Whole Foods, Organic and Plant-Based Trending Hard

China’s growing middle class is shaking up the country’s food sector, with major shifts in consumption and spending habits, and greater demand for healthy and premium products. Here we take a look at four of the biggest trends driving the Chinese food and beverage industry. 

China Embracing Global Plant-Based Nutrition Movement

One of the more interesting elements shaping R&D and consumption patterns in China's food sector is the phenomena of innovation lag and late adoption. Over the past several years, in tandem with China's consumption upgrade, we can see the systematic late adoption of consumption patterns which are already tried and tested in other markets. In China, global food sector growth trends like whole foods, plant based, sports nutrition, evidence-based nutrition etc. are only just taking root. While a history of success in other markets does not guarantee success in China, given the huge increase in interest and demand for these health-related foodstuffs there is ample room for sound investment. 

At the end of 2018, many research companies released their reports predicting food consumption trends in China over the coming years. One common denominator is predictions pointing to the rise of the plant-based nutrition and whole food movements in China. Nielsen said in their market insight [1], it's already a consensus that Chinese people are becoming more aware of healthy living. 

If we give a broad overview of the food industry in past years, we can find the total market value of healthy food like soybean milk and Yogurt climbed quickly from 2015 to 2017 while categories like candy, chocolate, and chewing gum have decreased gradually. (Source: 2018 China Shopper Report [2], Kantar Worldpanel and Bain & Company) 

Large multinationals like Pepsi, Nestlé and Kraft Foods are keenly aware of new consumer demands and are attempting to harness these forces through high-level advocacy and lobbying, and grassroots campaigning to promote healthy eating and stoke the fires of demand for healthy food products. In China this is best exemplified by these multinationals involvement in China's "low sodium action plan". Mengniu, Coca Cola, Danone, and Starbucks have all looked to the Chinese plant-based beverage market for revenue. In 2018, Coca Cola launched fiber-filled sprite, Coca Cola Plus (zero sugar and zero calories) and Chun Yue fiber water in China. 

Healthcare: Top Priority for Chinese

In addition to increased living standards, China's economic development has bought with it new challenges. China is now in the midst of a major healthcare crisis precipitated by the negative influences of globalization, the ubiquitous KFC's and Golden Arches and mass consumption of cheap and highly processed foods. Metabolic syndrome and all its deleterious sequelae have become a major issue facing China's healthcare system. 

According to research by the Lancet Medical Journal [3], in 2014, China now has more obese men and women per capita than the US. In terms of morbid obesity, China moved from 60th place for men and 41st place for women in 1975, to 2nd in the world for both men and women in 2014. (Definition of obesity: BMI≥30 kg/m2; severe obesity: BMI≥35 kg/m2). The prevalence of diseases like diabetes and cardio-/ cerebrovascular disease has skyrocketed placing an ever-increasing burden on China's healthcare system which is already straining under the load of China's large senescent demographic and huge population. The straw that breaks the camel's back will probably be a straw taken from the cups of China's children who are now heavy consumers of high fructose corn syrup laden beverages. China is also in the throes of a childhood obesity epidemic.

In 2019, Dingxiang Doctor (a famous medical portal in China) along with Health News (under the charge of NHC) released a report called “Health Insights in China 2019 [4]”, which indicated: 

  • 93% of Chinese people are of the opinion that health comes to the most important thing before wealth and job. 
  • Almost half of the interviewees (46%) are on a diet or have lost weight within a year. 
  • The generation born after 1990 are the most dissatisfied with their diet and health and gave themselves the lowest self-evaluation score among all the groups with regard to their health condition. This young generation represents a huge, untapped market for the healthy food sector. 

Four Trends in Healthy Food Consumption

► Low fat, low sodium, low sugar

Daily diet is the most basic and important source for our nutrient requirements. According to the data released by SIAL China & Nielsen [5], low fat, low sodium and low sugar are the most important nutrient content specifiers for Chinese consumers, in line with the broad policy goals of the Chinese government. 

