China’s plant-based market has increased considerable in the past few years, with COVID-19 further adding to an already upward projection. A change in dietary attitudes, in addition to health and environmental concerns, are some of the reasons behind the growth of the vegan market, which will reach an estimated US$ 12 billion in 2023.
As the largest consumer market in the world, China is increasingly important for international players in the plant-based industry. The Chinese government announced plans to decrease the country’s meat consumption by 50% by 2030 to reduce carbon emissions and prevent obesity.
Experts consider this to be an optimal time for both international and domestic companies to enter the alternative-meat market. However, it is fundamental to understand the cultural characteristics of the market and its challenges to be able to benefit from the opportunities.
China has a long history of vegetarianism, with a large population of Buddhists who practice vegetarianism as part of the religion’s teachings on compassion and non-harm. However, more recently, health concerns due to the prevalence of overweight adults and climbing obesity rates have become the push behind plant-based diets.
According to Tastewise, a consumer insights platform, consumer motivations for eating plant-based products are shifting away from ideological and political drivers to more health-oriented motivations.
The rise of Western-style plant-based diets has brought new dynamics to the Chinese market where exciting innovations drive awareness and trial in both foodservice and retail. Meanwhile, local players are actively giving local twists to products, leading to increasing product availability.
The Chinese culinary landscape offers a big selection of vegetarian dishes, including options that seek to recreate the texture and taste of meat using ingredients like tofu, seitan, and mushrooms. This has given rise to a rich variety of vegetarian dishes that form an integral part of the Chinese cuisine.
Like everywhere else, consumer perceptions around nutrition, taste and affordability remain key challenges for the growth of the plant-based food industry in China.
An interesting success story is that of oat milk, which in terms of performance is the most outstanding plant-based alternative in the recent plant-based trend in China, having achieved steady return consumption since Swedish oat drink company Oatly’s arrival in 2018.
Oatly used a bottom-up, B2B approach targeting high-end coffee shops in cities like Beijing and Shanghai to establish its brand, before launching on Tmall in 2018. Since then, it has established a high-tech production in Ma’anshan, Anhui Province to keep up with demand.
The oat drink has become a permanent item across the country, and the application of oat milk has evolved to product types such as ice cream and baked goods. In retail, oat milk has grown to account for 2.5% of the plant-based milk market in 2022.
On the other hand, meat consumption has long been a sign of status in China. According to the USDA Foreign Agricultural Service, China is the largest consumer of meat in the world, and meat consumption has increased five-fold over the past 30 years.
Experts estimate that approximately 4 to 5% of China’s population identifies as vegetarian or vegan. With a population of over 1.4 billion, this translates to 56 to 70 million people.
Over the past 10 years, plant-based meat substitutes (made from peas or soy) have contributed to the growth of this market. In 2018, the Good Food Institute valued the market for plant-based meat substitutes in China at over US$ 834 million, and this number is expected to increase by 20-25% every year.
The strongest segments for the plant-based market are Millennials and Generation Z. The buzz surrounding plant-based products has sparked an interest in vegan diets among traditional meat-eaters, and producers can rely on demand from younger Chinese consumers who are avid followers of food trends and love to try new flavors.
Obesity amongst Chinese teenagers is a health concern which plant-based companies can alleviate. Leveraging social media and influencers is key to engaging these segments and promote plant-based options as healthy and trendy.
According to a survey by iiMedia Research, 36% of Chinese consumers said they didn't know what plant-based meat is, and nearly 40% of participants said they did not know much about plant-based meat substitutes.
While there is an opportunity to educate, there is also the concern of negative attitudes towards meat-imitating products which can be seen as fake and unnatural, meaning that appealing to the natural aspect of plant-based products is crucial.
The Chinese brands offering plant-based products has increased significantly. Some of the leading names include Zhenmeat, Starfield and OmniFoods. These brands offer a variety of meat substitutes, ranging from pork to seafood, using ingredients such as soy, peas, and seaweed.
The push towards alternative sources of protein has been supported by the Chinese government, and in a speech during the 2022 session of the 13th CPPCC National Committee, Xi Jinping encouraged agricultural officials to explore cell-cultured and plant-based protein sources in a bid to ensure food security.
The China Vegan Society introduced in 2023 the China Vegan Food Certification (CVFC), the first program of its kind in China, which offers a standardization in the industry and aims to increase consumer trust. The first batch of recipients includes Beijing-based dairy alternative startup, Yeyo.
International brands have also entered the Chinese plant-based food market. Impossible Foods and Beyond Meat, one of the front runners in the plant-based meat sector, arrived in 2020 and has since launched partnerships with big names in the food and beverage industry, such as Starbucks, KFC and Taco Bell.
While these companies are engaging with international markets, their current products are not engineered to Chinese tastes. Chinese companies entering the market are at an advantage as they understand local tastes and culture, and are focusing on local dishes such as dumplings, as well as opting for pork rather than beef flavors.
Zhenmeat, a China-based start-up, caters to local culture by creating plant-based mooncakes, a Chinese bakery product traditionally eaten during the Mid-Autumn Festival.
Beyond cultural traditions, texture is a key consideration. For example, the texture of a meatball from the Yangzhou region is very dimpled, while hotpot meatballs are crispy. Foreign plant-based companies might not succeed in China if they do not observe regional preferences.
More recently, COVID-19 had a huge impact on consumer perception and concerns around food safety. Wet markets in China are constantly under suspicion of creating new viruses, which has resulted in a shift towards plant-based alternatives.
Other health benefits of meat-alternatives are also driving motivators for Chinese consumers. Weight loss is a significant factor, the importance of which has gone up 21% year-over-year, as well as gut health which is growing at a rate of 23%, and an emerging motivation is fertility which has grown in demand by 43%.
As the market grows, there has been an influx of investments in alternative protein companies. In 2022, Shenzhen-headquartered plant-based meat company Starfield attracted a US$ 100 million Series B investment round, the largest ever for a vegan protein brand in China. Increased investment in plant-based brands will encourage the creation of products that more closely mimic the taste and texture of real meat, making the transition easier for many consumers.
Companies entering the market with cell-based and cultured meat products should be conscious of positioning themselves as different to plant-based. There are trust issues around cell-based products, however, understanding motivations is key to successful positioning.
According to a study from Peking University, 62% of consumers said they would switch to cell-based meat if it was a more stable form of protein and 54% would be convinced by the positioning as a high-tech innovation. Ethical and sustainable factors were not rated as significant motivations.
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