INSIGHTS
Monthly Digest: China Food Sector Review | Apr 2024
BY Rita BaoMay 31, 2024

Contents

  • Market Condition

  • Company Dynamics

  • Financial Results

  • Regulatory Compliance

Market Condition

1. According to data released by the National Bureau of Statistics, the total retail sales of consumer goods in Q1 2024 reached 12.03 trillion yuan, a year-on-year (YoY) increase of 4.7%. Among these, the retail sales of grain & oil & food products, as well as beverages (for enterprises above the designated size), grew by 9.6% and 6.5%, respectively.

2. In Q1 2024, China imported a total of 652,000 tons of dairy products, down 15.6% YoY. The import value dropped by 29.7% to 2.58 billion USD. Among the main categories, only cream, protein, and condensed milk saw growth, while all other categories declined, with infant formula experiencing the largest drop of nearly 50%.

dairy products

3. By the end of March 2024, 87 enterprises had registered a total of 390 infant formula series (over 1000 recipes) under the new national standards. Leading companies such as Feihe, Yili, Junlebao, Ausnutria, Beingmate, Biostime, Nestlé (including Wyeth), Danone, Friso, and A2 had 140 series registered, accounting for 35.9% of the total. Imported infant formula series accounted for 17.69% of the total.

4. The A2 Dairy Industry Trend White Paper highlights the rapid growth of A2 dairy products in the Chinese market. In 2023, the e-commerce sales of A2 dairy products increased by 28%, from 630 million yuan to 810 million yuan. Specifically, the sales of A2 white milk rose by 45%, from 370 million yuan to 540 million yuan.

5. In Q1 2024, the share of RTD tea, nuts, packaged drinking water, and convenience food categories experienced significant growth in the offline food and beverages market. Conversely, categories such as RTD coffee, preserved and dried fruits, soda, and dairy beverages saw a noticeable decline.

offline retail monitoring

Company Dynamics

1. Mizone has upgraded its sports drink to " Mizone + Electrolytes," featuring that each bottle contains at least 455mg of electrolytes, effectively replenishing electrolytes lost during one hour of exercise. In China, electrolyte water has become one of the hottest subcategories in the sports drink segment. With more competitors entering the market, the competition is bound to intensify. Future success will depend on comprehensive strengths in supply chain, product development, consumer insights, market influence, and distribution network.

2. At the "2024 Brand New Product Launch Conference" in Yunnan, Nestlé China unveiled a series of new products, including instant coffees, coffee concentrate, RTD coffees (including two plant-based), as well as innovative coffee fruit tea made from coffee fruit husks. Nestlé aims to provide consumers with a diverse and rich coffee experience in terms of taste, flavor, and nutritional value.

Nestlé new products3. Liquid I.V., a functional hydration brand under Unilever, has entered the Chinese market through cross-border e-commerce. According to Unilever, Liquid I.V. contains eight nutrients, provides quick hydration, and helps enhance immunity and promote metabolism. China is the second overseas market for Liquid I.V., chosen due to the growing demand for vitamins, minerals, and nutritional supplements.

4. American infant nutrition brand AUKSUN has entered the Chinese market through cross-border e-commerce. Specializing in stage-specific nutrition supplements, AUKSUN has introduced a range of stage-specific probiotics (for infant, baby, toddler, kids) and DHA supplements (for infant and baby) to the Chinese market.

5. According to NielsenIQ data released in April, Ausnutria's goat milk infant formula brand Kabrita accounted for 79.1% of the sales volume and 78% of the sales revenue in the Chinese imported goat milk infant formula market in 2023.

Kabrita goat milk infant formula

6. Junlebao has officially launched its first infant formula for special medical purpose, tailored for infants with digestive issues and lactose intolerance.

7. Nongfu Spring, a leader in China’s packaged drinking water market with its natural water products, has expanded its product line to include purified water, further solidifying its position. The Chinese packaged drinking water market is primarily divided into purified water, natural water, and mineral water, with purified water holding the largest market share. The market is highly concentrated, with Nongfu Spring holding a 26.5% market share (with its natural water products), ranking first, followed by China Resources C'estbon with a 21.3% market share(with its purified water products).

8. Luckin Coffee's (Jiangsu) roasting base has officially started operations in Kunshan, Suzhou. This intelligent coffee roasting production base integrates green bean storage, distribution, roasting, packaging, and sales. With a total investment of $120 million and an annual roasting capacity of 30,000 tons, it is the largest single coffee roasting facility in China to date.

9. COFCO Coca-Cola has launched a nutrient-rich milk product, Rubeile, which boasts high calcium and high protein content, with each bottle containing over 12g of protein and approximately 400mg of calcium. It is also lactose-free, catering to those with lactose intolerance. This move aligns with Coca-Cola’s "all-category beverage" strategy, filling a gap in their dairy product offerings.

Rubeile

Financial results

Following Yili's release of its financial results for 2023 in late April, ChemLinked collected the annual financial results for year 2023 of the top ten listed dairy enterprises in China.

Enterprise

Revenue

(Billion yuan)

YoY Growth

Profit

(Million yuan)

YoY Growth

Yili

126.179

2.44%

10,429

10.37%

Mengniu

98.624

6.50%

4,809

-9.32%

Bright Dairy

26.485

-6.13%

967

167.87%

Feihe

19.532

-8.30%

3,290

-33.50%

Youran Dairy

(Raw milk supplier)

18.694

-3.60%

-1,050

Profit to loss

H&H Group

13.927

9.00%

582

-4.90%

Modern Farming

(Raw milk supplier)

13.458

9.50%

185

-68.10%

New Hope Dairy

10.987

9.80%

431

19.39%

Sanyuan

7.841

-1.38%

243

502.39%

Ausnutria

7.382

-5.30%

174

-19.40%

Regulatory Compliance

1. On April 29, 2024, China State Administration for Market Regulation (SAMR) issued a notification announcing the simplification of required documents for the registration and filing application of imported health food. More information on ChemLinked.

2. GB 43284-2023 Requirements of Restricting Excessive Package-Fresh Edible Agricultural Products took effect on April 1, 2024. The standard applies to the sales package of both Chinese domestic and imported agricultural products sold in China such as vegetables (including edible fungi), fruit, livestock and poultry meat, aquatic products, eggs, etc. 

 Disclaimer: All images used in the article are from the Internet. 

Rita Bao
ChemLinked Regulatory Analyst
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