Snack Foods for Children in China: Market Scale and Investment Potential

China recently released the "General Standard for Children Snack Food", which helps address the lack of standards developed to specifically regulate the children’s snack food market. Although the new association standard lacks any legal standing, the release of the standard is a signal to industry that the market potential is being formally recognized by Chinese industry and regulators. The release of association/industry standards often precede the development of national standards and new mandatory regulations.

Market dynamics are also shifting. Recently Chinese snack company BESTORE launched its first range of children’s snack products, showing its ambitions to tap into and develop China’s children snack market. There is already a huge market demand for children's snacks in China. The population of children aged 3-12 is 146 million ^[1], and the per capita annual consumption of children's snacks is more than four times that of baby food ^[2]. It  is estimated that by 2023, the children's snack market will grow steadily at a compound annual growth rate of 10% to 15% ^[3], and children's snacks will become a new growth point.

China's consumption upgrade has shaped consumer preference towards healthier, safer, and higher quality foods. The consumption upgrade and consumer purchasing preference has also been fueled by growth in our understanding of the role played by nutrition in human health, and human performance. In China, parents want to give children the best possible snacks to help them avoid chronic diseases and to foster an internal environment conducive to higher human performance.

The market is still underdeveloped, and a solid regulatory framework has not been developed. Compared to the strict standards for children’s snacks in foreign countries, for example, Japan, there are no standards specifically for children's snacks in China. The closest standards are for infant formula and complementary foods for children. 

Standards and regulations

On May 17, China Non-staple Food Circulation Association officially released the "General Standard for Children Snack Food", which will be implemented from June 15. This is the first standard in China specifically for "snacks" and the first standard for "snacks for children." The standard defines children snacks as snacks suitable for children aged 3 to 12, proposes to reduce added sugar, salt and oil in children's snacks and requires limits on sodium chloride, sucrose, and fat. It also requires the design of food packaging to fully consider the safety of children.

Dairy products for children perform well. 

In the Chinese market, children's dairy products are a common type of children's snacks, especially children's cheese sticks. Mintel's research on children's food and beverage purchases in China shows a high penetration rate of dairy products aimed at children in Chinese households, with about 70% of Chinese parents buying children's yogurt and milk. Children's cheese sticks, which are high in nutritional value and more tailored to children’s taste, have gained increasing traction among Chinese consumers.

China’s cheese stick market has grown rapidly to become the largest segment in China’s cheese industry, with a market size expected to have exceeded 2 billion yuan ^[4]. MILKGROUND, which specializes in children's cheese, has been a bright spot in this segment. In its recently released Q1 report for 2020, despite the impact of COVID-19, MILKGROUND recorded an income of 395 million yuan, translating to year-on-year growth of 32.66%. Its revenue attributable to sales of cheese reached 271 million yuan. Chinese dairy company Mengniu and Danish dairy brand Arla Foods also cooperated to roll out cheese sticks showing their confidence in the children's cheese market.

Latest brand dynamics

China’s health food company H&H group introduced French organic children's food brand GOOD GOUT in 2019 in various e-commerce platforms, including Tmall, Jingdong, and Koala. GOOD GOÛT's product portfolio includes organic chocolate rice crackers, organic cereal crisps, organic chocolate cereal crackers, organic nut bars, and organic fruit purees. This month, the brand released the “Blue Book on Healthy Diets for Chinese Children in 2020”. According to the bluebook,  

• 47% of parents think snacks are essential, and they will choose healthy snacks.

• 84% of parents think "natural, preferably organic" snacks are more suitable for children

• 92% of parents said they would buy healthier, organic snacks for their children.

The brand plans to roll out more than ten new products in 2020 and develop products specifically to meet the nutritional needs and taste preferences of Chinese babies. 

Chinese snack enterprises have also begun to develop this segment. BESTORE launched the first children's snack sub-brand on May 20, 2020. According to the company, the newly established brand focuses on children between 3 and 12 years old. It has rolled out 42 kinds of snacks on its Tmall flagship store, covering cookies, candies, fish sausage, meat floss, milk, etc. Actually, at the end of 2019, BESTORE decided to give top business priority to China’s children's snack market. By March 2020, BESTORE had already launched 86 kinds of products. Off the back of this move, the company’s sales have grown by 65%, according to sales data gathered in January 2020 ^[5]. The company has also added a "children snacks area" in its upgraded offline stores, in which the shelf is 30 cm high, perfect for children to pick up snacks themselves. Following BESTORE, snack brand Be & Cheery also officially launched children's food brand on May 25, becoming the second leisure snack brand to launch children's snacks in the wake of the official release of the “General Standard for Children Snack Food.”

Last month, Three Squirrels also outlined its plans to target China’s children snack market. 

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