Contents

• Market Condition

• Company Dynamics

• Regulatory Compliance

Market Condition

1. From January to July 2024, China imported a total of 1.53 million tons of dairy products, down by 14.4% year-on-year(YoY), with an import value of USD 6.46 billion, a 18.1% YoY decline. Infant formula, bulk milk powder, packaged milk, whey, yogurt, and cheese saw decreases, while cream, condensed milk, protein, and light cream showed growth. Notably, infant formula imports in July surged by 105.9% YoY and 33.97% month-on-month.

2. Malaysia's first fresh durian exports arrived by air in Zhengzhou, marking the start of its trade with China. As the world's largest durian consuming and importing country, China’s durian retail market grew to RMB 77.71 billion in 2023, with imports valued at RMB 47.55 billion accounting for over half of the market. Thai and Vietnamese durians currently dominate the market, but the entry of Malaysian durians may shift the competitive landscape.

3. While ergothioneine has not yet been officially approved as a food ingredient in China, it is gaining popularity in cross-border e-commerce as a component in beauty products. Sales of ergothioneine-based products surpassed RMB 50 million on Tmall Global in the first half of 2024, marking a 6000% YoY increase. These products, usually in beverage, tablet, or capsule form, are often combined with collagen, hyaluronic acid, lipoic acid, and glutathione. Leading brands include Swisse and Wright Life.

4. Following the explosion accident at BASF's German plant, prices for certain vitamins have surged in China. By August 19, vitamin A prices had risen to RMB 235/kg, up 160% from the previous month, while vitamin E climbed to RMB 165/kg, up 75%. Vitamin D3 saw the largest increase, with prices nearly five times higher than at the start of 2024. Industry insiders indicate that the explosion has temporarily disrupted the supply chain, and the price hikes will not last long.

5. A new concept of all-you-can-drink wine bars has gained traction in Beijing, offering unlimited wine access for approximately RMB 100 for three hours. These bars feature a selection of 20–30 wines, and customers use chip-enabled wristbands to dispense wine from smart preservation machines. The combination of affordability and self-service model provides a relaxed atmosphere, making wine more accessible, especially for those new to it, and serving as an innovative market education method.

6. Premium Italian handcrafted gelato has become trending among young consumers in China. Gelato, previously associated with upscale dining, has established itself as a high-end product in consumers' mind. Besides, its fresh ingredients and handmade appeal align with growing preferences for healthy eating. In addition, the eye-catching colors make it visually appealing on social media. With gross margins exceeding 70%—and some brands reaching over 80%—gelato has attracted numerous new players to the market.

Company Dynamics

1. Luckin Coffee leveraged the hype of Black Myth: Wukong in its promotional campaign and introduced the Black Myth Coconut Cloud Americano, featuring themed tote bags and cup sleeves, and limited-edition 3D posters for specific coffee sets. Shortly after the campaign launched, peripheral products sold out in Luckin Coffee's stores nationwide, and even caused ordering system to crash.

Recommended reading: Luckin Coffee Rides High with Black Myth: Wukong

2. Coca-Cola partnered with Oreo to introduce two limited-edition products: Coca-Cola® OREO™ Zero Sugar and OREO® Coca-Cola™ Sandwich Cookie. Themed "Besties Forever", this crossover targets Gen Z consumers and is expected to generate significant social media buzz. The combined influence of these two well-known brands is likely to drive higher consumer engagement and sales.

3. Sichuan Viee Beverage and Food Co., Ltd., a leading plant-based protein beverage enterprise in China, has received strategic investment from L Catterton, the world's largest and most experienced consumer-focused private equity group. Known for its nut-based beverages, such as peanut, walnut, and almond drinks, Viee specializes in the catering market, particularly as a popular drink for hot pot dining in Sichuan and Chongqing.

Recommended reading：Chinese Plant-based Protein Beverage Secures Strategic Investment from L Catterton

4. Chinese pet food manufacturer Seek Pet secured a nearly RMB 1 billion strategic investment led by Advent International, marking the largest investment in China's pet industry in 2024. Based in Shandong, Seek Pet is a key R&D and manufacturing partner for numerous well-known pet food brands. China’s pet food market reached RMB 69 billion in 2023, and with rising pet ownership and the increasing prevalence of packaged pet food, the market shows significant growth potential.

5. Arla Foods announced a strategic adjustment to its ingredients business and a new partnership with Sodiaal, France's largest dairy cooperative, for early life nutrition (ELN) business. This partnership is set to boost Arla Foods' presence in China's ELN market, by reinforcing its organic infant formula offerings and expanding its HMO formula through cross-border e-commerce.

6. Bright Dairy plans to invest another NZD 185 million in Synlait. After acquiring a partial stake in Synlait in 2010, Bright Dairy currently holds a 39% stake in Synlait, while A2 Company controls 19.8%.

7. Perrier launched a sub-brand, Maison Perrier, with three product series: Forever fruit series, Chic cocktail series, and Energize energy drink series. The Forever series features lychee and passion fruit flavors, exclusive to Asia. Maison Perrier aims to offer low-calorie, healthy sparkling beverages to expand into new drinking occasions and attract younger consumers.

8. According to a report by Vino Joy News, Treasury Wine Estates is planning to establish a winery with its own vineyards in China for its Penfolds brand. This move comes shortly after China lifted its tariffs on Australian wines, as TWE aims to reclaim its dominance in the Chinese wine market. Penfolds' multi-origin strategy, which involves expanding the brand’s portfolio to include wines from various global regions, places China as a key focus for future growth. Along with the establishment of the winery, the brand is focusing on promoting wine culture and brand awareness among Chinese consumers.

Recommended reading: Latest Developments in China's Wine Market

9. Concentrated juice giant Andre Group faced allegations of using rotten apples to produce concentrated apple juice. The company denied the claims, asserting strict quality control measures. The investigation by local market regulatory authority is underway. Andre Group is a leader in China's concentrated apple juice market, with 70% of its revenue coming from exports, serving major international food and beverage companies.

10. Chinese snack chain LYFEN opened its first warehouse-style membership store in Shanghai, spanning 2,500 m². Targeting families, businesses, and bulk buyers, the new store concept aims to help LYFEN regain market share in the highly competitive snack industry. Despite achieving a revenue of RMB 1.79 billion in the first half of 2024, the company's profits dropped by over 70% YoY.

Regulatory Compliance

1. In August of 2024, General Administration of Customs of China updated the National Food Catalogues of Traditional Trade & Meet the Requirements of Export to China on its website. The latest update adds a new note regarding frozen fruits: "For frozen fruit products, quarantine access management is no longer implemented." This means that the catalogue no longer applies to the import of frozen fruits, allowing them to enter the Chinese market from any country, provided they meet other requirements, such as food safety and quality standards. More information on ChemLinked

2. On August 26, 2024, China National Health Commission announced to update the Catalogue of Substances Traditionally Considered as Both Food and Chinese Medicine by adding four new substances. More information on ChemLinked

3. On August 29, 2024, China's Ministry of Commerce announced preliminary findings that spirits obtained by distilling grape wine in containers holding less than 200 liters (usually called Brandy) originating from the EU are being dumped in the Chinese market. The investigation revealed that this dumping poses a threat of material injury to the domestic brandy industry, with a direct causal link between the dumping and the threat identified. Currently, no provisional anti-dumping measures will be implemented at this stage.

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