2024 has been designated as the 'Year of Consumption Promotion,' with expanding domestic demand and boosting consumption as key economic priorities. From a macroeconomic perspective, the positive recovery signals in the first quarter of 2024 have led the industry to generally make positive assessments such as 'better than expected' and 'confidence is steadily recovering.' Online retail sales of physical goods grew 11.1% in the first four months, urban retail sales rose 4.6% in Q1, and China's foreign trade showed a rebound curve in April-May... These indicators signal a clear trend: China's new drivers are growing, and economic resilience and momentum are strengthening. However, when discussing the annual and future economic outlook, the industry also includes cautious voices like 'pressure to meet targets' and 'need to stay clear-headed.' Specifically in the food and beverage market, health demands continue to rise across sectors, membership store Sam's Club and regional retail benchmark Pangdonglai performed well, discount snack stores accelerated expansion by tapping into lower-tier markets, and second-generation entrepreneurs took over with a sense of mission and growth potential for their brands. Some companies delisted, others went overseas... In the first half of 2024, the food market remained dense with hotspots. By reviewing the hot events in the food and beverage industry in H1 2024, I found that driven by technological advances and changing consumer demands, the food market continues to see new policies, products, trends, and opportunities. The health trend is increasingly prominent, and policy tools are playing a silent but important role. Brands are seizing time windows to accelerate product development, actively absorb investment and financing resources, and participate in international market competition. In this process, the comprehensive upgrade and transformation of the food industry have brought consumers more diverse, healthier, and more thoughtful food experiences. Looking at trends, environment, and brands, this issue reviews the development trends of the food industry in H1 2024, reviews the market changes of the past half year with brands, and provides insights and strategic suggestions for future market directions.
M&A and Restructuring: Strong Alliances Become a New Antidote for Corporate Turnarounds In recent years, after the global economic recession triggered by uncertainties such as the pandemic, consumers have become more rational, capital investment enthusiasm has cooled, and profound changes in market structure have brought many challenges to the food and beverage industry. In the new development stage, as an important way of market resource allocation, a large wave of joint ventures, M&A, and restructuring has emerged globally. In the food and beverage market, more and more companies are using M&A as an antidote, and the heat of M&A activities is rising. In China, this includes not only large multinational corporations and upstream/downstream supply chain companies but also many local food consumer brands. More competitive companies are boldly making moves by investing in brands that align with their original business or horizontal expansion directions, integrating to expand industrial resources, ecological positioning, and capital strength to capture consumer mindshare. For most companies, acquiring quality assets in the same industry or upstream/downstream to achieve shared supply chain construction can significantly improve profitability and strengthen industry giant status. A typical example is the strategic merger announced at the end of last year between Snacks Hěn Máng and Zhao Yiming Snacks, which attracted market attention, indicating sustainable exploration of supply chain, brand building, and channel resources. As of June 12, 2024, the total number of stores for Snacks Hěn Máng and Zhao Yiming Snacks exceeded 10,000, and the group has officially changed to Mingming Hěn Máng Group, becoming the first brand in the snack chain industry to exceed 10,000 stores. Image source: Mingming Hěn Máng On the raw material side, at the beginning of this year, the proposed merger between Novozymes and Chr. Hansen was officially completed, with the official Chinese name 'Novonesis,' marking the beginning of a new era of biological solutions. It is understood that the merged group will operate a global network of R&D, application centers, and manufacturing bases, using biotechnology to achieve business transformation and upgrading, providing the market with richer biological solutions and a diversified product portfolio. Image source: WeChat official account @Novozymes China The birth of 'Novonesis' is not an isolated case. In recent years, we have found that cross-industry cooperation is becoming more significant. For example, many beverage companies are actively integrating food science, not only focusing on nutritional value but also striving for sustainable and environmentally friendly raw materials, reflecting the increasingly blurred boundaries between industries. Among them, leading brand Heytea has chosen to invest in brands that match its own tone and have development potential. In 2022, Heytea's subsidiary Zhuokong Beverage (Zhuhai) Co., Ltd. made an equity investment in Shaoshupai Coffee (12% stake), heavily entering coffee; previously, Heytea invested in plant-based brand 'Wild Plant YePlant,' which is the second-largest B2B oat milk supplier in China. Last November, ChaPanda announced the establishment of a new company called 'Sichuan Rongshang Jiahe Technology Co., Ltd.' with Chagee, with a registered capital of 50 million yuan. ChaPanda holds 25%, Chagee holds 20%, and the remaining 55% is held by Sichuan Huizhijie Enterprise Management Co., Ltd. The alliance between ChaPanda and Chagee means both parties may further deepen supply chain cooperation to improve supply chain management efficiency through sharing and co-building. Image source: Qichacha In the course of development, joint ventures, M&A, and integration are not uncommon, as they are not just a numbers game but a redefinition of corporate value, an important way for companies to lay out new categories, expand product lines, create new scenarios, break through development bottlenecks, and enhance long-term competitiveness. Facing changing market demands, joint ventures, M&A, and restructuring have become an important step for many companies' transformation. The key to success lies in how companies effectively utilize resources, accelerate supply chain layout and optimization, and achieve effective resource integration.
