Dairy Products China News(Dairy Products China News 1803)

Recent events in Chinese governing circles suggest a long period of stability at the top – a clear contrast to the trade turbulence threatened by the recent Trump behaviour. Within the market, though, the move to streamline towards what is being called “government lite” implies major changes will continue to affect the dairy sector in the coming years. Moreover in the economy change has continued apace, as befits a country whose GDP has risen by 86.9% since 2010 to account for 18.3% of global GDP last year.

Nowhere has this been more so than in the E-commerce sector, which exerts an increasing influence on the consumer dairy market.

This ongoing evolution is perhaps not surprising when we consider that 97.5% of China's online population can now access the internet via a smartphone. Statistics from the China National Commercial Information Center indicated E-commerce sales up 21% in 2017. Nielsen data tracking 34 FMCG categories shows that online sales grew 27% YOY (12 months to November 2017) compared with just 6% for offline sales. Kantar data for the 12 weeks ending 26th January 2018 shows that E-commerce achieved a record high of 12.4% share of all channels, with 42.6% of urban Chinese families buying FMCG online. In fact the expansion of the channel has been so successful that www.cnchemicals.com is now planning to launch in Europe in 2019. Moreover, after the proposed additional taxes were avoided due to the main operators’ outcry, cross-border E-commerce has continued to grow as well: eMarketer estimated that China’s online consumers spent USD100.2 billion on buying products cross border last year – even if this estimate is too high, the true level is widely held to be much more than the likely partial China Customs figures suggest.

None of this is unique to dairy, but these data serve as timely reminders that dairy brandowners fail to address these structural changes at their peril.