China's Plant-Based Milk Market

In recent years, the “plant-based” concept has become a global buzzword. According to Innova, the global compound annual growth rate of new food and beverage product releases with "plant-based" claims was 68% between 2014 and 2018 ^[1]. In China, the plant-based market is also growing fast, especially the plant-based milk sector. According to data from Zhiyan Consulting, plant-based milk is the fastest growing market segment of the plant-based sector in China since 2007. Euromonitor data shows that from 2014 to 2018, the annual compound sales growth of pre-packaged soy milk products in the Chinese market was 9.3%, while UHT dairy milk was only 1.1%. It is expected that China’s plant-based milk market will increase to 258.3 billion yuan in 2020, accounting for 24.2% of the total market size of the beverage sector in China. 

Chinese consumers’ attitude

Although plant-based milk is not a new product in China, the marketing and positioning of plant-based beverages as a clean label, sustainable and healthy drink is somewhat novel.  Most Chinese consumers are only aware of soya milk, which is traditionally consumed as a breakfast beverage in China. Rising consumer awareness about health and concerns about environmental sustainability has led to the increasing consumption of plant-based milk, especially among Gen Z and Gen Y consumers.

The best-selling drinks during 2019 11/11 Singles' Day Shopping Festival were both plant-based drinks. Doubendou and Vitasoy occupied the top two spots in terms of beverage product sales. Plant-based beverages were also the most popular category in terms of overall sales volume ^[2]. 

Market situation: low industry concentration

In China, plant-based milk utilizes raw materials like soybean, peanut, oats, coconut, walnut, etc. After years of market competition, the domestic plant-based milk market is dominated by four big categories: walnut milk, almond milk, coconut milk, and soybean milk ^[3].

Although there are numerous plant-based milk products in the market, there is no dominant market player. Currently, Yangyuan, a Chinese domestic company focusing on producing walnut milk, occupies the largest market share at 8.34%. Sichuan Blue Sword, Yinlu Group, Yeshu Group, and Lolo ranked second to fifth respectively, but their market shares were all less than 3.5%. The market share of the top 10 companies is 24.43%. This market has the lowest concentration among all the segments in the beverage industry. The low market concentration means there are ample opportunities and room to grow for new entrants. 

Food & beverage brands’ crossover actions:

In 2017, the plant-based milk market underwent rapid growth. One stellar example is Doubendou, which contributed about 1 billion yuan to Dali’s sales in less than one year ^[4]. The success of Doubendou has made soybean milk the starting point for enterprises to enter the plant-based milk market. It can be seen from the chart that following the launch of Doubendou, soybean milk products were rolled out one by one by companies like Yili and Uni-president.

Overseas brands in the China market

As the plant-based diet trend is sweeping the world, a growing number of overseas enterprises are looking to target the promising Chinese market. Swedish oat milk brand OATLY entered China in 2018 through cooperation with boutique coffee chain stores. It has cooperated with Pacific Coffee, Wagas, Seesaw Coffee, Manner, and Fisheye Coffee in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen, with the number of cooperative stores exceeding 1,000 by the end of 2018. It now ranks high among Tmall plant protein category sales ^[5]. According to the CEO of OATLY, the Greater China Region will become OATLY's largest and most important market in the next three to five years. This month, Arla Foods also announced its plans to enter the plant-based market by launching three kinds of oat milk. Arla's sales in China reached 110 million euros (about 861 million yuan) in 2018. In addition, Southeast Asian soybean milk has also gained traction amongst Chinese consumers, with VAMINO and Lactasoy of Thailand, and SANLIN of Singapore all ranking in the top ten bestselling imported soybean milks on JD.COM.