---
title: "How 'Old Lulu' Brands Bloom in China's Over 90-Billion-Yuan Plant-Based Milk Market"
description: "While many consumer sectors in China are cooling down, the plant-based milk market is heating up. According to the '2020 Plant Protein Beverage Innovation Trends' report, the market grew by 800% in 2020, with buyers increasing by 900%. Qichacha data shows over 5,000 plant-based milk companies in China, including internet-famous brands like Oatly, Guanghe Boshi, and Plant Label, as well as traditional giants like Yili, Mengniu, Nestlé, Six Walnuts, and Chengde Lulu. However, the market remains fragmented with no clear leader yet."
author: "林格木"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-07-27"
language: "en"
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# How 'Old Lulu' Brands Bloom in China's Over 90-Billion-Yuan Plant-Based Milk Market

> While many consumer sectors in China are cooling down, the plant-based milk market is heating up. According to the '2020 Plant Protein Beverage Innovation Trends' report, the market grew by 800% in 2020, with buyers increasing by 900%. Qichacha data shows over 5,000 plant-based milk companies in China, including internet-famous brands like Oatly, Guanghe Boshi, and Plant Label, as well as traditional giants like Yili, Mengniu, Nestlé, Six Walnuts, and Chengde Lulu. However, the market remains fragmented with no clear leader yet.

While many consumer sectors in China are cooling down, one track is heating up against the trend. According to the '2020 Plant Protein Beverage Innovation Trends' report, China's plant protein beverage market grew by 800% in 2020, with the number of buyers rising by 900%. Qichacha data shows that as of now, there are over 5,000 plant-based milk-related enterprises in China. Among these, internet-famous brands include Oatly, Guanghe Boshi, and Plant Label, while traditional giants such as Yili, Mengniu, Nestlé, Six Walnuts, and Chengde Lulu have also entered the fray. But like all emerging markets, despite the many entrants, the market share distribution is still relatively scattered, and the market landscape is not yet settled.

**How big is the potential of China's plant-based milk market? What kind of enterprises and brands can have greater development potential in this track?**

**The Rising Plant-Based Milk Revolution**

What is plant-based milk? How big is the potential of this market? Plant-based milk refers to beverages made by processing plants into a color and taste similar to animal milk through soaking, grinding, high-pressure homogenization, pressing, and other methods. According to the raw materials, it can be divided into soy milk, grain milk, nut milk, coconut milk, and other products. From a product perspective, plant-based beverages are fundamentally different from animal protein. Animal protein beverages are more nutritious, rich in eight essential amino acids, and are high-quality proteins that are an important material basis for the body and life, providing nutrition, energy, and enhancing immunity. However, research data shows that globally, Asians have the highest proportion of lactose intolerance, reaching over 90%. Plant protein is different. Plant-based milk contains no cholesterol and is low in saturated fat, making it suitable for people with cardiovascular disease or obesity; it is lactose-free, suitable for lactose-intolerant people, and contains elements lacking in animal milk such as cow's milk. For example, dietary fiber in oats can prevent cardiovascular disease, and lecithin in soy milk promotes metabolism; almonds are both food and medicine, containing unsaturated fatty acids... Under the consumption trends of natural nutrition, healthy eating, vegetarianism, and environmental protection, the popularity of plant-based milk has become inevitable globally. Taking the United States as an example, from 2017 to 2020, 32% of American consumers reduced or stopped milk consumption, of which 56% turned to plant-based milk. In 2020, the U.S. plant-based milk market reached $2.5 billion, and currently, plant-based milk can account for 20% of animal milk's share. According to data from the National Bureau of Statistics, in 2020, China's total dairy production reached 27.804 million tons; considering the total demand for dairy consumption, milk sources, and imports, the total animal milk volume can reach up to about 450 billion yuan. Benchmarking the current 20% substitution rate in Europe and the United States, the industry space is expected to reach 90 billion yuan or even higher in the long term. According to data from China Industry Information Network, in 2020, China's plant-based milk market size was about 50 billion yuan, with broad room for improvement. According to the '2020 Plant Protein Beverage Innovation Trends' released by Tmall Research Institute, among current Chinese plant protein beverage consumers, the 18-34 age group accounts for 69%, women account for 75%, and first- and second-tier cities account for 49%. In 2020, China's plant protein beverage market grew by 800%, with the number of buyers rising by 900%, contributing 15.5% to the growth of the beverage market, ranking third, becoming a high-speed growth engine in the beverage market.

In fact, Chinese people are very familiar with plant protein beverages. Since the 1980s, nutritious drinks such as walnut milk, almond dew, and coconut juice have gradually occupied consumers' minds. But limited by the level of technology at the time, for a plant-based beverage to taste good, it had to rely on some additives, such as white sugar and food flavorings. This stage can be seen as the 1.0 stage of plant-based milk. Decades later, as those cutting-edge and little-known food technologies finally matured and landed, a storm about plant-based milk is quietly brewing and taking shape. Since 2018, with the influx of a large number of foreign plant-based products, and with 0 additives, 0 sucrose, 0 cholesterol, and even clean labels setting off a new trend, beverage development quickly entered a new cycle, and the market entered the 2.0 era of plant-based milk.

