Contents

• Market Condition

• Company Dynamics

• Financial Results

• Regulatory Compliance

Market Condition

1. According to the National Bureau of Statistics, China’s dairy production from January to October 2023 totaled 25.55 million tons, with a year-on-year (YoY) increase of 3.7%. The dairy output in October 2023 was 2.68 million tons, up 0.9% YoY. 

2. As of November 16, 2023, the Chinese market has witnessed 910 infant formula recipes registered as per China’s new GB standards. Among the 910 recipes, 84.4% are from local manufacturers in China, including those established by overseas players. In terms of milk species, 72% are from cow milk and 28% are from goat or sheep milk. The top 3 Chinese and overseas dairy enterprises with the most recipes were Feihe, Yili and Junlebao in China, and Danone, Nestlé and Abbott overseas. 

3. China National Health Commission initiated a digital label pilot project this year to expand the display forms of food labels and enhance consumers’ reading experience. Currently, more than 40 products from over 20 enterprises have joined the project, covering various major food categories such as dairy products, beverages, instant food, meat products, plant-based oil, candies, etc.

4. In October 2023, the new consumption sector witnessed 14 investment and financing events, amounting to CNY 502 million. Among these events, 12 took place in the food and beverage sector. Compared with the same period in 2022, the volume shrank by 63.16% and the value by 84.31%.

5. Syntun’s statistics indicated that the online sales of food and beverage categories reached CNY 55.8 billion during the Double Eleven Shopping Festival. Specifically, the sales value of nutraceutical and pet food came up to CNY 14.8 and 4.8 billion, respectively. 

Company Dynamics

1. On November 29, Nestlé rolled out a new series of milk powder for consumers of all age groups, applying its proprietary technology to reduce the lactose in milk and generating prebiotic fibers from milk’s intrinsic lactose through specialised enzymes. Compared with regular milk, it decreases lactose by more than 80%, carbohydrates by 74%, and energy by 18%. Benefiting from this, it helps consumers with lactose intolerance and gastrointestinal sensitivity significantly improve adverse reactions, such as abdominal distension and diarrhoea after drinking milk. 

Nestlé’s N3 Milk Series

2. Weilaixing, Mengniu’s children milk brand, announced in November that the first Chinese domestic HMO-containing children liquid formula milk would be launched soon. The product is added with more than 10 nutrients, such as Mengniu’s self-developed HMOs, prebiotics GOS and FOS, Alpha whey protein, etc., to satisfy the nutritional demands of children aged above 3, especially those in the transition period from milk powder to milk. More information about HMOs in China. 

Weilaixing’s HMO-containing Children Liquid Formula Milk

3. Chi Forest newly introduced a vitamin C-enriched juice drink with orange and waxberry flavours, available in the brand’s online flagship store priced at CNY 4.86. Besides, Nongfu Spring also unveiled a new range of NFC orange juice, manufactured from its grove’s navel oranges in season, without adding water, sugar and additives. The whole manufacturing process of the juice is less than 36 hours, from fruit picking, juice extraction, to filling. It can be purchased in Nongfu Spring’s online flagship store at CNY 9.99. The launch of the new juice is closely associated with the popularity of the Chinese juice market from 2022. According to Kantar Worldpanel, China’s juice market reached CNY 14 billion in 2022, increasing 19.2% YoY. In the first half of 2023, the sales value of the juice segment in many leading beverage enterprises, such as Master Kong, Uni-President and Nongfu Spring, achieved double-digit growth. More details about China’s juice market on ChemLinked. 

4. Nutricia, a subsidiary corporation of Danone, unveiled Fortimel 能荃力益嘉, its first adult Foods for Special Medical Purposes in China this November. It is specially formulated for patients aged above 10 who are recovering after surgery or non-communicable diseases like cancer and stroke. Each bottle contains 9.4g premium milk protein, 28 varieties of vitamins and minerals, and 2.6g dietary fiber, which can sufficiently meet these patients’ nutritional needs. Moreover, to cater for Chinese consumers’ preference, the product is designed as red date and goji berry flavour by integrating the Chinese traditional regimen elements. 

Nutricia’s New aFSMP Product Launched in China

5. By-health’s Laboratory of Microbiome Research and Application was put into use recently, featuring a probiotic R&D platform and a synthetic biotechnology platform. Based on modern microbiology and biological manufacturing technology, the laboratory targets to self-develop more probiotics tailored to support the health demands of Chinese people and consistently build the technological strength of By-health’s products. Additionally, the probiotics factory of Bioflag, Ausnutria’s probiotic brand, was also officially put into operation this November. This aims to forge a world-leading intelligent manufacturing base for the research, production and application of functional probiotic strains. 

6. KFC strategically cooperated with Didi, a Chinese online taxi platform, to launch the “quick ordering during taxi trip” service nationwide. When users take a Didi taxi, they can see the KFC stores within approximately 100 metres from their destinations on the e-map during the trip, and can place orders through jumping to KFC’s Wechat Mini Program. Upon arrival, they can pick up the meals swiftly. This helps users efficiently utilise their travel time and simplifies the process of “taxing and ordering”. At present, the service covers nearly 10,000 KFC stores in China and can be accessed through both Didi’s app and WeChat Mini Program. 

Poster of KFC and Didi’s “Quick Ordering During Taxi Trip” Service

Financial Results

Regulatory Compliance

1. On November 7, 2023, China Association of Fragrance Flavour and Cosmetic Industries opened the consultation of amended GB 29938 General Rules for Food Flavorings for public feedback. The proposed draft mainly aims at modifying the varieties and quality specifications of synthetic flavorings used in food. More information on ChemLinked. 

2. On November 17, 2023, China National Health Commission (NHC) announced to update the Catalogue of Substances Traditionally Considered as Both Food and Chinese Medicine by adding nine new substances. More information on ChemLinked.

3. On November 20, 2023, China proposed new amendments to GB standard for restricting the overpackaging of food. It will greatly affect the packaging of many food commodities such as tea and complementary baby food. More information on ChemLinked.

4. On November 22, 2023, the General Administration of Customs of China published the list of non-compliant food products in October 2023. A total of 246 batches of imported food from 42 countries/regions were rejected. More information on ChemLinked.

5. The exposure draft of GB/T 19741 updates the requirements for plastic laminated films and bags used for liquid food packaging, covering the product classification criteria, printing quality, and physical properties. More information on ChemLinked.

6. On November 30, 2023, NHC and the State Administration for Market Regulation jointly unveiled the Announcement on Amino Acid Management on Foods for Special Dietary Uses, with immediate effect. More information on ChemLinked.

7. On November 30, 2023, NHC authorized the use of three new food raw materials. More information on ChemLinked.

8. On November 30, 2023, NHC authorized the use of two new food additives as food processing aids. More information on ChemLinked.

9. On November 30, 2023, NHC approved four new food related products, including one new food contact materials (FCM) resin, one new FCM additive, and two FCM additives with expanded usage scope. More information on ChemLinked.