Monthly Digest: China Food Sector Review | Jan 2024
BY Rita BaoFeb 07, 2024


  • Market Condition

  • Company Dynamics

  • Regulatory Compliance


Market Condition

1. In 2023, China experienced a significant downturn in the import of dairy products, with a total volume of 2.88 million tons, marking a 12% YoY decrease. The corresponding import value amounted to USD 12.08 billion, a 13.3% YoY decline. Specifically, the import of dry dairy products saw a reduction of 10% YoY, totalling 2.04 million tons, and the import value declined by 14.8% YoY, reaching USD 10.44 billion. Likewise, the import of liquid milk experienced a 16.5% YoY decrease, accounting for 835,200 tons, with an import value of USD 1.64 billion, down by 2.2% YoY. Examining product categories shows a considerable reduction in import volumes of large-package powdered milk, condensed milk, and packaged milk, all recorded declines exceeding 20% YoY. Infant formula witnessed a 16% YoY reduction. Whey powder and cheese defied the overall trend, showing growth of 9.4% YoY and 22.5% YoY, respectively.

2. In 2023, the total production of dairy products in China reached 30.55 million tons, with a slight growth of 3.1% YoY. 

3. In 2023, the number of investment events in China's consumer market was 683, with a decline of 30.4% YoY. The food sector was a key investment focus, with notable interest in seasoning products, cooking oils, snack variety stores, and health-conscious products. In the catering sector, there was heightened interest in supply chains and service providers. In the alcohol and beverage sector, investment centered on tea and juice. In the coffee sector, early-stage investment in coffee chain brands garnered significant attention.

2023 Investments in Different Sectors of China's Consumer Market

4. With the conclusion of safeguard duties on milk powder on December 31, 2023, all New Zealand dairy products have been granted duty-free access to the Chinese market starting from January 1, 2024. Before this, China and New Zealand had entered into agreements, mutually committing to eliminating import tariffs on dairy products. Notably, safeguard duties on New Zealand's liquid milk, butter, and cheese concluded on December 31, 2021, whereas safeguard duties on milk powder were set to end on December 31, 2023. 

5. As the Chinese New Year, the Year of the Dragon, approaches, food brands have been updating their product packaging to infuse a sense of festivity and ignite consumer purchasing desires. With the growing involvement of young consumers in Spring Festival purchases, brands have become increasingly aware of the importance of creating distinctive product lines with a touch of Chinese culture. By doing so, brands cater to consumers' emotional needs for a heightened sense of festive ritual during the holiday season.

product packaging with the theme of Year of Dragon

Company Dynamics

1. Starbucks announced the introduction of a new espresso named Blonde Espresso in its offline stores in China. This espresso is manufactured from light roast coffee beans and offers a softer and smoother taste with a bright orange flavor, providing consumers with a distinctive choice of espresso.

Blonde Espresso

2. Nestlé has launched its first-ever red bean-based beverage series in the Chinese market. The series includes three flavours: "Red Bean Milk Tea," "Red Bean Matcha Latte", and "Red Bean Jasmine Milk Tea." The products feature low sugar and zero trans fats, while being rich in dietary fiber and plant polyphenols, emphasizing a health-conscious beverage concept.

Nestlé red bean-based beverage series

3. The Brand Manager of Health & Wellbeing APAC at Unilever recently announced on LinkedIn that Liquid I.V., their electrolyte powder brand, is gearing up for entry into the Chinese market. Liquid I.V., founded in 2012 and acquired by Unilever in 2020, is a prominent electrolyte powder brand in the United States.

Liquid I.V. electrolyte powder

4. Nongfu Spring has revealed the signing of a 5 billion yuan investment project agreement with the People's Government of Jiande City, Zhejiang Province. As reported, the project will be implemented in two phases over multiple stages to establish a centralized industrial base for the comprehensive production of bottled water and beverages. As a prominent beverage company in China, Nongfu Spring's heightened investment in production capacity is a strategic response to the growing Chinese beverage market and the intensifying competition among beverage industry leaders.

5. User-generated posts showcasing Feihe ice cream products have emerged on social media platforms. The products are named Feihe Pasture and feature diverse offerings such as glutinous rice cake ice cream, milk bricks, stick-shaped ice cream, etc. The packaging uniformly adopts blue and yellow as the primary color scheme, highlighting key selling points such as "golden milk source zone" and "origin from infant formula source."

 Feihe Pasture ice cream

6. Eastroc Beverage has unveiled its performance projection for 2023, expecting a revenue surpassing 11 billion, indicating a growth of over 30% YoY. The net profit is anticipated to increase between 38% YoY and 43% YoY. 

7. More Yogurt, a popular freshly made yogurt brand, announced to gradually replace yogurt ingredients with organic alternatives. The initial phase of the replacement includes 61 stores in cities such as Nanjing, Hefei, and nearby areas. Subsequently, this transition will gradually extend to cover all stores nationwide.

More Yogurt organic yogurt

8. Busy for You, a fast-growing snack chain brand, has announced an investment of over 1 billion yuan in the next six months for nationwide market development, with a particular focus on expanding its presence in the northern region. Previously, Busy for You merged with Super Ming, another fast-growing player in China's snack food market. By January 2024, these two brands' total number of nationwide stores has surpassed 7,000.

Regulatory Compliance

1. China SAMR proposed a consultation draft of China's Food Safety Law, introducing a new requirement for the registration of liquid infant and young children formula (Stage 1-3). More information on ChemLinked.

2. China NHC consulted on a new version of GB 7718 General Standard for the labeling of prepackaged foods. The new draft significantly differs from the current version and its two previous drafts. The proposed changes cover many aspects, such as the application scope, ingredient list, date labeling, food claims, digital labeling, and imported food labeling. More information on ChemLinked

3. China MIIT proposed a new amendment to the GB 23350-2021 Standard for restricting the overpackaging of food, tea, and baby foods. The new draft modifies the k value of milk powder and modified milk powder products from 3.0 to 6.0. Besides, it specifies the k value of dried bean products as 12.0. The k value of blended bean products with 10 or more individual items inside the packaging is 11.0. More information on ChemLinked

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

Rita Bao
ChemLinked Regulatory Analyst
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