than 6,300 KFC restaurants will use wooden tableware to replace the original disposable plastic tableware for dine-in and take-out business.

6. According to the Chilean Embassy in China, the export volume of Chilean cherries will increase by 30% in 2020, and nearly 500,000 tons of cherries will enter the Chinese market. As of December 29, the sales of cherries on the Tmall platform had increased by more than 30% year-on-year.

Regulatory Updates

1. On Dec. 1, the State Administration for Market Regulation (SAMR), National Health Commission (NHC), and National Administration of Traditional Chinese Medicine released the Health Food Raw Material Directory - Nutrient Supplement (2020) and Health Function Catalogue Allowed for Health Food Claims - Nutrient Supplement (2020). Both regulations will come into force on Mar. 1, 2021.

2. On Dec. 14, China National Center for Food Safety Risk Assessment (CFSA) consulted on 11 new varieties of food-related products, covering two new FCM additives, six FCM additives with extended application scope, and three new resins.

3. On Dec. 15, China's Certification and Accreditation Administration (CNCA) released five trial guidelines for the certification sampling of five organic categories. They are vegetables, fruits, teas, dairy products, and livestock and poultry products. The implementation date will be July 1, 2021.

4. On Dec. 21, the China Ministry of Finance published the 2021 Tariff Adjustment Plan. The Plan reduces the provisional tariff of some special infant formula (such as infant formula for premature infants) from 5% to 0%. It also reduces the provisional tariff of whey protein powder and lactoferrin from 10% to 0%.

***Disclaimer: All images used in this article are from the internet.

Related Links:

[1] Monthly Digest: China Food Sector in November 2020

[2] Monthly Digest: China Food Sector in October 2020

Shine Hu
ChemLinked Research Analyst
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