The first trend: Under “new normal”, growth of food industry is slowing down, and the development will depend more on ‘value drives’ in the future.
Food industry corresponds with the overall growth of China’s economy, both transferring gradually from the previous number driving to value driving and from eating more to eating better.
Take dairy product industry for example:
First of all, dairy product industry keeps growing now but its growth rate begins slowing down.
Second, there will be differentiation of consumption, and the consumption of the high-income groups will be the major driving force in the consumption of dairy products.
Third, there is an obvious high-end oriented trend in dairy product industry, including the consumption of imported milk, cream and cheese, especially that of the infant formula, which is obviously featured with high-end oriented trend and import preferences.
The second trend: food consumption keeps upgrading and gradually becomes mature, for there are obvious differentiations in types, channels and regions.
- Differentiation in types. The proportion of food and clothing consumption declines while consumption characterized with life quality and lifestyle is increasing annually.
- Differentiation in channels. As for retails, new channels keep emerging, occupying shares of the traditional channels. At present, small supermarkets and convenience stores develop better than traditional shopping malls, and e-commerce channels cause pressure to traditional shops and supermarkets.
- Differentiation in food consumption regions. First-tier cities are still the important FMCG regions while not those with the fastest growth rate, and the CAGR of those middle and small cities has reached 7.7%.
The third trend: Increasing emphasis on food safety.
Food safety is increasingly being emphasized especially after China implemented Food Safety Law in 2015. From the short term, this will definitely increase cost of enterprises; however, from the long term, this will contribute to survival of the fittest so that leading enterprises can establish healthy brand images.
The fourth trend: E-commerce is reconstructing China’s food industry.
First, fresh food consumption accounts for a large proportion in e-commerce food consumption.
Second, imported food consumption accounts for 13% of the online food consumption in China. Almost all the comprehensive e-commerce platforms, namely, the B2C food e-commerce platforms now claim that they can import food directly from producing areas.
The fifth trend: China’s food industry is faced with the pressure of overall transformation, promoting the upgrade of business model.
China’s food and agriculture industry is suffering from ‘surge in cost’ and ‘sharp fall in prices’, so both the industry and its revenue are on a downtrend. ‘Made in China’ has lost its competitive advantages in cheap raw material prices and low labor force cost, forcing the food industry to get rid of the terminal competition which relies on homogeneous price wars and to reconstruct business modes through intelligentization, informationalization and networking, towards the value competition of integrating and optimizing product chains.
On the whole, the keywords of the future food industry will be those healthy, niche and featured products with quality consumption oriented, ushering new development opportunities in the consumption age of the 00’s generation.
Related reports:
Research Report on China Beef Market, 2017-2021
According to CRI, the legal import volume of beef in 2016 reached 579,800 tons, increasing by 22.4% compared to 2015, and the import value exceeded USD 2.5 billion.
Research Report on China Imported Fruit Industry, 2017-2021
In 2016, China imported fruit mainly from about 40 countries and regions, and the major fruit varieties included rambutan, durian, jackfruit, longan, mangosteen, mango and banana. The import value of fruit in China exceeded USD 5 billion in 2016.
A-Share Listed Food Companies – Profiles and Financial Data
In 2016, the revenue of main businesses of food manufacturers above designated size (annual sales revenue over CNY 20 million) amounted to CNY 11,098.62 billion, up by 6.5% YOY. Their profits totaled at CNY 724.77 billion, up by 6.1% YOY.
China Soy Sauce Industry Overview, 2017-2021
Soy sauce is the leading product in China’s condiment industry with the largest annual output volume, presenting huge potential for growth. In recent years, China’s soy sauce output volume has been constantly increasing. It exceeded 10 million tons in 2016 according to CRI market research.
Overview of Gourmet Powder Industry in China, 2017-2021
Overall, the demand for gourmet powder keeps stable. According to CRI market research, from 2011 to 2016, the annual demand remained over 2 million tons in China’s gourmet powder industry.