Chinese Enterprises' Succession Wave: Second-Generation Entrepreneurs Target Internet Channels Data shows that the average lifespan of family businesses globally is 24 years, with about 31.2% passing to the second generation and about 13.9% to the third. According to statistics from the State Administration for Industry and Commerce and the National Bureau of Statistics, China will have about 12 million family businesses facing succession, and about 86.1% (10.33 million) will disappear due to various factors. Image source: WeChat official account Yongcan Huajun In recent years, with the evolution of the times, the corporate world has welcomed a wave of second-generation succession. Since Zong Fuli, daughter of Wahaha founder Zong Qinghou, took over, 'second-generation entrepreneurs' have been under the spotlight. On December 9, 2021, Wahaha announced that Zong Fuli would serve as Vice Chairman and General Manager, responsible for daily work. On February 25 this year, after Wahaha officially announced the death of Zong Qinghou, his daughter Zong Fuli began to take over the company. Tianyancha App shows that as of April, Zong Fuli held positions in 108 companies. Looking at the entire food and beverage industry, there is a long list of succession cases: Liu Chang of New Hope, Xu Yangyang of Dali, Jiang Xiaoying of Xiangpiaopiao, 'Boss Luo Cheng' of Holiland, 'Matt Wang Jia' of Want Want, Zhang Zilong of Mala Wangzi... But unlike their parents who were used to strategizing behind the scenes, today's 'second-generation entrepreneurs' are more willing to take the stage themselves, personalizing their identity IP to build brand momentum. For example, 'Boss Luo Cheng' is the heir and brand director of Holiland. In 2021, Luo Cheng quickly became popular on the internet with a short video of a 'socially anxious rich second generation,' and since then, he has attracted a large fan base with personas like a silly sweet CEO, craftsman, and contrast cuteness. Now he has 3.06 million followers on Douyin. In his popular short videos, whether conventional or not, the content is closely related to Holiland. Many second-generation entrepreneurs are becoming internet celebrities while taking over, endorsing themselves and their brands on social platforms. Cai Wangjia, the second son of Want Want, chose Weibo, which is closer to consumers, and turned himself from a playboy into a funny guy. In his daily sharing, he is as active as an official account, with content including morning greetings, weird Want Want poems, and even PK with netizens on drawing Want Want, teaching netizens how to correctly say 'Want Want'... It can be said that he has perfected the funny guy persona and brand promotion. Image source: Weibo @Matt Wang Jia Undoubtedly, in today's era of high traffic and marketing costs, building a personal IP and becoming an internet celebrity has become a new way for second-generation entrepreneurs to take over businesses, reflecting the pursuit of brand youthfulness and internet connectivity, as well as attention to the new generation of consumers. In the current internet age, compared to traditional advertising, consumers prefer emotional and warm interactions. When these 'second-generation entrepreneurs' accumulate a large fan base, they become the most trusted spokespersons and promoters. Interacting with consumers through social media platforms not only helps understand real consumer needs but also provides quick feedback, allowing for better product and service improvement.
