Welcome to the April issue of Dairy Products China News.
China's economy grew by 5.3% in Q1, official figures indicate – slightly more than in 2023 overall and the 5% growth target set for this year, and a little ahead of most economists' expectations. Nevertheless, demand remains weak, and Chinese milk is in oversupply.
In dairying, the trend remains towards large farms which, although under pressure, can ride out the high operating costs which have put paid to many household producers. The same has happened at industry level, with the larger local brands pushing out the weaker local ones including OEMs – and making life harder for overseas brands unless they can provide a differentiated product. For instance, although such products lack a standard to confirm their specific differentiated status, Meiji's ESL milk has established itself in bakeries and competes with a few other brands – New Hope Dairy (Zhao Ri Weipin – the old Asahi brand), Weichuan, Junlebao (Yue Xian Huo).
This aligns with the Chinese government's focus on local businesses growing their market share wherever possible. This isn't just about agricultural products deemed strategic, of course – look at how the sales of Apple's Iphone have crashed this spring, the company falling to fourth place in the local smartphone market. In that case, geopolitical factors have been key – although not alone – in driving change. What is clear, in dairy as in other categories, is that international brands with longterm goals in China need to scrutinise what the major dairy businesses manufacturing locally are doing, and then offer something different. Imports will face increasing pressure and simple me-too brands will not make the distance.
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