Monthly Digest: China Food Sector Review | May 2025

Contents

• Market Condition

• Company Dynamics

• Regulatory Compliance

Market Condition

Continued Growth in China's Dairy Imports

In April, China imported 231,500 tons of dairy products, up 3.7% year-on-year (YoY). Import value reached USD 1.13 billion, with a 19.3% YoY increase. By import volume, butter, condensed milk, protein, packaged milk, and cream declined, while other categories saw YoY growth. In terms of value, all categories except condensed milk and packaged milk recorded growth, with yogurt seeing the highest increase in both volume and value.

Litsea Cubeba Gains Traction with Distinctive Regional Flavor

Litsea Cubeba (Mu Jiang Zi in Chinese) has become a trending seasoning in China. Known for its high citral content (70%-90%) and compounds like citronellal and cineole, it creates a unique flavor profile of "lemon freshness + peppercorn spiciness + minty coolness". Litsea Cubeba is primarily used in the foodservice sector, particularly in Yunnan and Guizhou cuisine. As its distinctive flavor gains popularity, it is increasingly being incorporated into more consumer settings such as coffee, freshly prepared tea beverages, and baked goods. The rise of Litsea Cubeba also underscores a growing consumer appetite for natural ingredients and regional flavors.

Kombucha Makes a Comeback Amid Health and Wellness Trend

With the rising trend in health and wellness, kombucha—a type of fermented beverage—has made a comeback in the public eye. Social media platforms like Red and Douyin are buzzing with kombucha DIY tutorials and innovative recipes, with celebrities and influencers further boosting its popularity. Retailers like Sam’s Club, Freshippo, and Watsons have launched innovative kombucha products, including low-sugar versions and new flavors. New product formats like powders and concentrates have also emerged to meet consumer demands for convenience.

All-You-Can-Drink Wine Trend Expands in Beijing

Data shows that nearly 300 pubs and restaurants in Beijing now offer "all-you-can-drink wine" promotions, many of which are popular on social media. This wine consumption model, exemplified by "RMB 99 for unlimited wine," primarily targets urban white-collar consumers, offering a variety of imported wines for unlimited consumption within a set time. Notably, this trend is expanding from Western-style restaurants to Chinese eateries, aiming to attract non-traditional wine drinkers. Industry experts believe this model has the potential to spread to other Chinese cities, thereby boosting wine consumption and reshaping its traditional role in social settings.

Chocolate Prices Rise on Global Cocoa Cost Surge

Driven by soaring global cocoa prices, major international chocolate brands like Mars and Ferrero have recently adjusted product prices in the Chinese market. The impact of rising cocoa costs is widespread, affecting not only pre-packaged chocolate but also bakery and ice cream sectors that rely on chocolate as an important raw material. To mitigate cost pressures, companies are improving internal efficiency, diversifying supply chains, developing "chocolate+" products with lower cocoa content, and exploring new manufacturing technologies. Market analysts generally believe that chocolate prices are unlikely to return to previous levels in the near future.

China's PET Beverage Bottle Recycling Rate Exceeds 97%

According to data from the China Beverage Industry Association, over 4 million tons of PET beverage bottles are recycled annually in China, achieving a recycling rate exceeding 97%.

Company Dynamics

Thai Coconut Water Leader IFBH Files for HK IPO

Recently, Thai coconut water company IFBH Pte. Ltd. submitted its prospectus to the Hong Kong Stock Exchange. IFBH, with its two major brands, If and Innococo, has consistently held the top position in China's coconut water beverage market for several consecutive years. In 2024, the company's market share in the coconut water segment reached 34% in the Chinese mainland and 60% in Hong Kong SAR.

Zespri Achieves over NZD 1 Billion in China Sales

Zespri's financial results for 2024/25 show a global operating revenue of NZD 5.14 billion, with global fruit sales revenue reaching NZD 5.03 billion. Sales in China surpassed NZD 1 billion, making China as Zespri's largest single market globally for the fourth consecutive year.

Hormel China Celebrates 30 Years

Hormel China recently celebrated its 30th anniversary in Shanghai. According to the company, meat snack has become Hormel China's fastest-growing category since the company expanded the main business from chilled meat to include meat snack in 2019. Its peanut butter brand Skippy is also venturing into the snack sector. In addition, Hormel China has now adopted a dual business model, focusing on both retail (To-C) and foodservice (To-B) channels.

Starbucks China Sees Growth in Q2 FY202

According to Starbucks' Q2 FY2025 financial results, the company recorded a revenue of USD 739.7 million in the Chinese market, up 5% YoY. The quarter saw a 4% increase in same-store transactions, along with strong same-store sales. It is reported that Starbucks is considering the partial sale of its China operations to attract external investors and revitalize its growth in the market.

Ausnutria Launches Four New Goat Milk Ingredients

Ausnutria has launched four new goat milk ingredients: hydrolyzed goat milk casein, hydrolyzed goat whey protein, goat lactoferrin, and goat colostrum. These ingredients are being applied in formula milk powder, FSMP, and nutritional supplements, with related products expected to debut in 2024–2025.

Freshippo Taps into "Sleep Economy" with High-Melatonin "Good Night Milk"

Fresh grocery and e-commerce platform Freshippo launched a “Good Night Milk” product with a high natural melatonin content. Within just one week of launch, it attracted over 3,200 orders. The 250ml product contains 12,500 pg of melatonin. In China, the food and beverage industry is increasingly focused on the emerging “sleep economy,” leveraging ingredients like GABA and theanine to market products with sleep-health benefits.

Wusu Beer Diversifies into Functional Beverages with "Dianchi" Launch

Wusu Beer (under Chongqing Brewery Group) has launched a functional drink named "Dianchi" (a homophone of "battery" in Chinese), marking the company’s entry into the functional beverage segment. The product features a low-sugar formulation and includes functional ingredients such as taurine and niacinamide, as well as extracts from the Tianshan saussurea involucrata.

Three Squirrels Expands with Multi-Brand and Lifestyle Retail Strategy

Snack company Three Squirrels has unveiled its latest strategic plan, which involves incubating a series of sub-brands across a wide range of consumer categories including snacks, bakery, fresh food, beverages, personal care, home care, etc. The company also plans to establish its new offline retail channel: neighborhood-based lifestyle stores that offer a comprehensive product lineup to meet everyday consumer needs.

Regulatory Compliance

China Launches National Crackdown on Food Additive Abuse

On May 6, 2025, the Food Safety Commission of the State Council, in collaboration with five other major competent authorities, officially released the Comprehensive Governance Plan for Food Additive Abuse. The plan aims to enhance regulation across the entire food chain, from agricultural production to dining tables, by addressing risks related to the misuse of food additives, strengthening legal enforcement, and reinforcing public health protection. More information on ChemLinked.

NHC Consults on 28 Food Safety Standards

On May 14, 2025, the National Health Commission announced a public consultation on 28 national food safety standards and amendment sheets. These include one microbiological testing standards, two food product standards, twenty-four physical and chemical testing standards, and one standard for toxicological evaluation procedures and methods. More information on ChemLinked.

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