Consumption Returns to Rationality: Market Changes Reshape New Consumption Ecosystem The wind of consumption downgrade has blown away some of the 'luxury' of the new consumption market. In the first half of the year, some once-famous internet-famous brands faced store closures. First, Yang Zhenhua, founder of 'Panda Doesn't Walk,' owed wages and lost contact; then 'snow cone assassin' Zhong Xuegao's boss was forced to sell sweet potatoes to repay debts; now Hankou Second Factory is rumored to be on the verge of bankruptcy. On the highly sensitive price element, Zhong Xuegao, even with the subsequent launch of 'Zhong Xue Gao Bu Gao,' fell into an awkward state of 'can't lie flat, can't win the roll.' Hankou Second Factory's 8-yuan soda, sold under the banner of nostalgia, failed to move consumers. Panda Doesn't Walk founder Yang Zhenhua attributed the closure to the pandemic and management in a long post, but did not see customer complaints about reduced product size and poor delivery service. Image source: Weibo It is evident that besides internal management and operational deficiencies, new consumer brands struggle to regain past glory mainly due to a lack of necessary foundation and products that meet consumer needs, making it difficult to cope with sharply declining brand value. However, some are happy and some are sad; the tea beverage track has produced a few dark horses. Chagee's performance has been unstoppable, with store numbers surging in 2023, adding over 2,300 stores annually, an average of 6 new stores per day, leading the industry in store growth rate and new store share. Currently, the total number of global stores reaches 4,092, ranking ninth among major tea beverage brands. It is understood that Chagee will go public in the US in mid-2024, expecting to raise $200-300 million. At the same time, ORDER Lemon lemon tea beverage brand operator received angel round financing, coconut-themed tea shop Yebainian received 30 million yuan in A-round financing, and platforms like Conversion Space and LeSweet, which provide new retail marketing empowerment for catering companies, have also attracted investor attention. It is clear that in promoting product innovation, adopting new technologies, and establishing market positions, the tea beverage market is increasingly focusing on health orientation, convenience, personalized experience, and overall experience optimization, which have become core demands. Also health-oriented is the new consumer brand Bào Jī Dú Jiǎo Shòu, which received strategic investment from Huashengren Capital in January this year. This healthy light meal and meal replacement manufacturer has six categories: high-protein meat, whole wheat baked goods, slow-carb staples, soul seasonings, light-calorie drinks, and belly-reducing snacks. It is reported that the brand's annual revenue in 2022 was close to 700 million yuan, with layout including mainstream online e-commerce platforms and over 10,000 offline terminal sales points. In June 2022, it officially launched its internationalization strategy and has since successfully entered multiple international markets including the US and Japan, further expanding its global business footprint. Image source: Bào Jī Dú Jiǎo Shòu From the coldness of store closures to the hustle and bustle of store openings, the new consumption market alternates between excitement and silence, but from the ups and downs, we can still see some development trends. In the future, the industry will favor companies that emphasize product innovation, with competition centered on product quality, user reviews, and brand image, ultimately aiming to build consumer trust.
Anchoring on 'Sugar Control' and 'Real Milk' Raw Materials: The Health Track Continues to Be Favored With the growing popularity of healthy eating concepts, this summer's drinks will also be graded. In March this year, the Shanghai Municipal Center for Disease Control and Prevention announced that the 'Nutrition Choice' grading label for beverages developed by the center began trial implementation in Shanghai to guide public healthy eating. The grading system evaluates the nutritional value of beverages based on the content of four key components—'non-dairy sugar,' 'saturated fat,' 'trans fat,' and 'non-sugar sweeteners'—and divides them into four grades: A, B, C, and D, with recommendation levels decreasing from high to low. It is understood that this is the first time China has introduced a 'Nutrition Choice' grading label for beverages, comprehensively reflecting the sugar and fat content in drinks. The grading system mainly references Singapore's beverage grading system. Image source: 'Shanghai CDC' WeChat official account As of now, in Shanghai, freshly made tea beverage brands such as Chagee, Naixue Tea, and Happy Lemon have begun labeling their product packaging. Chagee's Shanghai stores implement the 'Nutrition Choice' label, using ABCD to grade products for health, intuitively reflecting 'sugar control.' However, currently, no packaged beverages are labeled according to Shanghai's beverage grading. In addition, Heytea released a sugar control declaration in June, committing to sugar control in fruit teas, and partnered with Boohee Health to launch a new product using low-GI sugar raw materials, '+Slow Sugar·Duo Rou Grape.' It is understood that Heytea also plans to launch more reduced-sugar fruit tea products using new 0-sugar or low-sugar raw materials and formulas. Previously, Heytea offered a free 'true 0-calorie sugar' option for all fruit tea products. Niucha uses 0-sugar natural 'luo han guo sugar' to