Market events

1.       Besides Tmall, JD.com, and Kaola.com, another Chinese tech giant Meituan joined the cross-border e-commerce (CBEC) business. Meituan is a one-stop platform for food, transportation, travel, shopping and entertainment. Recently, it added a new channel named Global Shopping on its app, allowing overseas brands to sell products through the CBEC channel.

2.       China’s annual 315 renovation campaign exposed the safety problem of Chaqi Caiye, a company providing pickled Chinese cabbage for multiple popular instant noodles brands, including Master Kang and Uni-President. This exposure sent a shock wave among Chinese consumers and also caused many related food brands’ PR disaster.

Company dynamics

1.       Nestle's pet nutrition brand Purina Pro Plan plans to introduce its high-tech product "Pro Plan Colostrum Food" into the Chinese market. This product provides various colostrum food nutrition solutions based on the three types of puppies of different sizes, large, medium, and small, to help enhance the immunity of young pets.

2.       Cargill announced that it would build a new pet food factory in Jiaxing, Zhejiang Province. The new facility, which will produce dog and cat food for Cargill's premium pet food brand PetMaster, will be completed in 2023.

3.       On March 3, Danone announced its cooperation with a Chinese domestic nutrition company, Eurbest. They will work together to expand local infant formula factories and develop new products. Brands with local factories have competitive advantages in getting for registration approval after China implemented infant formula registration. The new policy has prompted international companies to cooperate with local manufacturers.

4.       Chinese plant-based meat brand Expectation (植得期待), founded in 2021, recently completed its Angle round of financing. Huiji Food, which owns Expectation, has more than 20 years ofexperience in the traditional plant protein field, and succeefully created and operated a popular soy product brand Haobashi. Huiji Food aims to develop Expectation as the Chinese biggest plant-based meat provider. Expectation now has launched more than 30 SKUs.                    

Expcetation's products

5.       New Zealand dairy company Fonterra officially introduced its high-end cheese brand KAPITI into the Chinese market. It has now entered JD.com, Douyin, and some boutique supermarkets. With the consumption upgrade, cheese is becoming popular in China. Its market size will reach 15 billion yuan in 2022.

6.       Tims China, the Chinese brand of Canadian coffee brand Tim Hortons, announced to gain a US$ 194.5 million investment. It has opened 410 stores in China, with US$103.9 million sales in 2021.

7.       Chinese emerging tech company Zhinuo Tech completed its Angel round of financing, securing over 10 million yuan. The company was founded in 2021, focusing on using synthetic biology and fermentation engineering technology to develop high-value-added natural products. The company's main product directions include human milk oligosaccharides (HMO) and new microbial pigments.

8.       Sugar substitute brand LESWEET completed Pre-A round financing. Following healthy lifestyle trends, its products cover two categories: zero-calorie condiments and casual snacks with zero-calorie sugar.

9.       Japanese craft beer brand Misaki Craft entered the Chinese market in 2022 and for now released two SKUs.

Misaki Craft's products

10.   Chinese yogurt brand Simple Love completed its C-round of financing. As the first additive-free low-temperature yogurt brand in China, Simple Love has successfully created a brand image of additive-free, safe ingredients and outstanding quality in consumers’ impression. As of December 2021, its compound annual growth rate in revenue exceeded 100%.

11.   Japanese boutique coffee brand %Arabica gained investment from PAG. This brand now has 57 stores in China, and is famous for its symbol of “%.”

12.   Beer brand Heineken Silver released its virtual beer product “Heineken Silver” on a metaverse platform Decentraland. Consumers can also take seconds to understand how to make a beer on this platform.

Heineken's NFT product

Interesting & noteworthy new products

1.       Chinese emerging coffee brand Saturnbird launched two plant-based drinks, cereal oat milk, and 0 sugar fresh coconut milk.

Saturnbird's product

2.       Multiple brands’ spring limited products have cherry blossom elements:

Three squirrels released multiple cherry blossom-flavored snacks, including daily nuts, sweet rice balls, Qingtuan, cake, and oolong tea.

Three Squirrel's product

Genki Forest announced the return of its spring-limited cherry blossom white-grape-flavored sparkling water. This new packaging is unique. When the refrigerated temperature drops below 8°C, the bottle body will bloom with blossoming cherry blossoms.

Genki Frost's product

Wine brand Torre Oria released a cherry blossom red dry. This wine is produced in Valencia, Spain, and is made from the native Spanish grape variety, Bobal. The packaging of this wine is decorated with cherry blossom elements. The label even gives off cherry blossom fragrance.

Torre Oria's wine

3.       Callebaut released a new generation of innovative products “Callebaut NXT,” a plant-based milk chocolate. Different from ordinary vegan chocolate, NXT chocolate is dairy-free, lactose-free, nut-free, allergen-free, and contains a milk substitute derived from the chufa plant.