On October 25th, 2016, the State Council launched the plan of Healthy China 2030 [6], which aims to prevent myopia and obesity problems among students and to make efforts on oral health protection and sodium reduction

On April 18, 2018, Chinese Nutrition Society and Chinese Center for Disease Control and Prevention first proposed the Salt Reduction Guideline in Chinese Food Industry [7]with the goal of lowering the daily salt intake per capita by 20%. On February 15th, 2019, NHC released a notice of "Healthy Oral Action Plan (2019-2025) [8]", outlining China's "Sugar Reduction Action" targeting schools and encouraging enterprises manufacture "low-sugar" or "sugar-free" products and to use these claims.

 

Will these plans influence the market? Let's see two similar examples in England and the US.

  • England started its "salt Reduction Campaign" in 2003. After 5 years, the salt content of most processed food in the supermarkets decreased by 20%-30%. In 2013, England intensified efforts and signed salt reduction agreements with hundreds of food companies. 
  • On January 7, 2017, the US issued a dietary guideline suggesting a lower intake of sweet food. Before this, several states also passed sugar taxations to reduce sugar intake, following the success of this campaign in England, The EU, Mexico, Thailand, etc. According to a paper on PLOS Medicine [9], one year after the introduction of the tax, the sales of sugary drinks in Berkeley fell by 9.6%, while sales in surrounding areas with no tax rose by 6.9%.

Given the experience of countries like these two, we believe China's policies and plans will influence the food market gradually and the Chinese government will manage the content of sugar or salt strictly within the next five years to meet its goal. Will China impose a tax on sugar? Given the economic importance of the sugar industry, it is unlikely but not impossible.

Under such circumstance, food enterprises may switch to the use of "Nature Sweet". Stevia extract is a good choice, which is increasingly popular in the food and beverage sector and is healthier than other high-intensity sweeteners (HIS). Read our article Global Market of High Intensity Sweetener and Its Future Trend—China Focus [10] for market info and GB 8270-2014 National Food Safety Standard Food Additive Stevioside [11] for compliance tips.

► Trending Segments in Healthy Foods

  • Probiotics
    According to a Euromonitor report, the global market of probiotic is about US 36 billion dollars. China accounts for 20% of the global market and is predicted to reach US 13 billion dollars in 2022. In 2016, China is the largest market for probiotic milk formula. The market value totals US$2.4 billion, nearly 50% of the global market. 

Compared to the use of probiotics in dairy products, investing in health food products could also be a wise choice. According to a report by Euromonitor, Trends, Innovations and Opportunities Driving the Global Probiotics Market [12], 74% of probiotics are used in dairy-based yogurt, 15% for sour milk products and 11% for probiotic supplements. Although it only accounted for 11% in 2016, it is predicted to outpace all others through 2021. Read Probiotic Beverages in China: An Overview of Market and Regulatory Conditions [13] and Probiotics in Infant Formula [14] for more info.

  • Nuts
    The sales volume of nuts in China increased by 16.3% from 2016 to 2017. Online sales volume has developed at a rate of 33.3% according to the Nuts Consumption Whitepaper 2018 [15], released by Tmall (operated by Alibaba Group) and Kantar Worldpanel. The sales value of a mixed nut increased by 229.7%. The sales volume of nuts designed for expectant mothers accounted for 29.6%, and walnuts are expectant mothers' favorite. 

As for the market performance of all the major brands, Wolong Daily Nuts was the standout performer. The company was set up in 2012 with only four people in the company, Wolong innovatively developed small-packaged product "Daily Nuts" in 2015 and reached a sales income of RMB 1 billion yuan in 2017, making it a strong competitor to many big companies like Three Squirrels and Ryohin Keikaku Shop in China. 

Although the performance of the whole market soared in the past years, only 40% of Chinese consumers had more nuts compared to what they had half a year ago. There's still a big market to be exploited. 50% of all interviewees hold the idea that nuts are tasty and convenient for eating. Only 9% of them regarded nuts as unhealthy food, as noted in Mintel's Snack Consumption Report 2017 [16], it is believed the sales value of nuts may reach RMB 345 billion yuan in 2020. 

► Plant-based eating taking root

  • Going vegan
    Veganism and the plant-based nutrition movement is a global mega trend which has significantly shaped the food sector in the UK and US in the past three years, China is also increasingly affected by this trend, and it is beginning to shape the market.