enhance health, and Jidong's entire line of beverages has been upgraded to optional 0-calorie sugar, focusing on zero sugar and zero burden. ChaPanda reduces consumer burden through 'two reductions and one optimization,' i.e., reducing sugar in raw materials and methods, and optimizing flavor. Beyond sugar, tea beverage brands are also making a big deal about 'milk.' Last year, Chagee upgraded its product base to achieve 0 creamer, 0 vegetable fat powder, and 0 hydrogenated vegetable oil. Heytea has 'rolled' to new heights in raw materials, launching its own custom-developed first dedicated real milk for the new tea industry—3.8 Yuán Mù Zhēn Milk—filling the gap for dedicated milk in new tea drinks. Data shows that in 2023, China's new-style tea beverage market reached 333.38 billion yuan, and is expected to reach 374.93 billion yuan by 2025. The growing health consumption market has driven higher standards for product efficacy, quality, and update cycles. Policy promotion has also allowed more health ingredients to be applied in food. Under this 'grading labeling' pilot, 'health score' ranks first, and raw material options are the primary starting point to stir the tea beverage industry.
Avoiding Deep Water Involution, Going Overseas Heats Up: Chinese Enterprises Seek a Second Growth Curve Avoiding the fierce domestic market involution and going overseas to find a second growth line has been a popular move for domestic companies in recent years. China's 'new three items'—new energy vehicles, photovoltaics, and lithium batteries—have developed very rapidly in overseas M&A and business. Industry insiders analyze that domestic 'involution' and global supply chain restructuring are major drivers of the Chinese enterprise overseas wave. In the long run, Chinese enterprises going overseas are generally shifting from cost-driven to market-driven. In terms of going overseas, domestic food companies are also restless. Hema's first stop overseas was the United States. In early June, news came that Hema's private brand products have entered the largest Chinese supermarket chain in the US, 'Dahua Supermarket,' and the largest Chinese shopping website in North America, 'Yamibuy.' This is the first large-scale overseas expansion of a local supermarket's private brand. Image source: Hema Intelligence Bureau The first batch of Hema's overseas products selected the company's best-selling leisure snacks and grain and oil instant foods in China, including sauce categories (sesame paste, pepper sauce, stew packets, etc.), snacks (melon seeds, hawthorn strips, soda crackers, sea salt toffee, etc.), and rice and noodle categories (knife-cut noodles, Longkou vermicelli, etc.). It can be seen that Hema's overseas expansion is a lightweight model. In fact, there have been many precedents of Chinese food companies rushing overseas. In mid-last year, Luzhou Laojiao and Moutai were active in Southeast Asia, including Singapore and Bangkok, Thailand. Entering 2024, Wuliangye became the official partner for the New Year's Eve countdown celebration in Times Square, Luzhou Laojiao participated in the Australian Open as a co-sponsor and official partner, and even Fenjiu appeared at the 2024 UAE Overseas Chinese Spring Festival Gala. Moutai has opened some overseas distribution rights, encouraging domestic distributors to expand international markets. Beyond alcohol, new tea drinks are not to be outdone. Currently, Mixue Ice City has nearly 4,000 overseas stores. ChaPanda regards 2024 as the 'first year of going overseas.' In 2024, Tianlala plans to continue laying out in 3-5 Southeast Asian countries and gradually go global. In addition to Southeast Asia, a number of brands including Heytea have begun to take the second step—the European and American markets. In February this year, Mixue Ice City opened its first store in Sydney; in March, Heytea announced the recruitment of overseas business partners and opened its first London store in summer... In addition, cross-border e-commerce platforms like Temu and SHEIN, which rely on domestic supply chains, are also expanding. Image source: Xiaohongshu @Mixue Ice City-Sydney Undeniably, with the continuous advancement of globalization and domestic competition gradually shifting from incremental to stock games, some segmented tracks have even upgraded to more brutal reduction games. Facing an increasingly involutionary market environment, going overseas is both a trend and a necessary choice for many companies. However, opportunities and challenges often go hand in hand. In overseas markets, Chinese food brands need to position and build their brands according to local culture and consumption habits, and also face competition from brands in other countries. This means consuming a lot of time and energy, and requiring customization for the special needs of different countries and regions. At the same time, regarding quality and safety issues that consumers always focus on, Chinese food brands need to pay special attention when entering overseas markets. Although the Chinese government has issued a series of strict food safety standards, companies still need to further strengthen their own supervision. In addition, international trade barriers and related policies also pose significant obstacles to Chinese food brands going overseas. In overseas markets, Chinese food brands often face endless trade barriers and policy restrictions. However, no matter what lies ahead, the era of Chinese brand navigation has arrived, and food and beverage brands are not afraid of difficulties and have begun to set sail.
