China’s plant-based food market is booming. Even at this early phase of development, it has proven its market potential with investments injected reaching over $100 million USD to-date and expanding in the double digits. Indeed, China’s plant-based food industry is closely following the international market.
And yet 90% of plant-based stakeholders still on their way to enter the Chinese food industry.
Ryan Xue, Founder & Secretary-General of China Plant-Based Foods Alliance (CPBFA), and Jennifer Lee, Founding Executive Director of the US-China Agriculture and Food Partnership (AFP) – the two organizations that initiated AgFood Future shared their insights on the development of the emerging market of plant-based food in China.
The start of the pandemic in 2020 jumpstarted the rapid expansion of a once-niche market in China that is now trending into a burgeoning section of the global market of plant-based meat alternatives. Industry experts anticipate the alternative protein global market value will reach 28 billion USD by 2025. The Chinese market share? Projected to be over 15 billion USD (100 billion yuan) by 2030.
Lee notes, “The outbreak of the COVID-19 sparked the kindle that was already set in China for the growth of the plant-based foods market. We are in the right place at the right time as industry, government, and consumers are all even more open to innovative products and models.” In February 2020, the Chinese government issued agricultural product policies, addressing innovation and adding value to the agricultural industry chain.
Xue and Lee agreed there is an opportunity, through innovation, to shift production from a single point to an entire production ecosystem, and emphasizing innovation with everyone in the value chain.
China is standing in the strategic period of the market’s early development stages. For international businesses entering the Chinese market, the opportunities for established brands include the industrialization of their production, and for start-up players, chances lie upstream once the industry has become more established.
Gen Trends – The Wave of the Future
In general, Millennials and Gen Z choose a plant-based diet for environmental and welfare concerns. This young group of consumers in China, born in the 1990s and especially after 1995, welcome plant-based food due to health concerns. According to Xue, the consideration of healthy nutrient refinement in daily intakes will primarily drive the future market.
According to recent surveys, 80% of this generation’s consumers in China have shown strong interest in accepting plant-based food products for high-protein alternatives. Indeed, despite the country’s long history of using plant‐based food in its culinary tradition, it is the young people who will be the driving force in the market moving forward.
Localized Taste and Texture
Primary factors in consumer choice for plant-based food is, of course, taste and texture. Localized flavors resembling familiar dishes are better setup to gain traction, but a good mouthful is still hard to come by these days. Xue said there must more to work on product innovation for better taste, texture and nutrition.
Even though many companies provide alternative protein products as ingredients for burgers, chicken nuggets, or sausages (all foods that prevail in the foreign markets), Chinese companies tend to use the new plant-based food to answer the call for varieties familiar to the local palate.
Currently, plant-based meat and milk alternatives make up 15% of the market. Primary ingredients include soybeans, peas, and algae, which are competitive from a price and cultural perspective. However, alternative protein substances will not replace meat anytime soon, said Xue.
AgFood Future is working to formulate a set of guidelines for industry stakeholders to form a consensus in regulatory standards, market education and other areas.
Uniform guidelines will synchronize the industry practice in China’s market, especially if the process includes international stakeholders. Best practices will guarantee food security and innovation within the industry chain and market development in the future.
Shortly after its launch in July 2020, AgFood Future held a webinar on the nomenclature compendium of plant-based food (August 2020) followed by a closed-door meeting on industry standards and certification systems in September in Shanghai.
With over 300 members ranging from Chinese market regulators, domestic and international industry representatives, and various business service providers, AgFood Future aims to use the guidelines as a joint effort to build a communication platform. The goal is to ensure easy access to the industry for both Chinese and international players as well as to help future industry members easily enter the market.
“For a healthy and sustainable new market to be developed, we must connect all stakeholders in the market, pushing forward policies, regulations, and industry best practices with all participants along the chain, from the bottom up,” said Lee. “The plant-based food market in China is one of the fastest developing markets in the world. China has its unique ecosystem, so creating a more open platform for international collaboration will help the development of the China market, while also allowing China to contribute to the development of the global market.”