**The Great Battle of Plant-Based Milk Brands**

This storm has brought new and old brands into the game, developing in full swing. According to Qichacha data, as of now, there are over 5,000 plant-based milk-related enterprises in China, including old plant protein brands such as Coconut Palm, Yangyuan, and Lulu, startup brands like Wheat Oye, oatoat, Daily Box, and Aomai Planet, as well as cross-industry giants like Mengniu, Yili, Junlebao, Dali, Danone, Vitasoy, and Heytea. Driven by these enterprises, the market has experienced several development stages: from niche demand to the establishment of local brands, and then to the entry of big brands and intensified overall market competition. In 2018, Oatly entered China with environmental and international slogans and capital support, as a 'challenger/new generation', triggering changes in the entire plant protein industry. Transformation and upgrading are the most talked-about topics in the plant protein beverage circle in the past two years. Many plant-based milk categories have also increased R&D and market investment, launching their own new plant-based milk products. Among them, new brands have also ushered in a period of small development, such as Wheat Oye, Daily Box, and Aomai Planet, all of which received multiple rounds of financing in 2020. These domestic new brands have adopted similar product strategies, trying to quickly seize market share with the help of capital.

The emergence of new forces inevitably leads to fierce competition and industrial upgrading. Traditional giants are also not to be outdone, entering the fray across industries. Multinational giants such as Nestlé and Unilever, as well as Chinese local Mengniu, Yili, and beverage giant Danone, have all launched plant-based milk products. Among them, by raw material, oat is the most common, but other categories are also in full swing, such as soy, walnut, coconut, and almond. Overall, China's current plant-based milk market shows high concentration in sub-segments but a fragmented overall pattern. The leading brands in various sub-segments mentioned above, such as Yangyuan Six Walnuts, Lulu Almond Dew, Coconut Palm Coconut Juice, and Dali Doubendou, each hold more than 70%-90% market share in their vertical fields. As the industry may evolve from plant protein beverage 1.0 to plant-based milk 2.0, a new market landscape is brewing, placing higher demands on enterprises in terms of R&D, innovation, design, production capacity, as well as product taste, nutritional value, brand, marketing, and channels. All enterprises face greater challenges. Like all emerging industries, new and old brands in the plant-based milk track each have their own advantages. New brands tend to have more innovative thinking and flexibility, while old brands have strong brand assets, mature management experience, and efficient supply chains. After several years of development, China's plant-based milk track is showing a polarized state: on the one hand, most financing rounds for new brands stopped before 2022. Because the market still needs cultivation and costs remain high, new brands have significantly slowed their development pace before accumulating sufficient independent R&D and supply chain capabilities; on the other hand, old brands, based on years of industry accumulation, are making up for their shortcomings in product innovation and youthfulness, accelerating market layout and seizing market share.

**Who Can Become the Game-Changer in the Plant-Based Milk Track?**

"In this war, 80% of brands may find it difficult to persist, and old brands that have accumulated for many years are more capable of running long distances, and may even reshape the entire industry landscape," Zhang Ran, an investor who has long focused on the consumer sector, told New Consumption Think Tank. According to Euromonitor's calculation of retail sales market share of various enterprises, in the plant-based milk field, the top five companies in 2022 were Yangyuan Beverage, Coconut Palm Group, Chengde Lulu, Dali Foods, and Vitasoy International. These leading companies anchor different sub-markets, gradually forming a pattern where leaders dominate their respective tracks. The core advantage of a company becoming a track leader and stabilizing its position is the big single product in the sub-segment, but long-term reliance on big single products has also limited the development of these companies. In the past few years, traditional plant-based leaders in China have mainly attracted consumers through marketing upgrades and packaging changes, without successfully developing new products and upgrading to break the original product boundaries. However, New Consumption Think Tank observed that Chengde Lulu, which has been deeply involved in plant protein for decades, has recently been making frequent moves, starting a new wave of product upgrades and iterations.

Let's start with Lulu, the oldest plant protein company. With its super single product of almond dew with independent intellectual property rights, it successfully occupies more than 90% of the market share in its industry, and relying on first-mover advantages, it continues to occupy the user's mind that brand equals category. But when facing the environment of category upgrades, intertwined domestic and foreign products, and fierce competition, how will it seek change? Against the backdrop of the hot plant-based milk track, Chengde Lulu took advantage of the situation in early 2023 to launch its new product: almond milk. According to its official account, this 'almond milk' product targets emerging consumer groups, featuring 0 cholesterol and 0 trans fatty acids, catering to the current new generation's consumption trend of 'light burden, light health'. Through carefully selected raw materials and unique patented processes, the product has a rich milky aroma and a protein content of up to 2.0g/100ml, which can maximize the retention of the nutritional value of wild almonds while achieving a mellow flavor and silky texture—currently, most plant protein beverages have a protein content of about 1.0g-2.0g/100mL, while the national standard requires pure milk to have a protein content of 2.8g/100mL or more. Through the author's recent understanding of the market and the company's annual report and other information disclosures, in recent years, Chengde Lulu has continuously increased R&D investment, actively expanded product lines, and while focusing on and deepening its main business, it has continuously researched and developed new high-value-added products and categories. This also shows that Chengde Lulu, beyond its basic plant-based protein beverage attributes, is opening up plant-based milk as its 'second growth curve', overlooking the broader blue ocean market of milk substitutes. Not only does it have obvious advantages in brand culture accumulation, production capacity, and supply chain over the years, but Chengde Lulu is also the leader or participant in two national standards, six industry standards, and a series of group standards and local standards in this field. Among them, it participated in the formulation of the group standard for plant-based milk as the second identity. In the view of New Consumption Think Tank, these can prove that the pioneer of plant protein is not outdated, and is trying to accelerate the nationalization and internationalization process with the posture of a national beverage, and through its accumulated strength, strive to move towards the throne of the new track leader.

**Times are developing, and children are growing up.** Among the 'old Lulu' brands that once accompanied countless people through their youth, some have died out, some have stagnated, some have already given up, facing severe challenges under the new situation, and there are also brave ones who are unwilling to rest on their laurels and are willing to embrace change. They hope to use their accumulated brand assets and innovative products stored for years to follow the pace of the times and continue to bloom.

(Note: At the request of the interviewee, Zhang Ran is a pseudonym in the article.)


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