Products Launched

Editors’ notes:

• The trend of yogurt’s shift into snacks and desserts is prominent.

• Sparkling water continues to gather steam in the Chinese market with more innovative ingredients and flavors.

• Children’s snack is a hot segment.

• Functional ingredients represented by hyaluronic acid and collagen are more frequently added to foods.

• Festive limited new product launch remains a popular marketing approach.

Hokkai Pastures’ strawberry flowing cheese yogurt. Photo source: Tmall

Shamba Star’s milk tablet. Photo source: Tmall

Wonderlab’s hyaluronic acid gummy. Photo source: Tmall

KFC’s love and roses Hokkaido ice cream. Photo source: KFC official WeChat accountCompany Dynamics

1. Chinese new tea chain leader Hey Tea released its 2020 annual report. In 2020, Hey Tea entered 18 new cities. As of December 31, 2020, Hey Tea has opened 695 stores in 61 cities at home and abroad. The number of members of the WeChat Mini Program "Hey Tea GO" exceeded 35 million, with more than 13 million new members.

2. Yum China opened 1,165 new stores in 2020, setting a new store opening record in its 33-year history in China. By the end of 2020, the total number of Yum China stores reached 10,506, covering more than 1,500 cities and towns. The company plans to invest $8 billion (about RMB 51.6 billion) over the next five years for further expansion in the Chinese market.

3. Luckin Coffee said in a statement that it filed for bankruptcy protection in New York. Luckin stressed that the bankruptcy filing is an important part of the company's restructuring and will not directly impact on the company's operations.

4. Nestlé announced its 2020 full-year results. In 2020, Nestlé Greater China’s sales reached CHF 5.986 billion, translating to approximately RMB 44.028 billion, down 13.41% year on year. China’s negative growth was due to declines in out-of-home channels and limited consumer stockpiling during lockdowns. However, coffee, infant cereals, and pet food were sectors with prominent growth.

5. Chinese new tea chain brand Nayuki Tea has filed to list in Hong Kong. According to its prospectus, in the first three quarters of 2020, Nayuki Tea’s revenue was RMB 2.15 billion. It has opened more than 500 stores nationwide.

6. Coca-Cola released its 2020 Q4 and full-year financial results. In 2020, the company achieved revenue of $33 billion (about RMB 213 billion), a year-on-year decrease of 11%. In the Asia Pacific, Coca-Cola saw growth in its soda category in China and India.

7. PepsiCo released its full-year earnings for 2020. As of December 26, 2020, PepsiCo's revenue was $70.372 billion, equivalent to about RMB 454.2 billion, a year-on-year increase of 4.8%. In the Asia-Pacific, Australia, New Zealand, and China region, the company’s operating profit rose 24%, with food/snack sales up 7% and beverage sales up 1%.

8. Danone reported 2020 full-year net sales of €23.62 billion (about RMB 184.775 billion), a year-on-year decrease of 1.5%. Danone's infant formula size in China reached nearly $2 billion (about RMB 12.921 billion), with Aptamil crowning the No.1 multinational brand in Chinese infant formula market by market share.

Industry focus

1. The "Infant Milk Powder Traceability" mini-program developed by the Ministry of Industry and Information Technology has accessed data from 76 major domestic infant milk powder companies. Consumers can browse contents including product information, consumption information, and enterprise information through the mini program.

2. Nayuki Tea initiated the formulation of "Tea Beverage Series Group Standards." The formulation will be conducted in three phases. The first phase will be standards for new tea products, the second phase will be standards for product manufacturing techniques (methods), and the third phase will be standards for product raw materials. The first-phase formulation expects to complete in 2021 by preliminarily classifying new tea products into five categories: fruit tea, fresh milk tea, bubble tea, cold brew tea, and milk cap tea.

3. According to data from the Ministry of Commerce, from New Year's Eve to the sixth day of the first lunar month (February 11 to 17, 2021), retail and catering companies achieved combined sales of RMB 821 billion, a year-on-year increase of 28.7% from 2020 and 4.9% from 2019.

4. According to data from Dingdong Maicai (a fresh grocery e-commerce platform), the overall sales of glutinous rice balls on the platform have increased by nearly 30% from January and expect to reach a peak on the Lantern Festival, which falls on February 26 this year.

Regulatory Updates

1. On February 20, China officially approved the usage of gelatinized confection and powder for health food filing.

2. On February 20, China National Health Commission approved ten new varieties of food additives and six new varieties of food-related products.

3. On February 8, China National Health Commission opened 26 national food safety standards for public feedback. The standards under consultation include Good Manufacturing Practice for Formula for Infants and Young Children.

4. On February 18, CFSA (China National Center for Food Safety Risk Assessment) released two notices to consult on the use of one bacterial strain for baby foods and ten new varieties of food additives.

5. On February 3, China Dairy Association held a meeting discussing the preparation work of drafting the “14th Five-Year Strategic Development Guidance of China Dairy Industry”. One of the key tasks of the “14th Five-Year Plan” is to optimize the industrial structure and facilitate the development of pasteurized milk, fermented milk, cheese, and other high-additional-value products.

6. China SAMR published a series of notifications regarding requirements for the filing of health food product using the five functional ingredients (i.e., coenzyme Q10, reishi shell-broken spore powder, spirulina, fish oil and melatonin), which have been added into the health food raw material positive list earlier in 2020.

Related Links:

[1] Monthly Digest: China Food Sector in January 2021