Yili Rolls out Adult Cheese Snacks

Recently, Yili's cheese brand Miaozhi (Wonderful Cheese), released a new product called Pocket Cheese. It has two flavors of Milk Cheese and White Peach Oolong, which draw inspiration from the most popular milk tea flavors at present. The new product aims at the adult ready-to-eat cheese market with a well-marked slogan "Snack Time for Adults" on its package.

Although cheese has long been a part of the daily diet in western countries, in China, cheese-eating habits are just being to form. Chinese consumer's per capita cheese consumption is less than 1% of that in Western countries ^[1]. China’s consumption upgrade has meant consumers increasingly accept western food. According to Euromonitor data, the size of the Chinese cheese market (retail volume) reached 5.83 billion yuan in 2018, a year-on-year increase of 16.8%. In the 14 years from 2004 to 2018, the compound growth rate was 22.5%. It is expected that the market size will reach 10.53 billion yuan by 2023. 

New product features

Yili's new product Pocket Cheese is positioned as a healthy snack, tailored to the needs of young people for convenient and healthy snacks.

The "2020 Tmall Food Consumption Trend Report" jointly released by CBNData and Tmall Food shows that the growth of small packaged snacks was remarkable in 2019, with sales up 90% from 2018. To align with this trend, Yili made the cheese into small and independent packages, which are portable and convenient.

Secondly, the health awareness of modern young people is continuously improving. In the “Insight into the Consumption Trend of Post-95s in 2020” jointly released by Analysys and Suning, "health" was listed as the top driver of purchasing preference among the post-1995 generation in China. Yili’s claim of “one Pocket Cheese is only equivalent to the calorie of half an apple” will help it attract key demographics such as young girls who pay attention to their body shape, but are also cognizant of getting an adequate dietary intake of calcium and vitamin D.

Also, according to Ipsos' “White Paper on Dairy Innovation Trends 2020," as many as 74% of consumers focus on the appearance of dairy products. Yili's Pocket Cheese uses a trendy packaging design, which may gain traction among young consumers.

Cheese product for adults is a relatively untapped segment. 

At present, there are few cheese products for adults in the Chinese cheese market. On the contrary, children are the biggest target group for cheese manufacturers. Cheese sticks for children are the most popular category in the Chinese market, and brands including Yili, Arla Foods, Milkground, Bright Dairy, MILKANA have rolled out cheese stick products specifically for children.

ChemLinked found that on Chinese major e-commerce platforms, Jingdong and Taobao/Tmall, available ready-to-eat cheeses for adults, are mainly from Dr. Cheese, Arla Foods and Mengniu. 

Yili’s ambition in the cheese sector

Data show that in 2018, China's cheese market share accounted for only 2.4% of the dairy market, while this figure was 68% in the U.S., 55% in the U.K., 29% in Japan, and 34.1% in South Korea ^[2]. In light of the enormous potential of the Chinese cheese market, several dairy enterprises have begun to tap into the cheese business, including Yili.

Yili established its “Health Drink and Cheese Business Department” in 2018, and launched fresh string cheese and cheese yogurt. In 2019, Yili doubled down on its investment in the Chinese cheese market by launching children's cheese stick products ^[3]. Yili acquired Westland, New Zealand's second-largest dairy company, to enrich and increase its goat milk and cheese product lines and resources. Yili has also launched co-branded cheese products using design I.P. from the popular animated movies “Frozen” and “Cars” to help drive cheese consumption amongst Chinese families.

Although Yili is a latecomer in the Chinese cheese market, its strong brand power and nationwide distribution channels are unmatched when  compared to other cheese brands in China. Therefore its products have remarkable competitive strengths. According to Yili, it entered the cheese market at the end of 2018 and has now become the third-ranked cheese brand online ^[4]. 

Growth opportunities for cheese products in China

Cheese snacks

Yili's Pocket Cheese is an innovative product. It widens the consumption scenarios associated with cheese, which is often limited to the kitchen and dining table and makes a convenient, nutrient-rich snack. Other innovative cheese snacks include cheese-added cereal and cheese crisps.

Home cooking

The COVID-19 pandemic has catalyzed the “stay-at-home economy." According to Kantar data, sterilization/disinfection products, and home cooking necessities have all been subject to considerable spikes in demand. In addition to traditional Chinese soy sauce and noodles, western food such as bread, pasta, and pizza have become more popular among Chinese consumers. Cheese, a staple of the western diet and a key ingredient in many western meals, is likely to benefit from a post-Covid spike in demand and early entrants to the market are likely to reap the rewards of a solidified market position and investment in brand building.