Monthly Digest: China Food Sector in Jan 2020

Products Launched

1. New Hope Group launched a high-end yogurt called "Jiaojiao," the flavor of this product is salted egg yolk. The price of the product is not fixed and varies slightly across different channels. The average retail price is 15 yuan (approx. 2.2 dollars).

2. Junlebao's UHT milk brand, Baixiaochun (白小纯), has had its packaging, nutrition, and taste upgraded. It launched a variety of interesting flavors, including cheese and strawberry, cheese, and mango, which are quite popular in China. This product is marketed as fresh and reportedly takes two hours from milking to production.

3. Tsingtao Beer has released a new fashionable product which was launched during the ISY Sanya International Music Festival. It is packaged in metallic aluminum cans and wrapped with black, grey, and pink. 

4. Uni-President's official Tmall flagship store is offering Sweetory’s almond chocolate spread imported from South Korea. It is the first time that Uni-President launched a chocolate product in China.

5. Weiwei (维维), which started with soy milk, launched Weiwei bean yogurt, a plant-based UHT yogurt. Weiwei is one of the few companies in China which has launched plant-based yogurt. Other brands that have produced plant-based yogurts include Nongfu Spring and Six Walnuts (六个核桃).

Industry Focus

1. Affected by the African swine fever (ASF), the total amount of imported meat increased significantly this year. According to GAC data, in the first 11 months, China imported 5.485 million tons of meat products, up 42% year on year. 838 million tons of pork was imported, up 66% year-on-year. Almost all pig slaughtering enterprises in China have implemented a self-inspection system for ASF. 

2. Tang Ke, from the Ministry of Agriculture and Rural Affairs (MoA), said that imports of soybeans continued to decline last year (2019), and prices were relatively stable. Domestic soybean production continues to grow, and the price has been rising steadily. 

Company Dynamics

1. Lyfen (来伊份) issued a notice stating that it had signed a cooperation agreement with the National Center of Meat Quality and Safety Control. These two sides will jointly build a platform for industry-university-research cooperation to participate in the development of plant-based protein products and meat products.

2. MilkGround and Mengniu reached a strategic agreement to cooperate in cheese production. Mengniu will invest 458 million RMB in becoming a shareholder of Jilin Science and Technology Company (a wholly-owned subsidiary of MilkGround, and mainly produces cheese). Meanwhile, Mengniu would acquire 488% of the stock equity of this subsidiary and through agreement transferring, it would gain 5% of stock equity of MilkGround as well.

3. New Hope Group launched the community fresh new retail "fresh kitchen"(鲜小厨). Fresh Kitchen positions itself as community e-commerce and has an integrated store warehouse.

4. Oz Farm, an Australian milk powder brand, plans to launch new product packaging for Chinese consumers in 2020. OZ Farm will hold an Oz Farm Magic World event, to engage with online and offline consumers, and sponsor TV and media programs aimed at mothers and children.

5. Three Squirrels will invest 2.06 billion yuan to build a new alliance factory, which will be constructed in two phases, with 11 food alliance enterprises in the first phase and another 25 factories later. After that, it will gather manufacturing, processing, warehouse distribution, logistics, etc., and include shared monitoring, storage setup, human services, financial support, etc. Furthermore, the goal of three squirrels is to open 1,000 food provisioning stores (投食店, large-scale store) and 10,000 squirrel stores (middle- or small-sized store) by 202 Its snacks business is a major priority and is expected to outstrip its nuts business by 2025. 

6. Nongfu Spring has announced that from 2020, it will shorten the expiration date of most of its products. Meanwhile, it will update its product labels to align with new labeling regulations. 

7. Zhenrou (珍肉), a domestic plant-based meat-alternative start-up, is looking to raise $2 million (approx. 13.75 million RMB) for further investment in 2020. 

8. Luckin coffee has opened a chain of two kinds of unmanned machines in Beijing, officially announcing its move into the unmanned retail market. In addition to nuts, fruit juice, canned coffee, and other products, consumers can also be purchase snacks, drink products provided by Luckin's suppliers. Luckin has continued its rise with its market value exceeding $10 billion for the first time. By the end of 2019, it had 4,507 stores. 

Regulatory Compliance

1. On January 6, 2020, China National Health Commission publicized six substances that are considered as both foods and as traditional Chinese medicine.

2. On January 7, 2020, China General Administration of Customs (GAC) released the list of non-compliant food products(138 batches in total) rejected by GAC during port-inspection in November 2019.

3. January 14, the Ministry of Agriculture and Rural Affairs (MoA) issued a work plan for the Regulation of Agricultural Genetically Modified Organisms in 2020, the work plan points out that the seed enterprise breeding materials and related breeding bases shall carry out the testing of transgenic ingredients.

4. As revealed by the MOFCOM notice released on January 16, 2020, China's Vice Premier Minister Liu He signed the phase one trade agreement with U.S. President Trump on January 15. The agreement has nine chapters covering intellectual property, trade in food and agricultural products, microeconomic policies, etc. 

5. On January 17, 2020, six ministries jointly announced the expansion of cross-border e-commerce pilot cities to 50 more cities and the whole of Hainan Province. The announcement was published with immediate effect.

6. As revealed by a SAMR announcement issued on January 16, 2020, 3110 batches of food-related products from 3097 enterprises were inspected during the recent national sampling, of which the overall qualification rate reached 95.1%.

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

Related Link

[1] Dec. Recap: Monthly Digest: China Food Sector in Dec 2019
[2] Nov. Recap: Monthly Digest: China Food Sector in Nov 2019