Monthly Digest: China Food Sector Review | Feb 2025

Contents

• Market Condition

• Company Dynamics

• Regulatory Compliance

Market Condition

1. According to NIQ, China's fast-moving consumer goods (FMCG) market saw a 2.8% YoY growth in total sales across all channels in 2024. Online sales surged by 10.2% YoY, while offline sales declined by 1.3% YoY. In the food sector, sales across all channels grew by 1.8% YoY, with online sales increasing by 13.3% YoY, partially offset by a 0.4% YoY decline in offline sales. Beverages and alcoholic drinks led the growth, with omnichannel sales rising by 7.7% YoY and 6.4% YoY, respectively, in the first 11 months of 2024.

2. China imported 2,615.5 kilotons of dairy products in 2024, marking a 9% decline YoY. The total import value of dairy products reached USD 11,233 million, down 7% YoY. Notably, import volumes rebounded in November and December 2024, increasing by 6.4% and 18.8% YoY, respectively.

Among major dairy categories, import volumes of cream, butter, protein, and condensed milk grew, while other categories saw declines. For infant formula, although total import volume decreased compared to the previous year, monthly import volumes experienced  significant YoY growth since June 2024.

3. According to Food Data Link's report 2025 Global Food Ingredient Trends, three major trends are shaping the food ingredient industry:

• Segmentation of health benefits–Health-oriented ingredients accounted for nearly 70% of global food ingredients, spanning categories like oral beauty, gut health, sports nutrition, emotional well-being, and weight management.

• Tailored health solutions–Increasingly customized health products are being developed to meet the unique needs of specific consumer groups, including the elderly, women, and pet owners.

• Enhanced ingredient quality–Suppliers are enhancing ingredient quality through optimized formulations, advanced processing techniques, upgraded product concepts, and strengthened efficacy validation.

Company Dynamics

1. Modulen IBD, a nutritionally complete food for special medical purposes (FSMP) under Nestlé Health Science, was approved as China’s first provisionally imported FSMP for children with Crohn’s disease. This follows a December 2024 policy, which allows designated medical institutions in Hainan Free Trade Port’s Bo’Ao Hope City to provisionally import FSMPs and health foods legally sold overseas but not yet registered domestically.

2. Louis Vuitton launched a China-exclusive mahjong-themed chocolate box ahead of Valentine’s Day, available at Le Chocolat Maxime Frédéric at Louis Vuitton in Shanghai. In recent years, LV has been expanding its presence in the lifestyle sector, launching ventures including a restaurant in Chengdu, a pop-up café in Beijing, and a dedicated chocolate boutique in Shanghai. These initiatives aim to attract younger consumers by offering more frequent and accessible luxury experiences.

3. Ferrero China reported record-high sales in the first five months of FY 2024/25 (Sept 2024–Jan 2025), achieving double-digit YoY growth. Snack chain stores were the primary growth driver, which helped to expand consumer reach across various city tiers. Warehouse club retailers, including Sam’s Club and Costco, sustained their three-year growth momentum. According to third-party data, Ferrero ranked second in China’s chocolate market, capturing a 19.5% market share in January 2025.

4. Beyond Meat, the U.S. plant-based meat brand, announced its full withdrawal from China, planning to shut down operations by Q2 2025 with a 95% workforce reduction. Despite partnerships with large food retail channels such as Starbucks, KFC, Fresh Hippo, Metro, and Sam’s Club, high costs and unappealing taste have hindered the widespread acceptance of plant-based meat in China. Since 2022, China’s plant-based market has cooled, leading to the gradual exit of global and domestic plant-based brands.

5. Three Squirrels, a leading Chinese snack enterprise, established a pet food company and launched the brand "Golden Papa". With pet ownership on the rise and pet care becoming a significant part of consumer spending, more food enterprises such as Yili and Holiland are entering the pet food sector, capitalizing on the growing demand for premium pet nutrition.

Recommended reading: Paws for Growth: Unlocking the Dynamics of China's Pet Food Market and Competitive Landscape

6. Chinese freshly made tea brand HEYTEA announced it would pause its store expansion and steer clear of price wars, opting instead to focus on differentiation. In 2024, its innovative Super Plant Teas series—featuring superfoods like kale, avocado, beetroot, and açaí blended with tea and fresh fruits—sold over 37 million cups since its launch in July. This series quickly became a standout product of the year in China's freshly made tea beverage market.

7. Inikin, a ready-to-brew tea brand under Yili, has launched two new flavors and initiated its second production line at the Huanggang factory. The brand has innovated with a fresh-lock cap that separates tea powder and water, preserving the freshly brewed taste. By expanding Inikin’s product offerings and strengthening its supply chain, Yili is strategically tapping into the growing demand for sugar-free tea.

Regulatory Compliance

1. On February 12, 2025, China's State Administration for Market Regulation (SAMR) released a Guidance to optimize the registration of Foods for Special Medical Purposes (FSMP) targeting amino acid metabolism disorders. The document aims to enhance registration efficiency and improve accessibility of FSMP products for patients with rare diseases. More information on ChemLinked.

2. On February 17, 2025, the China State Administration for Market Regulation (SAMR) issued a public consultation on the Food Safety Law of the People's Republic of China (Draft Amendment for Public Consultation), which proposes a licensing system for the bulk transportation of key liquid foods.  More information on ChemLinked.

3. In February 2025, China approves 5 food raw materials, 8 new food additives and 7 new food-related products.