INSIGHTS
Monthly Digest: China Food Sector Review | Sep 2024
BY Rita BaoOct 07, 2024

Contents

  • Market Condition

  • Company Dynamics

  • E-commerce

  • Regulatory Compliance

Market Condition

1. From January to August 2024, China imported a total of 1.75 million tons of dairy products, a year-on-year decrease of 13.2%, with an import value of USD 7.38 billion, down by 16.1% YoY. By category, except for growth in the imports of condensed milk, protein, and cream, all other categories saw declines. Notably, in August, infant formula imports grew by 34% YoY in volume and 29.9% YoY in value, reaching 19,400 tons and USD 370 million, respectively.

infant formula imports

2. Mojing Market Intelligence released its Q2 2024 Consumer Potential White Paper. The online food and beverage market achieved sales of RMB 101.1 billion, up 4.8% YoY, though growth slowed compared to Q1. Online sales of health supplements reached RMB 31.91 billion, with a 5.0% YoY increase. In the beverage sector, categories like liquid salad, prune juice, and dietary fiber drinks showed robust growth. In health supplement sector, the oral beauty segment declined, with weight management, sports nutrition, and women's health products gaining traction.

3. A survey conducted by the JD Consumer and Industry Development Research Institute among 1,000 consumers indicated that approximately 65.5% of respondents prefer "zero additives, zero sugar, and zero fat" in their food choices, in pursuit of a healthier, burden-free diet. Moreover, consumers have broadened their health awareness beyond food, incorporating it into social life and daily habits.

4. Media reports have revealed some goji berry processing factories using sodium metabisulfite and even industrial sulfur for color enhancement, leading to sulfur dioxide residues exceeding safety standards. According to local goji berry production regulations, the use of sodium metabisulfite and its alternatives is prohibited in the processing of goji berries, not to mention industrial sulfur, which is strictly forbidden for use in food products. This food safety incident has sparked widespread concern on Chinese social media.

Company Dynamics

1. Mondelez China significantly increased its investment in the Chinese frozen bakery enterprise "Evirth," marking Mondelez’s first major equity investment in China since entering the market 40 years ago. Previously, Mondelez and Evirth engaged in strategic cooperation to produce and market frozen baked goods under the Oreo and Philadelphia brands. This investment strengthens Mondelez's position in China's frozen baked goods market, which Mondelez estimates to be worth USD 3 billion, with an annual compound growth rate of approximately 15%.

Oreo cheeze cake

2.  Starbucks China introduced three new regionally inspired drinks across more than 7,300 stores nationwide: Chestnut Red Bean Latte, Persimmon Frappuccino, and Pomelo Oolong Tea Latte. These drinks were created by Starbucks baristas drawing inspiration from their hometown cultures and cuisines. Additionally, Starbucks China launched its first brand-customized short drama on Douyin, titled “I Opened a Starbucks in Ancient Times”, featuring product and brand placements, garnering over 70 million views.  

Starbucks

3. Meiji's sports nutrition brand SAVAS has rebranded for the Chinese market with a new Chinese name, "劲倍士", which better aligns with sports scenarios in the Chinese language. The brand also launched three upgraded products and one entirely new product. In April, SAVAS appointed Chinese gymnast Zhang Boheng as its brand ambassador, whose popularity surged during the Paris Olympics. These efforts reflect Meiji’s aim to capitalize on China’s rapidly growing sports nutrition market. Meiji's dairy segment in China has faced profitability challenges, with operating losses expected to widen in FY 2024.

SAVAS

4. Ferrero China launched its first R&D center—Ferrero China Food R&D Center in Hangzhou. The center will focus on new product development for the Chinese market, including formulation research, localized flavor innovations, and consumer testing. Notably, Ferrero's first factory in China was established in Hangzhou in 2015.

Ferrero China Food R&D Center in Hangzhou

5. Lay's launched a "zero additives" rice cracker as part of its strategy to diversify its product portfolio in China’s snack food sector. It is noteworthy that rice cracker is a traditional snack in China, evoking nostalgic memories of consumers born in the 80s and 90s. In recent years, Lay's has consistently strengthened its localization efforts to resonate with Chinese consumers.

Lay's zero additives rice cracker

6. Coca-Cola China announced a five-year strategic cooperation agreement with Chimelong Group. Under this agreement, Coca-Cola China will provide a full range of beverage solutions, including carbonated drinks, juices, teas, ready-to-drink coffee, and bottled water, to Chimelong’s theme parks and hotels. With over 40 million annual visitors, as reported on the Chimelong Group's official website, this partnership taps into a substantial customer base. While specific commercial details were not disclosed, previous collaborations of this kind typically include not only product sales but also joint marketing strategies and exclusive rights for promotional use of certain intellectual properties.

Coca-Cola China & Chimelong Group

7. Feihe Dairy signed a strategic cooperation agreement with FrieslandCampina (food ingredients business), focusing on providing customized nutritional solutions across all life stages, with a particular emphasis on brain nutrition. Feihe also expressed its focus on the development and application of functional proteins, aiming for further innovation in the deep processing of proteins in dairy products.

8. H&H Group received a special food production license from the Guangzhou Huangpu District Market Supervision Bureau. This license allows for both R&D and production at the same site. Unlike the traditional mode where production facilities are exclusively used for manufacturing and R&D centers solely for innovation, this “one-site dual-use” mode speeds up the transition from R&D to market launch through small-scale production trials. These trials are then followed by broader production strategies based on market feedback.

9. Baking brand Horsh launched six baking products free of sodium dehydroacetate, utilizing a fermented sour milk powder derived from whey and lactic acid bacteria as a preservative alternative. This shift aligns with GB 2760-2024 National Food Safety Standard Standard for Uses of Food Additives, which bans the use of sodium dehydroacetate in the baking industry effective since February 8, 2025.

Horsh launched baking products free of sodium dehydroacetate

E-commerce

1. Douyin's top live streamer Crazy Brother Yang came under investigation for allegedly misleading consumers when promoting “Hong Kong Meicheng Mooncakes.” It was discovered that the so-called high-end Hong Kong mooncake brand was actually manufactured in Guangdong, specifically in Guangzhou and Foshan. Three Sheep Group, the enterprise behind the livestream faces penalties of RMB 68.94 million for false advertising and misleading promotions.

Regulatory Compliance

1. On September 20, 2024, General Administration of Customs of China (GACC) published the list of non-compliant food products in August 2024. A total of 301 batches of imported food from 35 countries/regions were rejected. Most non-compliant imported food in August came from Ecuador (16.6%, all aquatic products), followed by Australia (15.6%, mostly beef) and Japan (12.3%, mostly snacks). More information on ChemLinked.

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

Rita Bao
ChemLinked Regulatory Analyst
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