Monthly Digest: China Food Sector Review | Jun 2025

Contents

• Market Condition

• Company Dynamics

• Regulatory Compliance

Market Condition

1. Lemon Prices Surge Amid Tight Supply and Peak Demand

China’s lemon prices soared this summer due to multiple factors. Sichuan's Anyue, a key growing region, faced severe drought, cutting production by half. Simultaneously, export restrictions by countries like Turkey shifted global demand to China, intensifying domestic supply shortages. Hoarding by middlemen and seasonal demand from freshly-made tea beverage stores have further widened the supply-demand gap. Leading freshly-made tea beverage brands have absorbed the cost hikes to preserve product pricing, but prolonged price pressure may eventually lead to consumer price adjustments.

2. Low-Alcohol Trend Gains Momentum in Wine Sector

The trend toward low-alcohol wine (7–12% ABV) is gaining traction in China, fueled by shifting consumer preferences toward lighter, healthier drinking experiences. Leading domestic wine brands such as Changyu, Tiansai, Tonhwa, and CITIC Niya are launching products in this category, typically characterized by low ABV, compact packaging, and fashionable design. Distributors are actively expanding offerings in cafés, bistros and new retail spaces. While niche for now, low-alcohol wine is viewed as a high-potential growth segment.

3. Weight Management Market Sees Continued Growth

Fueled by government-led health initiatives, China's weight management sector has seen increasing consumer attention. Data shows that the market is expected to reach RMB 326 billion by 2025. The scope of weight management products has expanded beyond basic weight loss to include multiple functions, including appetite suppression, metabolism enhancement, fat absorption blocking, fat burning, and muscle building. In terms of formulation, there is increasing adoption of traditional Chinese medicinal ingredients, plant extracts, superfoods, and probiotics, reflecting a shift toward more natural and functional ingredient profiles.

4. China's FSMP Market on the Rise

China's Foods for Special Medical Purposes (FSMP) market surged from RMB 7.3 billion in 2019 to RMB 23.2 billion in 2024, with a CAGR of 26.1%. Market expansion is driven by increased product segmentation, broader channel access, and higher penetration. Projections indicate the market will grow to RMB 53.1 billion by 2029 at an 18% CAGR. The market remains highly concentrated, with the top five companies accounting for approximately 78% of total market share in 2024.

5. Instant Retail Poised for Trillion-Yuan Breakthrough

Industry insiders estimate that China's instant retail market will approach RMB 2 trillion in 2025. The increasingly fast-paced lifestyle has fueled fragmented, time-sensitive consumer demands, prompting a shift toward frequent, low-value purchases—particularly in essential categories such as fresh food, personal care products, and OTC medicines. As a result, instant retail is emerging as a vital channel for fulfilling real-time daily needs with speed and convenience.

6. Retail Rankings: Walmart Tops China Chain List

According to the China Chain Store & Franchise Association's 2024 Top 100 ranking, Walmart China led with RMB 158.8 billion in sales, largely due to the strong performance of its Sam's Club brand. Other food retail chains in the top 10 include Sun Art Retail, Freshippo, Yonghui Superstores, Wumart, M.Y.J, and Busy Ming.

Company Dynamics

1. Starbucks Explores Partial Sale of Its China Operations

Starbucks is exploring a partial sale of its China operations to attract outside investment and accelerate local market growth, according to CEO Brian Niccol. The company has not disclosed potential investors or provided further details.

2. General Mills Reportedly Considers Selling Häagen-Dazs Stores in China

According to Bloomberg citing insider sources, General Mills is reportedly exploring the sale of its Häagen-Dazs stores in China while retaining its retail presence in supermarkets and convenience stores. The company has not responded to the report. Previously, its China president stated in an interview that the company will focus on expanding its retail presence, promoting handheld products, increasing points of sale, enhancing product displays, and improving price accessibility to boost consumer visibility and reach.

3. DQ Accelerates Diversified Store Formats in China

Dairy Queen plans to accelerate the expansion of traditional ice cream stores while actively developing diversified "Ice Cream Plus" formats in China. These include customized cake shops and burger restaurants to provide all-day dinning offerings. The brand aims to tap into new consumption scenarios and unlock growth potential through segmented product lines and diversified business models.

4. Sam's Club Debuts Label-Free Bottled Water

Sam's Club has launched a label-free PET bottled natural water under its own brand Member's Mark, using fully recyclable PET and minimizing labeling to reduce environmental impact. This initiative is projected to cut over 34 tons of plastic and 200 tons of CO₂ emissions annually, while simplifying the recycling process.  

5. Perfetti Van Melle Partners with Cainiao

Global confectionery giant Perfetti Van Melle has partnered with Cainiao Group to enhance its supply chain capabilities in China. The Smart Candy Warehouse joint project has officially begun operations in Xi'an. The facility is positioned as a regional hub, aiming to provide fast, regional delivery to five northwestern provinces with a goal of achieving 3-day delivery speeds.

6. Dayao Launches Prebiotic Soda

Chinese beverage brand Dayao has introduced a prebiotic fruit-flavored soda, marketed as “0 sugar, 0 fat”with gut health benefits. Each can contains 6,000mg of prebiotics and 100mg of vitamin C. While the prebiotic soda category has gained momentum in North America, it remains in its early stages in China. Industry insiders view Dayao's launch as a strategic move to seize early market share.  

7. Baixiang Foods Under Fire Over Misleading Branding

Baixiang Foods faced criticism over its "Duoban" instant noodle series, with the trademark—literally meaning "a half more" in Chinese—accused of misleading consumers about increased portion sizes. The company issued an apology and promised packaging revisions. This incident echoes previous cases where trademarks of food enterprises were challenged for using descriptive language that could mislead consumers. Legal experts warned that even registered trademarks may face invalidation if they mislead consumers and violate advertising or consumer right regulations.

Regulatory Compliance

1. On June 10, 2025, the State Administration for Market Regulation (SAMR) issued the Measures on Supervision and Administration of Live E-Commerce (Draft for Comments) for public consultation. The Measures clarify the obligations of live e-commerce platforms and livestream operators. More information on ChemLinked.

2. On June 28, 2025, the State Administration for Market Regulation (SAMR) and the National Health Commission (NHC) of China jointly issued an official notice updating the List of Non-Edible Substances That May Be Illegally Added to Food. The update adds sildenafil analogues and tadalafil analogues, which are commonly used in erectile dysfunction medications, aiming to strengthen oversight on unauthorized ingredients in food products. More information on ChemLinked.

3. On June 29, 2025, China's General Administration of Customs (GACC) announced that it will conditionally resume the import of seafood from certain regions of Japan, making a significant policy shift. More information on ChemLinked.

  Disclaimer: All images used in the article are from the Internet.