---
title: "Top Ten Predictions for the Food and Beverage Industry in 2019!"
description: "At the end of 2018, we put forward ten major predictions for 2019, covering key events that could trigger deep industry changes, such as raw milk price increases easing liquid milk competition, rapid consolidation in the slaughter industry, and breakthroughs in Chinese-style products by Shuanghui. The overall tone for the food and beverage industry in 2019 is expected to be 'stability'."
author: "New Distribution"
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published: "2019-01-03"
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# Top Ten Predictions for the Food and Beverage Industry in 2019!

> At the end of 2018, we put forward ten major predictions for 2019, covering key events that could trigger deep industry changes, such as raw milk price increases easing liquid milk competition, rapid consolidation in the slaughter industry, and breakthroughs in Chinese-style products by Shuanghui. The overall tone for the food and beverage industry in 2019 is expected to be 'stability'.

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At the end of 2017, we released the top ten predictions for the food and beverage industry in 2018. Looking back, some of those predictions have been fulfilled or are gradually being fulfilled. At the end of 2018, we put forward ten predictions for 2019, looking ahead to ten major events that may occur in the coming year and trigger deep industry changes.
Prediction 1: Raw milk price increases will ease competition in liquid milk
As the domestic dairy cow inventory continues to shrink, the supply of fresh milk is becoming increasingly tight. It is expected that the supply-demand balance for raw milk in 2019 will be tighter than in 2018, and prices are likely to continue to rise moderately. If the market enters a stage of supply shortage, passive promotions of low-end products (the main form of price wars) to digest excess raw milk may be significantly reduced, and overall competition in liquid milk is expected to ease noticeably.
Prediction 2: The slaughter industry enters a period of rapid reshuffling
Pig slaughter has the attribute of a "cost leadership strategy," but the current slaughter industry in China has low entry barriers, severe overcapacity, and extremely low concentration, leaving huge room for integration and improvement. After the African swine fever outbreak in 2018, the Ministry of Agriculture issued frequent policies to crack down on private slaughtering. In 2019, with further policy tightening, the industry is expected to undergo a major reshuffle, and leading companies will accelerate breaking through the concentration ceiling.
Prediction 3: Shuanghui's cooked food stores succeed, achieving a major breakthrough in Chinese-style products
China's meat cooked food market is vast but extremely fragmented, with a low level of industrialization. The accelerating pace of urban life is releasing demand, and under consumption upgrades, channels are shifting from wet markets to branded stores. Shuanghui's entry into cooked food is timely and advantageous. If the store model matures in 2019, it is expected to achieve significant development in Chinese-style products and break through the bottleneck of meat product development.
Prediction 4: Leading domestic milk powder companies rise strongly, rewriting the competitive landscape
Since 2017, China's milk powder industry has been changing its "small and scattered" pattern. Domestic brands, following leaders like Feihe and Yili, are competing head-on with foreign brands and gradually regaining lost ground. Looking ahead to 2019, the channel clearance of old products produced before the registration system will end, the landscape will evolve faster, and domestic leaders may regain market discourse power.
Prediction 5: Catering supply chain integration forces condiment market share to concentrate
In 2018, large-scale catering distributors, Kuaitui (Meituan) & Meicai and other unicorns accelerated the integration of the secondary wholesale/catering wholesale-to-terminal link. In the future, the strong in the channel will become stronger, while the weak will gradually exit or be integrated. Downstream channel changes will push upstream manufacturers to concentrate share among large players. It is estimated that this trend will accelerate significantly in 2019.
Prediction 6: Another round of expense wars in the condiment industry
Looking ahead to 2019, leading companies require faster growth. For Zhongju, Baoneng is expected to gain actual control, and after institutional optimization, the pace of operations may accelerate. Qianhe's high-profile model requires high expense support. Overall, condiment industry expenses in 2019, especially sales personnel compensation and channel expense support, are likely to continue growing rapidly.
Prediction 7: Beer industry structure optimizes, product mix upgrades
In the future, the beer price band may transition from a pyramid shape to a "vase shape" similar to baijiu, i.e., low-end shrinks, the middle widens, and the top continues to lengthen. 2019 may be a year of further optimization of the beer industry structure, product mix improvement, and price increases that boost profits.
Prediction 8: Food giants accelerate new retail layout
In 2018, food and beverage giants tested the internet, and many FMCG companies followed suit in micro-commerce. This is essentially a defensive counterattack to change their "bystander" stance in the "new retail" battlefield and proactively attack to avoid losing too much discourse power in the supply chain. In 2019, forward-looking giants are expected to explore more possible models of "new retail."
Prediction 9: Overseas M&A in health products accelerates
In 2018, By-Health, Harbin Pharmaceutical Group, and China Jianyin Investment jointly invested nearly $1.4 billion to acquire well-known brands in Australia, New Zealand, and North America. It is estimated that this trend will continue in 2019.
Prediction 10: Baijiu + Internet exploration model upgrades
Affected by the macro late-cycle, baijiu prosperity is declining, which may force liquor companies to reform. The baijiu + Internet exploration model is expected to upgrade, and cooperation between baijiu and BATJ is expected to become closer in 2019.
Against the backdrop of significant uncertainty in Sino-US trade frictions and strong downward pressure on macroeconomic growth,
**We believe the food and beverage industry in 2019 will be mainly characterized by "stability."**
Although expectations for economic slowdown in 2019 are strong, over a longer cycle, the trend of long-term growth in national disposable income remains unchanged. Under the hierarchy of needs theory, the food and beverage sector, located at the base of the pyramid, will be the last to suffer negative impacts from consumption downgrades caused by economic downturns. Moreover, generational changes in consumers place health and safety demands for food at a more important position, and demand for high-quality, safe (branded), and healthy products is unlikely to decline.
According to Nielsen data, more than 80% of Chinese consumers (82%) say they are willing to pay more for healthy products. Therefore, in the long run, our research logic of accelerating upgrades in third- and fourth-tier cities, branding of consumption paths, and adhering to industry leaders still holds under short-term economic pressure.
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