FOOD & BEVERAGE

TAPPING INTO NEW GROWTH OPPORTUNITIES IN CHINA’S F&B MARKET

China surpassed the U.S. as the world’s largest consumer market for the food and beverage (F&B), reporting an annual growth of around 15 % in F&B, totaling more than US$98 billion. Chinese high demand for Imported F&B products, fueled by food safety with around 60 % of Chinese consumers preferring foreign brands.

Revenue in the Food & Beverages market amounts to US$18,525m in 2018 and revenue is expected to show an annual growth rate of 16.5%, resulting in a market volume of US$33,978m by 2022

China’s F&B market remains a compelling proposition for foreign investors as new preferences for healthy and imported foods are complemented by supply chain integration and emergence of new retail segments.

COVID-19 and its subsequent control measures significantly disrupted China’s catering sector earlier this year. It also had a negative knock-on effect on the sales of beer, liquor, and condiments to restaurants. But these effects are expected to be short lived.

As the outbreak subsides, food and beverage (F&B) demand, particularly for consumer necessities, is returning to normal. For foreign investors, it is worth noting that changes in Chinese consumer behavior since the outbreak has established a ‘new normal’ and is driving transformation in the industry, most visibly in the marketing and distribution channels of F&B products.

Investors should note the changing trends in China’s e-commerce, new retail, and food supply chain integration to seize the developing opportunities in one of the world’s most dynamic markets.

AN OVERVIEW OF CHINA’S F&B IMPORT MARKET

As the world’s largest food importer and consumer, China’s net demand for imported F&B products shows no sign of waning. In 2019, China’s food imports reached US$90.8 billion, showing a year-on-year growth of 23.4 percent. From 2014 to 2018, the value of China’s imported food grew at a CAGR of 7.4 percent. At this rate, the country is expected to import more than US$100 billion worth of foods in 2021.

EXPORTING MEAT PRODUCTS TO CHINA DURING COVID-19: WHAT YOU NEED TO KNOW

In 2018, out of 17 categories of China’s imported food – aquatic products, meat, and dairy products were the three most popular food segments among Chinese consumers. Imports of aquatic products, meat, and dairy products reached US$12.2 billion, US$11.1 billion, and US$10.6 billion, respectively, and together accounted for about 46 percent of the total imported food. 185 countries and areas exported F&B products to China in 2018, up from 170 in 2017. New Zealand leapfrogged the US and Australia to become China’s top import partner. Dairy products are New Zealand’s main food export to China.

Thanks to favorable factors, such as free trade agreements and the Belt and Road Initiative (BRI), New Zealand, France, and Vietnam have significantly increased their export footprint in China.

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