Products and Services: New Retail Must Grasp Both Envying Pangdonglai, admiring Pangdonglai, wanting to become Pangdonglai. This is what many retail companies think. On June 6, the China Chain Store & Franchise Association released the '2023 China Chain TOP100' report, covering 46 comprehensive retailers, 23 supermarkets, 15 convenience stores, and 16 specialty stores. In this list, Walmart, Easyhome, and Suning.com ranked in the top three with sales of 120.2 billion yuan, 117.6 billion yuan, and 94.1 billion yuan, respectively. The competitive situation between traditional giants and emerging dark horses is very prominent. Brands in the top ten, including Yonghui, DRT, Wumart, and China Resources, all experienced a decrease in store numbers. Hema, a representative of new retail, saw an increase in store numbers but a decline in sales. At the same time, Pangdonglai, which has risen sharply in recent years, became a new star in the list with 13 stores and 10.7 billion yuan in sales, ranking 46th, marking its first appearance on the list. Image source: Henan Baoshitong Information There was a saying outside: 'Pangdonglai's success, Alibaba can't learn it.' Hema, as a pioneer of Alibaba's new retail, has been seeking breakthroughs. From offline channels with 'moving mountain prices' and 'discount' reforms, the introduction of low-price measures like 'expensive must compensate,' to the differentiation of membership systems, and tireless exploration of business formats, Hema has launched Hema Fresh stores, X membership stores, and Hema Outlets to cover the market. It can be said that Hema has tried everything you can think of and even what you haven't thought of, but this has also bred some problems: everyone has found that Hema's positioning is increasingly chaotic, and Hema is confused. Sam's Club, which is one of the two major domestic warehouse membership supermarkets alongside Hema, has not conceded. Similarly, Sam's also adopts a low-price strategy. Comparatively, Sam's fans have stronger stickiness, and Sam's currently has about 800 private brands like Member's Mark, accounting for 20% of the available SKUs. It is worth mentioning that Sam's Club particularly emphasizes its membership services and customer experience, providing members with additional discounts and exclusive rights. In addition, its membership system and flexible return and exchange policies have successfully catered to the special needs of some customers. Overall, these leading supermarkets are on the same track, and no one gives way to anyone. To maintain market position, differentiation is still needed. Pangdonglai's service differentiation and humanistic care have become well-known. Especially for the retail industry, beyond product differentiation, how to do service well is a common topic for retail enterprises.
Final Thoughts Overall, in the first half of 2024, market consumption gradually returned to rationality and showed several key trends: first, internal integration within enterprises; second, emphasis on health products and lifestyle concepts; third, actively seeking a second growth curve as a self-rescue model; fourth, online-offline integration and personalized experiential consumption in new retail. These major events not only mark the growth trend of the new consumption market but also reflect the new trend of industrial upgrading. Overall, they reveal deep changes in market dynamics, predicting the evolution of consumer demands and how technological progress drives the industry to continuously innovate and optimize its products and services. As these trends develop, it can be foreseen that the industry will pay more attention to products and services, while seeking more efficient resource allocation and market response mechanisms in the context of rational consumption.
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