Jan 04, 2022
Monthly Digest: China Food Sector in December 2021
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Market events

1.       BCG and Little Red Book recently co-released the 2021 China New Consumption Market Insight Report, covering 6 industries and 59 new consumer brands. The report reveals that the Chinese market is witnessing the rise of new consumption when new consumer brands have become a popular choice among consumers, especially young people who live in high-tier cities. In this trend, cosmetics brands, food&beverage brands, and mother&baby brands are the pioneers.

2.       Three top live-streamers, Viya(薇娅), Cherie(雪梨) and Sunny(林珊珊), were fined a massive amount of money for tax problem. Later, all their social media accounts were shut down. These fine tickets also released an alarm for other live-streamers. Many immediately self-check their tax conditions and pay back taxes. The tax event can be a turning point for this wild-growing live-streaming industry.

3.       Yiyouth cooperated with CBNData to release the GEN-Z Favored Brands List of 2021, containing 41 brands from different sectors. Multiple food brands entered the list: coconut beverage brand Fresh Yolo, pet food brand Myfoodie, emerging coffee brand MANNER, traditional dairy brand Guangming, health snack brand Laojin Mofang, etc.

4.       Firmenich announced the flavor of the year 2022, magical botanical, inspired by Pantone’s color of the Year 2022, Very Peri.                         

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Company dynamics

1.       In December, the children food sector was one of the focuses of investors:

  • Children food brand Woxiaoya (窝小芽) consecutively gained two rounds of financing recently. Since 2020, this brand has launched nearly 100 SKUs, covering children’s main meals, snacks, and seasoning. It reached 100 million yuan annual GMV and kept a 30 -50% monthly growth rate.

  • Another children food brand Qiutian Manman (秋田满满) also gained about ten million dollars investment. Founded in 2018, this brand reached over 100 million yuan sales in 2021 Double 11, increasing by 576% year-on-year. Focusing on main and supplementary food, the brand has a wide range of products, such as noodles, fresh food, seasonings, and snacks.

2.       The famous Global HMOs (Human Milk Oligosaccharide) supplier DSM announced that Chinese regulatory authorities had approved the safety application of six HMOs synthesis colonies, implying an important step of HMOs’ compliance in China. In the international market, HMOs is a popular functional food ingredient. Infant formula added with HMOs has sprung up, so many companies are looking forward to introducing related products to China. DSM predicts that the commercialization of HMOs in China still requires at least four years.

3.       Food brand Orange Star (橙色星球) gained a new round of financing, mainly from Xiaomi Group, a tech giant in China. Positioning itself as a food tech company, Orange Star uses natural ingredients to develop innovative food products. At present, it focuses on frozen products.

4.       Innovative Coconut brand BOONBOON (椰满满) gained a Pre-A round of financing. Founded in 2020, BOONBOON focuses on coconut-flavored baked products. Its sales exceeded 10 million yuan in the first three months after entering Tmall.

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BOONBOON’s product

5.       Coca-Cola China’s wholly-owned subsidiary Culiang Wang opened a Tmall store named Zhibaishuo, focusing on selling plant-based beverage products of multiple brands in Coca-Cola Group. Coca-Cola has regarded plant-based beverages as a high potential sector, so it is actively developing new products in this sector besides opening online stores.

6.       Mineral water brand UCON from Genki Frost officially entered offline large-scale retail channels. Genki Forest started to develop its new brand UCON in September 2020. In July 2021, UCON launched its first product in online e-commerce channels such as Tmall and JD.com.

7.       Emerging dairy brand Adopt A Cow completed B round of financing. As a rising star in the Chinese dairy market, this brand has covered multiple sectors, such as UHT white milk, UHT yogurt, cheese bar, milk powder, etc. It is expected that its revenue in 2021 exceeded 2 billion yuan.

8.       Beyond Meat announced that it would open its first overseas R&D center. The center will locate in Shanghai, and it is also the creative center of the whole Asian market, focusing on developing quality plant-based products for consumers in the Asia-pacific market.

9.       Chinese dairy giant Modern Farming launched a new brand Three Calves. As a high-end UHT milk brand, this new brand will use A2β-casein as its biggest selling point.

