Monthly Digest: China Food Sector in Feb 2020

Industry Focus

1. Contactless Delivery

On Feb. 12, Meituan Waimai(美团外卖), one of the largest App-based delivery/takeout platforms in China, released the Contactless Delivery Report, which shows that more than 80% of orders used its contactless delivery service, and 66% of users requested this service for all deliveries. Chain restaurants such as KFC, McDonald's and Starbucks, etc. launched contactless delivery during the outbreak, allowing customers to freely request this service.

2. Charity

During this outbreak, many enterprises have devoted themselves to charity. The table below shows the donation status of partial enterprises during this month: 

**some of the listed items are additional donations, data source: company statement and related reports.

3. Supply-side pressures

On Feb. 18, many mother and infant retailers and distributors affected by the epidemic reported major shortages of infant formula produced by Wyeth, Abbott, Mead Johnson, Dumex, etc. Wuhan is also suffering from a major shortage of some other categories of pre-packaged foods, especially convenience food.

4. Pork Price

The coincidence of African swine fever and COVID-19 in 2020 has been a devastating one-two blow to China’s pork sector. This situation will accelerate market consolidation by forcing small and medium-sized farmers to withdraw from the market at an accelerated pace. Pork prices will likely hit new highs this year.

However, with the recent rise in pork prices, profitability is expected to increase. According to data released by the price monitoring center of the National Development and Reform Commission on Feb. 12, the profit of pig breeding in the future is expected to be 2,354 yuan (approx. 350 dollars) per pig.

5. Decline in Importation

The president of Chilean Fruit Exporters Association (ASOEX) Ronald Bown says that Chilean fruit exports to China could take a $100 million dollar hit (cherries are expected to suffer major drop).

On Feb. 26, the liquor importers and exporters branch of the CFNA released the report Data on Liquor Imports in 2019. According to the report, the import volume for the whole year was 1.59 billion liters. The value of imports was down 5.01 billion dollars, down 40.1% and 13.3% respectively year on year.

**CFNA: China Chamber of Commerce of I/E of Foodstuffs, Native Produce and Animal By-products)

Products Launched 

Yangyuan Drinks (养元饮品) launched a walnut beverage, named Kamuning (卡慕宁), this is the second product line of this company (its first product was Six Walnuts (六个核桃). The product has also added functional ingredients such as GABA. 

Company Dynamics

1. On Feb. 23, Haoxiangni(好想你) announced the sale of 100% of its stake in Be&Cheery(百草味, a snack brand) to Pepsico for $705millon.

   

2. On Feb. 24, Bestore (良品铺子, a snack brand) listed on the Shanghai Stock Exchange (SSE) at 11.9 yuan (issue price). Its price rose 44.03% to the daily trading limit on the day of listing, bringing its total market value to 6.87 billion yuan (approx. 1 billion dollars).

3. On Feb. 25, Shuangta (双塔食品) announced a contract with Beyond Meat for the sale of pea protein, with an initial purchase of 628,300 pounds (approx. 285tons).

4. The BBC reported that on Feb. 25, TESCO, Britain's biggest retailer, sold its 20% stake in Gain Land, a Chinese joint venture, marking Tesco’s full withdrawal from the Chinese market.

5. On Feb. 26, Coca-Cola's CEO revealed that the company had cut more than 600 products in 2019. It is reported that most of these products only accounted for 1% of the total sales volume.

6. On Feb. 26, Three Squirrels (三只松鼠, a snack brand) announced the launch of its food delivery service. Squirrel Shop (松鼠小店) has also altered its business strategy during the coronavirus outbreak and is now focusing on community marketing.

 Regulatory Compliance

1. On Feb. 5, 2020, Taiwan FDA released a notice announcing that dairy products exported to Taiwan must be accompanied by an official sanitary certificate from the competent authority in the exporting countries,

2. As revealed by Taiwan FDA Notice on Feb. 6, 2020, Taiwan released the Labeling Requirements of Foods for Special Medical Purpose (FSMP) to renew the classification and labeling requirement of FSMPs and repeal the former Labeling Requirements of FSMP Product classed as Special Nutritional Foods.

3. According to a GAC announcement issued on Feb. 13, 2020, 133 batches of food products from 39 countries/regions were rejected by China GAC, amounting to 1316.6 tons.

4. On February 18th and 20th, 2020, CFSA opened ten new FCM additives and four new food additives to public feedback. The new food additives and FCM additives have already passed a technical evaluation by the expert review committee.

5. On February, seven overseas infant formula manufactures received GAC manufacturer registration approval, and 17 countries had dairy manufacturer registrations approved by GAC. 

**Disclaimer: All images used in this article are from the internet.