Contents
Market Condition
Company Dynamics
Interesting & Noteworthy New Products
Financial Data
Regulatory Compliance
Market Condition
1. China Import Food Industry Report 2022 indicated that the total food imports reached USD1,354.6 in 2021, hitting a record high in recent ten years, with a year-on-year growth of 24.5%. Meat, grain, aquatic products, dairy products and fruits ranked TOP5 in import value, all exceeded 10 billion dollars.
2. According to National Bureau of Statistics, domestic milk production arrived at 10.4 million tons in Q3 2022, with a year-on-year growth of 6.8%. In contrast, the import volume of dairy products was 740,200 tons, with a year-on-year decrease of 20.6%. The value of import reduced by 3.3% compared with Q3 2021.
3. Many overseas dairy enterprises (Arla, A2, Fonterra etc.) attended the fifth China International Import Expo (CIIE) held in Shanghai with a wide range of premium dairy products. Due to the huge potential in the Chinese market, these dairy enterprises intended to have deeper cooperation with Chinese domestic firms.
4. The market size of low-temperature meat products (meat stored and sold at 0-4℃) in China has been increasing steadily in recent years, growing from RMB 290.7 billion to RMB 434.8 billion in 2017-2020. Consumers’ rising awareness of healthy food contributes to the thriving of this industry. According to anticipation, the industry’s market size will reach RMB 708.64 billion in 2027. This industry is currently popular for investment. High-growth projects with independent brands and supply chains are more attractive to investors.
5. China's E-commerce platforms this year, for the first time, didn't release their GMVs of the Double 11 Shopping Festival. Instead, Tmall announced that the GMV maintained stable over last year, JD stated that it"exceeded the average growth of the industry", Douyin and Kuaishou just reported the increase in merchants and transactions at the midnight of November 11. For more detailed information, please see Insight into China Double 11 Shopping Festival 2022 | ChemLinked
Company Dynamics
1. H&H Group announced to bring Zesty Paws, a leading high-end brand of pet nutrition launched in North American market into China to consolidate the corporation’s advantage over the pet food sector from the nutrition supplement dimension.
2. Purina, a pet food brand of Nestlé, formulated a 5-year and a 10-year plan for Chinese pet market based on its localisation strategy and international advantages. The brand will attach great importance to high-end and mass markets and launch marketing campaigns online and offline.
3. Beingmate’s GMV had a year-on-year growth of more than 20% during the Double 11 Shopping Festival, with a steady increase on Tmall and JD e-commerce platforms and a surge on Douyin and Pinduoduo e-commerce platforms.
4. Tim Hortons China signed a 2-year cooperative agreement with Shanghai Hema (盒马). The two firms will jointly develop their co-brand products from all-round cooperation on product design, product orientation, product promotion and product pricing. This cooperation can broaden the consumption scenario and product system of Tim Hortons China and provide consumers with more diverse service experiences.
5. Lay’s new potato chips decreased 50% saturated fat compared with the previous counterparts, which was an innovation in the face of consumers’ increasing awareness on health. The snack industry is currently heading towards a low-sugar, low-calorie and low-fat trend.
6. Rancha, a brand of Chi Forest (previously known as Genki Forest) stated to remove the sugar substitute erythritol in its products and was upgraded into sugar-free tea to embrace the sugar-free trend in ready-to-drink tea sector in the long term.
7. Nestlé ceased targeting children under 16 with advertisements for high-sugar products, including confectionery, ice cream and water-based beverages with added sugars. The ban will take effect on July 1, 2023, and will be implemented worldwide from TV to online platforms.
Interesting & Noteworthy New Products
1. Nutricia, a nutrition brand of Danone, rolled out Anamix series Food for Special Medical Purpose (FSMP) in the fifth CIIE, which could offer nutritional support for rare hereditary metabolic diseases. Customers can purchase the commodity through cross-border e-commerce channel.
2. Healthy food brand Ffit8 and pharmaceutical firm Langdi jointly unveiled a high-calcium protein powder more suitable for Chinese people’s physical condition and much easier for seniors to absorb calcium and protein.
3. Cosmeceutical brand Lessgo and Ganmaoling, a brand of San Jiu Enterprise Group (a pharmaceutical firm), launched a co-branded product: Sugar-free Pangdahai Popping Bead Gel Candy. After adding the powder of Pangdahai (namely sterculia scaphigera), honeysuckle and licorice, the product has an extra throat-moistening function and a sweet and refreshing taste.
