Insight - COVID-19 spurs plant-based protein market in China

China’s plant-based protein market is growing strongly. According to Austrade advisors in China, the COVID-19 pandemic has accelerated the adoption of plant-based proteins among consumers.

Three factors are helping to drive sales:

  • Food-safety concerns
  • Increasingly health-conscious consumers
  • The ease and growth of online sales.

Currently, 39.8% of plant-based protein is imported and this creates a fast-growing export market for Australian companies. This includes Australian producers of plant-based drinks (e.g. almond milk), plant-based dairy (cheeses and yoghurt), and plant-based meat.

Australia-based producers have an advantage in Chinese markets, owing to Australia’s reputation for clean, green produce.

For plant-based protein trade opportunities, contact Kathy Chen, in Guangzhou and for investment opportunities contact Jeanne Wang in Hong Kong.

A webinar for Australian oats producers who want to export to China will be held on March 25 (see below).

The growth of plant-based foodstuffs in China

China is the world’s biggest plant-based milk market. This is partly due to the high incidence of lactose intolerance. As China’s population becomes wealthier, lactose-intolerant consumers are looking for dairy-free, protein-rich options. This means China’s growing appetite for milk alternatives is increasing.

In 2020, China’s plant-based beverage market was worth RMB55 billion (A$11 billion).[i] This accounts for 24.2% of the entire beverage market. It includes a wide-range of beverages, principally soy milk, almond milk, oat milk, walnut milk, peanut milk, coconut milk.

The plant-based protein market is also expanding in terms of product range. Besides drinks, products include plant-based meat, snacks and ice-cream and egg products. Currently, drinks comprise 63.1% of the market, while plant-based meat comprises 30.5%. Plant-based dairy, such as cheese and yoghurt, accounts for 4% of the market.

China’s plant based protein statistics from key online platforms including Tmall, JD.com, Pingduoduo and Suning. Source: CnAgri.com, an agriculture consulting company

Besides lactose intolerance, the other factors driving growth in plant-based foodstuffs are:

  • the perceived nutritional benefits
  • low fat and low cholesterol properties
  • purchasing convenience and affordability.

Online sales of plant-based protein are growing fast. In the first half of 2019, online sales totalled RMB 338 million. During the first half of 2020, online sales had almost tripled, to RMB 873 million, according to CnAgri.com, an agriculture consulting company.

This suggests that e-commerce presents a viable route to market for Australian exporters.

Investment in plant-based protein manufacturing

Investment in alternative protein startup companies is also rising quickly. According to Green Queen, over US$230 million was raised from angel investors and funds in the Asia-Pacific region in the year to November 2020. This is almost four times the total funds raised for alternative protein startups over the previous three years.

The majority of funds went to plant-based companies, with around 86% of funds raised. Cell-based and fermentation-based start-ups attracted 14% of this alternative protein funding.

According to the Good Food Institute, over A$1.5 billion was invested in alternative protein companies globally between January and July 2020. US companies accounted for the vast majority. In APAC, Hong Kong’s Green Monday and Australia’s v2food raised the most (see below).

Australian companies already active in the sector

There is growing interest among Australian companies in opportunities to sell plant-based protein food and beverages into China.

Oppenheimer Pty Ltd, an Australia vegan food manufacturer and exporter, has set up a manufacturing facility in China. The company showcased their products in the Australia Pavilion at the 2020 China Import Fair (CIIE). The company’s product range includes plant based and vegan meat ball, beef, pork, chicken, seafood, egg, chicken nugget, gelato etc.

Australian companies are also attracting investment from Asia. In October 2020, Australia’s largest plant-based meat startup, v2food, closed on a Series B round of funding, worth A$77 million. Investors included Singapore’s state-backed investment fund, Temasek, and two venture capital firms: Hong Kong-based Horizons Ventures and Beijing-based Sequoia Capital China. To date, v2food has raised A$113 million.

In-market expertise and seminars

Austrade is working to help Australian plant-based protein companies to find new markets and attract investors.

On March 25, the Australian Export Grains Innovation Centre (AEGIC) and Austrade will host a webinar, ‘Australian oats for healthy food products’.

The webinar is specifically targeted at companies that want to learn more about the plant-based protein market in China and Chinese consumers. Simultaneous English-Chinese translations will be provided.

For more information about trade and investment opportunities in China and the webinar on March 25, please contact:

Kathy Chen, Business Development Manager Guangzhou

Jeanne Wang, Investment Manager Austrade Hong Kong.

 

[i] Chemlinked. 2021 China Food Consumption p13