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Three Calves’ products

10.   The alcohol industry continued its popularity among investors:

  • Craft beer brand Taste Room gained about ten million yuan investment. This brand was founded in 2016 and launched its first product in 2017. In 2021, it became the craft beer brand with the highest growth rate in Tmall Double 11. For now, it has launched more than 100 experimental products.

  • Sparkling wine brand JOJO also gained a strategic investment recently. Its main products are low-alcohol cocktails. The most popular product reached over 1,000 units monthly sales.

11.   Nestle launched a new online platform MyCancerMyNutrition.com. Besides providing food and nutrition information, it also gives cancer patients support in terms of diagnosis, coping with side effects, etc.

Interesting & noteworthy new products

1.       Chinese beverage giant Eastroc Beverage launched its first energy drink brand for women, SHECAN(她能). The company claims that these products contain vitamin B, amino acids, collagen peptides, etc. Also, their prices are higher than other ordinary energy drinks.

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SHECAN’s products

2.       Yili Changqing launched a high-protein yogurt whose protein standard reached 9g/100g. Another selling point of this yogurt is that it doesn’t contain any sugar. This new product’s price is also much higher than ordinary yogurt products, reaching 20 yuan/cup.

3.       Cocktail brand Rio and famous Chinese shampoo brand Bawang co-launched a gift box containing ginger-flavored cocktails, a shampoo, and a hairline measuring ruler, which is a successful IP cooperation of Rio. As a young fashion brand, Rio often cooperated with some well-known traditional brands to win consumers’ attentimage005-19.jpgRIO’s gift box

4.       Plant-based meat brand STARFIELD worked with famous bubble tea brand Hey Tea to launch a black pepper plant-based beef.

5.       Lay’s launched a new Japanese grapefruit-flavored “Purple French Fries”. This product is made of purple potatoes and is rich in anthocyanins. The color is all from its original ingredients and without any other artificial coloring.

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Lay’s purple french fires

6.       Oreo released its winter limited white biscuit with vanilla ice-cream flavor. This is also the first white Oreo biscuit in the global market.

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White OREO

Some impressive data

1.       According to statistics from "One View Business", as of the end of November, in 2021, a total of 618 financing events happened in the new consumer sector, with a financing amount of 70.3 billion yuan. Among them, the food sector ranked first with 197 cases, accounting for more than 31%, and the financing amount was nearly 17.6 billion yuan, accounting for 25% of the total financing amount.

In November 2021, a total of 26 financing events happened in the food sector, accounting for more than 38%. The two keywords of "catering" and "snacks" were the focus of investment this month.

2.       In December 2021, sales of mulled wine on Tmall increased by five times year on year. Cinnamon and star anise, the best companions for mulled wine, also witnessed a sales surge.

3.       According to data from the National Bureau of Statistics, in the third quarter of 2021, China’s milk production was 9.74 million tons, an increase of 760,000 tons and 8.5% over the same period last year.

Regulatory compliance

1.       As revealed by a notice released by State Administration for Market Regulation (SAMR) on November 30, 2021, China is now soliciting feedback on “Administrative Measures of the List of Non-Edible Substances That May Be Illegally Added to Food (Consultation Draft)”. More details on ChemLinked.

2.       On December 8, 2021, China National Center for Food Safety Risk Assessment (CFSA) opened five new varieties of food additives and one new food raw material for public feedback. The consultation period of the five new varieties has ended. Comments regarding the new food raw material can be sent to xspyl@cfsa.net.cn before January 8, 2022. More details on ChemLinked.

3.       As per the notice released on December 9, 2021, CFSA is now consulting on four new varieties of food-related products, including one new additive variety for food contact materials (FCM) and articles, and three new resins. Any opinions can be sent to biaozhun@cfsa.net.cn prior to January 7, 2022. More details on ChemLinked.

4.       The General Administration of Customs (GACC) clarified the Implementation Matters of Decree 248 & 249, involving food import declaration and labeling. More details on ChemLinked.

5.       Friesland Food Trading (Shanghai) Co., Ltd., an affiliated company of Friso, was recently fined 200,000 yuan by Shanghai Huangpu District Market Supervision and Administration Bureau. The penalty reason was in the context that the Chinese government has recently promoted breast milk feeding that the company published advertisements for infant milk products, beverages, and other foods that claimed to replace breast milk in whole or in part.

Ye Chen
ChemLinked Research Analyst
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