4. Lemon Republic, a brand of lemonade, released a new product called cold-pressed lemon. Customers can instantly have a cup of lemon juice after adding purified water below 40 ℃. The product sales have reached 200,000 bags and the sales value has exceeded 700,000 yuan in the first 15 days on the shelf.
5. Beyond Meat launched a new range of plant-based dumplings. Chinese customers can purchase them online through Beyond Meat’s flagship stores on Tmall, JD and other e-commerce channels.
Financial Data
Enterprises | Revenue | Year-on-year Growth | Impressive Statistics |
Starbucks (Q4) | USD8.4 billion | 11% | 1. The global comparable store sales grew 7%. North America and U.S. increased 11%. China dropped 16%. 2. The net revenues of the Chinese market in Q4 improved to a 9% drop compared with a 38% decrease in Q3. The volume of same-store transactions decreased by 17% from a drop of 43% in Q3. |
Luckin Coffee (Q3) | USD547.5 million | 65.7% | 1. Luckin opened 651 new stores in Q3, having a quarter-over-quarter increase of 9.0% compared with Q2. The company has set up 7,846 stores by 30 September, 2022, including 5,373 self-operated and 2,473 partnership stores. 2. Revenues from self-operated stores in Q3 were USD388.2 million, with a year-on-year growth of 53.9%. Revenues from partnership stores in Q3 were USD126.4 million, with a year-on-year increase of 116.1%. |
Oatly (Q3) | USD183 million | 7% | 1. Revenues from the Asia market increased 16.3% to USD39.8 million, despite the impact of COVID-related restrictions in China. 2. Revenues from retail and foodservice channels continued to grow in Q3 2022, accounting for 57.7% and 36.5% of the total revenue, respectively. Around 63% of Asia revenues were from the foodservice channel, with the e-commerce channel as a critical contribution. |
H&H Group (Q1-Q3) | RMB9184.4 million | 13.4% | 1. Revenues from the Chinese market accounted for 74% of the total revenue, with a year-on-year growth of 7.3%. The Baby Nutrition & Care, Adult Nutrition & Care and Pet Nutrition & Care segments had positive growth in Chinese Mainland. 2. The Group’s market share of infant milk formula (IMF) in China was 5.6%, and a narrowing sales decline was seen in IMF business during the previous three quarters, attributed to the company’s efforts to raise brand awareness and expand accessibility in lower-tier cities. 3. Swisse saw a 22.8% growth in sales value and ranked TOP1 in the online vitamin, herbal and mineral supplements (VHMS) market with a market share of 7.2% for twelve months ended 30 September 2022. 4. Pet Nutrition & Care (PNC) segment surged 52.3% because of the expanding online and offline presence. |
Pinduoduo (Q3) | USD4991.1 million | 65% | 1. Revenues from online marketing services and others were USD3,996 million, and revenues from transaction services were USD987.2 million, with a year-on-year growth of 58% and 102%, respectively. 2. In comparison, revenues from merchandise sales reduced to USD7.9 million, with a year-on-year drop of 31%. |
Meituan (Q3) | RMB62.6 billion | 28.2% | 1. The net profit of Meituan in Q3 2022 were RMB3.5 billion, with a year-on-year increase of 5.6%. 2. For Q3 2022, Meituan's core local business still achieved a steady year-on-year income growth of 24.6%, despite the negative impact of the epidemic. The order delivery volume increased by 16.2%. In the early August, the highest daily order volume exceeded 60 million. |
Regulatory Compliance
1. On November 24, 2022, General Administration of Customs of China (GACC) published the list of non-compliant food products in October 2022. A total of 234 batches of imported food from 37 countries or regions were rejected. More details on ChemLinked.
2. On November 21, 2022, China's Ministry of Agriculture and Rural Affairs (MoARA) unveiled the draft of a new GB standard titled Requirements of Restricting Excessive Package–Edible Agricultural Products. The new standard proposes the requirements for restricting excessive package of edible agricultural products, the corresponding testing methods and judgment rules. More details on ChemLinked.
3. Regarding relevant laws and regulations, the competent authority incorporated the labeling requirements of Food for Special Medical Purposes (FSMP) into Guidelines for the Label of Foods for Special Medical Purposes. In addition, a logo for FSMP is newly designed and is suggested to be displayed on the minimum sales package of FSMP products. More details on ChemLinked.
