Monthly Digest: China Food Sector Review | Mar 2024
BY Rita BaoApr 12, 2024


  • Market Condition

  • Company Dynamics

  • Regulatory Compliance

Market condition

1. The China National Food Industry Association released the 2023 Annual Report on China's Food Industry Economic Performance,1 indicating that in 2023, the total revenue of China's food industrial enterprises above the designated size totaled 9.0 trillion yuan, an increase of 2.5% YoY. This growth rate was a slowdown of 3.1 percentage points compared to the previous year. China's food imports and exports reached 2.0 trillion yuan in 2023, with a 6.0% YoY increase. Among these, food imports amounted to 1.46 trillion yuan, growing by 6.1% YoY.

2. In 2023, China's alcoholic drinks industry saw a total output of 61.31 million kiloliters, a modest increase of 1.1% YoY. Sales revenue totaled 1.08 trillion yuan, up by 9.3% YoY. Profits reached 262.82 billion yuan, up by 7.6% YoY.2 Specifically, revenue in the Chinese Baijiu sector increased by 9.7% YoY to 756.3 billion yuan, with profits growing by 7.5% YoY to 232.8 billion yuan. The beer sector witnessed revenue of 186.3 billion yuan with an 8.6% YoY increase, and profits of 26 billion yuan, indicating a significant 15.1% YoY rise. The Chinese rice wine sector achieved revenue of 21 billion yuan with a 2.1% YoY increase, and profits of 1.95 billion yuan, an increase of 8.5% YoY. In the wine sector, revenue amounted to 9.09 billion yuan, up by 4.8% YoY, and profits reached 220 million yuan, a modest increase of 2.8% YoY. 

3. Since March 29, 2024, China has lifted anti-dumping and countervailing duties on imported Australian wines.3 Tim Ford, the CEO of Treasury Wine Estates (an Australian wine giant), emphasized that this decision marks a significant milestone for the Australian wine industry and Chinese partners and consumers. He also expressed plans to enhance the enterprise's wine distribution network in China.

4. Shanghai pilots the "Nutri-Grade Labels" for beverages to guide the public towards healthier dietary habits. The nutri-grade labels grade beverages from A to D as per their content of non-dairy sugars, saturated fats, trans fats, and non-sugar sweeteners, with the recommendation level decreasing from A to D.

Recommended reading: Shanghai Pilots Nutri-Grade Labels for Beverages

beverages graded by nutri-grade labels

5. Tianshui Malatang, a local street dish featuring a mix of fresh vegetables and meat simmered in a hot, spicy broth, has gone viral on Chinese social media. Food lovers have flocked to Tianshui (a city in Northwest China's Gansu Province) for this iconic delicacy. The malatang craze has boosted the local tourism economy and driven sales of local agricultural products such as Gangu chili peppers and Dingxi potatoes.

Tianshui Malatang craze

Company dynamics

1. The passing of Zong Qinghou, founder of the Wahaha Group, has captured widespread attention. In tribute to the esteemed entrepreneur, consumers rushed to purchase Wahaha products. Sales surged explosively online and offline in late February and early March, resulting in flagship products such as Wahaha AD Calcium Milk, Wahaha Purified Water, and Nutri-Express being sold out. In Wahaha's recent enterprise internal memo, Zong Fuli, the heiress, reaffirmed the enterprise's dedication to continuous innovation in corporate structure, product R&D, and distribution networks.

Wahaha’s explosive sales growth

2. Tetra Pak has introduced the world's first E3 ultra-high-speed filling machine tailored for Tetra Pak 250ml packaging in the Chinese market. With electron beam sterilization technology applied for the first time in the packaging industry, this machine achieves an impressive filling speed of up to 40,000 packages per hour, resulting in a remarkable 60% growth in production efficiency. Furthermore, replacing conventional sterilization methods with electron beam sterilization delivers significant energy savings of up to 30% and water savings of 45%, consequently reducing overall energy costs. The E3 ultra-high-speed filling machine has already been deployed at Yili's Modern Smart Health Valley and Mengniu's Ningxia factory.

3. Wyeth has launched a liquid infant formula containing two HMO ingredients, 2'-FL and LNnT, in China. Products are imported from Germany to China through general trade, marking the debut of non-CBEC-channel liquid HMOs infant formula products in the Chinese market.

Wyeth illuma liquid HMO infant formula (imported to China through general trade)

4. Feihe's subsidiary in Canada, Canada Royal Milk, has obtained approval from the Canadian Food Inspection Agency (CFIA) to produce infant formula. The company has initiated the necessary steps to commence production and to make the product available for retail distribution nationwide in Canada by the summer. As reported, Feihe's investment in infant formula production in Canada marks the first such enterprise in Canada and the first locally produced and sold infant formula brand.

5. Meiling Goat Dairy has introduced the first goat milk powder with the health function of aiding in lowering blood sugar (health food registration No. G20230842). This product, formulated with chitosan, chromium picolinate, zinc lactate, and other ingredients, is tailored for individuals with elevated blood sugar levels. In the fiercely competitive Chinese dairy market, dairy functionalization is rising as consumers increasingly prioritize health concerns.

Meiling goat milk powder with the health function of aiding in lowering blood sugar

6. Moutai unveiled UMEET Blueberry Sparkling Wine, its first low-alcohol sparkling beverage targeting young consumers. UMEET offers five flavors, each in a 375ml bottle with a 6% vol alcohol content, priced at 118 yuan. In recent years, Moutai has ramped up its strategy for brand rejuvenation, unveiling a range of products tailored to younger consumers. These include Moutai Ice Cream in collaboration with Mengniu, "Jiangxiang Latte" with Luckin Coffee, and "Maoxiaoling Chocolate" with Dove.

Moutai UMEET Blueberry Sparkling Wine

7. Mengniu took the lead in establishing the group standard "Detection of Seven Human Milk Oligosaccharides in Infant Formula and Formulated Milk Powder" in collaboration with the Shanghai Infant and Child Nutrition R&D Center and other units. This marks China's first standard for detecting seven HMOs simultaneously. The standard, utilizing high-performance liquid chromatography (HPLC), boasts low matrix effects, low detection costs, convenient experimental operation, and high method reproducibility.

Regulatory compliance

1. On March 12, 2024, China published 47 new national food safety standards and 6 amendment sheets to existing ones. These new standards include 1 for dairy products, 1 for food contact materials, 7 for food testing methods, 16 for microbial testing methods and 22 for food additives and nutritional fortifiers. More information on ChemLinked

2. On March 21, the State Administration for Market Regulation (SAMR) of China and five other departments jointly issued the Notice on Tightening the Supervision of Pre-cooked Food Safety to Promote High-Quality Industry Development. The notice aims to clarify the definitions of pre-cooked food and to introduce regulations on the use of additives in the sector to ensure food safety.

3. On March 26, 2024, the SAMR announced several detailed guidelines, encouraging food businesses to improve the labeling of production dates and shelf lives on prepackaged food products, including food additives. The announcement is expected to facilitate greater transparency for consumers in identifying the packaging and labeling information. More information on ChemLinked

4. On March 26, 2024, China National Health Commission (NHC) issued the draft of national food safety standard legislation plan for 2024 (hereafter as the Plan). 34 food standards are listed in the Plan, covering food products, food additives, food nutritional fortifiers, testing and determination methods, and food business operations. Among them, 14 are new standards to be formulated, while the rest 20 standards are existing ones with revisions. More information on ChemLinked

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

Rita Bao
ChemLinked Regulatory Analyst
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