    According to the market research firm Euromonitor International, there are 51.9 million vegans in China. In 2017, China became the fourth largest country in Asia in terms of the total number of vegetarians. (Top 5 Countries with the Largest Vegetarian Populations [17], Euromonitor International) Young people (especially teens) and millennials are the main advocators of this lifestyle choice due to the promotion of the movement on social media by KOLs. 

China's CCTV also reported the global vegan trend. It reported that people advocate vegetarianism due to its benefits for health, environment, ethics, etc. At the same time, stores and restaurants selling vegetables and fruits are more and more popular. According to Twitter, the word "Vegan" ranked first place in the trending list in January. Thus, CCTV entitled this news "2019 will be the year of vegan" [18]. In 2016, Chinese Nutrition Society has also added dietary guidance for vegans in the Dietary guidelines for Chinese residents, 2016 [19]. But China's vegan food sector is still very immature with only a few meat-alternative processed food products available. 

  • Plant-based diet
    According to the survey of Mattson, 80% of the interviewees preferred the description of "plant-based" rather than "vegan". President of Mattson, Barb Stuckey said, "plant-based was selected by the vast majority, because consumers tend to see plant-based as a positive dietary choice, whereas following a vegan diet is seen as a lifestyle associated with serious commitment, deprivation, and allegiance to a 'cause' that defines them (animal rights, environmental activism)". 

Compared to "vegan", "plant-based" simply means more plants and less meat, which is fairly flexible. Proveg International, a leading international food awareness organization, believes a plant-based diet offers numerous benefits compared with a diet centered on animal products. A rich and varied plant-based diet can offer prevention and treatment of a host of modern lifestyle diseases, including some forms of cancer and hypertension [20]. 

Innova Market Insights also found, plant-based products have gradually entered the mainstream. According to a survey conducted in England, US, Brazil, China, etc, 80% of consumers have changed their diet structure on their own accord. 40% of consumers ate more vegetable and fruits in 2018. (Source: Top 10 Trends for 2019, Innova Market Insights [21]) 

We believe this trend will greatly influence the consumption of fresh vegetables and fruits, especially imported vegetables and fruits. Chinese consumers place a high priority on quality, safety, experience, and service and these characteristics are all synonymous with imported products. In 2018, the import value of vegetable and fruit reached RMB 80.8 billion yuan, with a YOY growth of 22.9% according to the GAC data [22]. "Fresh" will be the keyword for 2019. 

Besides fruits, plant-based protein beverage (another saying "plant-based milk") is also a great market. On China's Global Food & Hospitality Trade Show 2018, Verena Wiederkehr, head of Food Industry & Retail of Proveg International elaborated on the plant-based milk global market and also the market in China. From 2015 to 2017, plant-based milk sales in China increased by 17%.

 

Check Plant-based Milk Alternatives Market in China [23] for more info. 

► Health food

In addition to healthy eating, Chinese people are also willing to take health food products to supplement nutrition or regulate body functions. According to the chnci.com, China accounts for 14% of the global health food market, ranked second place after the USA. Euromonitor believes the health food market in China is estimated to reach 1 trillion CNY in 2020.
View China Health Food Sector: Import and Market Data 2018 (China Import & Market Data of Major Food Sectors 2018 [24]) for more info. 

Which function do consumers place a high priority on and what products will be highly demanded? According to the "Health Insights in China 2019" by Dingxiang Doctor and Health News, sleep problem, digestive disorders and gastrointestinal diseases are the most common problems among the post-70s, 80s and 90s generations.
 

  • 36% of the public has digestive disorders and gastrointestinal diseases.
  • 83% of the public have sleep problems. 

We believe sleep-aid supplements will be the next opportunity. According to a Mintel report, in 2015, 57% of urban consumers believe imported health food is of better quality. After 3 years, along with the development of CBEC, Chinese consumers now have access to a wider array of high-quality health food products, such as Swisse and Blackmores. We predict a larger proportion of Chinese people will prefer imported health food products especially after Quanjian case [25]. 

Compliance Tips:

 

For any questions related to the following labeling and content claim advice, you may get connected to our team: [email protected].