4.       New products spring up in Chinese cheese market:

Children snack brand Little Yellow Elephant launched a new cheese product, “Good Morning Cheese.” It is a liquid cheese product, with calcium content five times that of the same amount of milk and protein content 1.5 times that of milk.

 Good Morning Cheese

Chinese emerging cheese brand Dr. Cheese released a new product, Simple-Salt Cheese Slices, with a cheese content of over 80%.

Simple-Salt Cheese Slices

5.       Chinese craft beer brand Panda Brew launched a new product Guozong Pear Perry. Perry is a subcategory of cider, a fruit wine brewed with fresh pears or pear juice. Chinese consumers are unfamiliar with this kind of cider, so Panda Brew gave consumers with this new product for free to test the market.

Guozong Pear Perry

6.      Famous Chinese sparkling water brand Genki Frost cooperated with NEVERCOFFEE to launch its first coffee product line, including sugar-free American coffee and low-sugar latte. This action implies that Genki Frost has entered the ready-to-drink coffee market.

Genki Frost's coffee products

Some impressive data

1.       According to the National Bureau of Statistics, in January and February, China’s total retail sales of consumer goods reached 7.4426 trillion yuan, a YoY increase of 6.7%. Different industries’ total retail sales are listed below:

• Grain, oil, and food: 310.3 billion yuan, up by 7.9%.

• Drinks: 48.1 billion yuan, up by 11.4%.

• Tobacco and alcohol: 101.1 billion yuan, up by 13.6%.

2.       Chinese top infant formula brand Feihe unveiled its 2021 annual report. In 2021, its revenue reached 22.776 billion yuan, increasing by 22.5% YoY. Its market share stood at 19.2% in December 2021, becoming China’s largest infant formula brand.

In the future, Feihe will continue to expand its ultra-high-end product line and invest more in another two sectors, milk powder for children & adults and goat powder.

3.       Chinese infant formula brand Ausnustria achieved 7.762 billion yuan sales in 2021, increasing by 12.1% YoY. Ausnustria owns a top goat milk powder brand Kabrita, whose sales have ranked first in the goat milk powder market for four consecutive years.

4.       H&H Group reached 11.55 billion yuan revenue in 2021, up by 3.2%. The revenue from mainland China was 9.085 billion yuan, accounting for 78.7% of the total revenue. The sales of goat milk powder became the most eye-catching point in the report. This product line contributed to 9.1% of total sales and increased by 42.7% in 2021.

Regulatory compliance

1.       16 national food safety standards issued previously by the State Administration for Market Regulation (SAMR) together with National Health Commission (NHC) came into force in March, involving food additives, contaminants in food, food testing methods, and food contact materials. These GB standards provide a legal basis for regulators, and also offer compliance guidelines for food manufacturers. More details on ChemLinked.

2.       On March 1, 2022, China National Health Commission (NHC) officially approved the use of 32 new varieties of food ingredients and food-related products, including 2 food raw materials, 11 food additives and 19 food contact material (FCM) substances.

3.       In early March, Chinese netizens found Orion lifted prices in only China and Russia and chose to use inferior cocoa butter substitute in the Chinese market. However, Orion is continuing to use pure cocoa powder in other overseas markets. The topic quickly went viral on China's Twitter-like social media Weibo, with millions of views and a plethora of discussions and criticisms towards Orion. Voices like boycotting Orion and its sub-brands are all over the Chinese Internet. More details on ChemLinked.

4.       As revealed by the notice released on March 2, 2022, six infant formula products produced under new GB standards were granted formula registration approvals. Among the six products, three are from Junlebao, and the rest are from Yili Group. More details on ChemLinked.

5.       On March 8, 2022, the China Ministry of Industry and Information Technology (MIIT) unveiled the draft of the first amendment sheet of GB 23350-2021 Requirements of Restricting Excessive Package–Foods and Cosmetics and announced to solicit public feedback till April 6, 2022. Any feedback can be sent to KJBZ@miit.gov.cn before the opinion collection ends. More details on ChemLinked.

6.       On March 14, 2022, China National Center for Food Safety Risk Assessment (CFSA) opened the proposal of arabinoxylan as a novel food ingredient for public feedback, Arabinoxylan is commonly used as a source of dietary fiber. Shareholders can send their comments to xspyl@cfsa.net.cn prior to April 14, 2022. More details on ChemLinked.

7.       On March 21, 2022, the State Administration for Market Regulation (SAMR) issued a drafted notice regarding the supervision of the health food logo. Comments can be sent to bjspjgc@163.com till April 21, 2022. More details on ChemLinked.