Agriculture, Food & Drink

Discover the China Opportunity with CBBC

• A growing number of UK food and drink companies have set their sights on exporting to the China market: Asia’s largest - and soon to be the world’s largest - grocery market, which is expected to surpass the United States’ grocery market in value by 2023. Access to the China market has been gradually improving for a wider range of UK exports, and this trend is expected to continue.
• Growing demand in China for imported UK food and drink products is being driven at the consumer level: Chinese shoppers are sophisticated and selective in their consumption of imported UK products, which are often perceived to be of a higher quality and safer for consumption than some products produced or sourced locally. In response to this, a wide range of platforms through which consumers can browse and purchase imported food and drink products have sprung up in China: providing channels which UK brands and businesses can leverage.
• Key opinion leaders (KOLs) – China’s internet influencers - are often more knowledgeable in their respective fields and industries and have greater influence on the buying behaviour of Chinese Millennials and Gen Zs than traditional media, and their recommendations and livestreams have become a key piece of consumer engagement in the country. Key opinion consumers (KOCs) - influencers with a smaller number of followers than KOLs but who are highly trusted among their followers - offer opportunities for product seeding and can help build brand awareness for UK SMEs.
• CBBC’s team of specialists in the Agriculture, Food and Drink sector provide UK exporters with detailed market knowledge and consumer insights, sector guides, cross cultural communication and understanding, and guidance around customs and compliance regulations.
• Our quarterly China Hot Pot member newsletter shares key news and updates from the sector, as well as interpretations of key regulatory changes in our active business community. In addition, there are many opportunities for you to engage directly with us through our China Business Clinics and Masterclasses.
• We offer direct access to the market through a comprehensive programme of events and activities.
• Our key partners and stakeholders include the Department for International Trade, the Department for Environment, Food, and Rural Affairs, the Agriculture and Horticulture Development Board, Scottish Development International, and Invest Northern Ireland, and we complement this with our access to key government departments at both national and regional levels, as well as via an extensive network of trade associations and bodies throughout China.

Please contact us to learn more about our bespoke and tailored practical solutions to fast-track your business entry into China and market expansion.

An Overview of China’s Agriculture, Food & Drink Sector

In 2021, China became the UK’s biggest export market in East Asia and the sixth biggest export market worldwide for food and drink products, according to the Food and Drink Federation (FDF). Not only have UK exports of food and drink to China increased by 12.5% in 2021 from the year before - reaching £802.8 million in value - but export volumes were also seeing similar numbers to UK imports of food and drink from China over the same period.

On the topic of product categories, the top three exports to China by value are pork (£239.6 million), whisky (£200.1 million), and salmon (£45.6 million), which together made up 60% of the sector’s exports to China in 2021. Compared to 2020, exports of whisky and salmon rose significantly by 84% and 194.3%, respectively. Pork exports, however, dropped slightly by 14.3% but maintained the biggest share by value.

For the health food and drink market, health concerns, an ageing population, and the expansion of China’s middle-class will continue to drive future growth. 18% of Chinese consumers are already consuming meat alternatives, which may come to impact China’s demand for pork and beef in the future. Spurred by COVID-19, the demand for dietary supplements, immune system-boosting foods, and energy drinks are also expected to climb. Looking ahead, the functional food market in China is estimated to be worth RMB 600 billion (£69.8 billion) in 2022.

Leading Export Product Categories:

Meat and Seafood

Pork

• China's meat consumption is dominated by pork, which accounts for 60% of total consumption of pork, poultry, beef, and mutton. The country imports a large amount of pork from abroad: most of the imports come from the European Union, Brazil, and the United States, and customs data show that total pork imports reached 4.4 million tons in 2020, accounting for about 55.0% of the total amount of imported meat — the highest in recent years.
• According to the Agriculture and Horticulture Development Board (AHDB), China has become the biggest buyer of UK pork from non-EU countries. In 2021, UK pork exports to China totaled £239.6 million, which is equal to 64% of the UK’s total pork exports to non-EU countries (£372.7 million). Given growing demand for food that can be stocked up in case of Covid restrictions, frozen pork (£140.5 million export value) and offal (£92.7 million export value) are key products being exported to China.

Salmon

• Whilst France and the United States remained the biggest buyers of Scottish farm-raised salmon in 2021: having bought £304 million and £152 million worth of Scottish farm-raised salmon respectively - China has become the fastest growing export market — up 194.3% from 2020 — and ranking third in the world in market size, at £45.6 million. The growing demand can be attributed to improved awareness and importance placed on health, which encourages the consumption of nutrient-rich and low-carb food. It is worth noting that, due to the resurgence of Covid-19, sanitation when dealing with salmon shipments is now an important concern for both China Customs and end consumers.

Dairy

• According to the AHDB, China is the biggest buyer of UK milk and cream among non-EU countries. Between January and December 2021, the UK exported £14.1 million worth of milk and cream to China, which accounted for 62.5% of its total exports by value to non-EU countries (£22.6 million).
• Interestingly, as of 2021, China has also become the biggest buyer of UK butter and other fats from non-EU countries. Between January and December 2021, the UK exported £25.7 million worth of butter and other fats to non-EU markets, £4.6 million of which went to China, making it the biggest non-EU export market.

Alcoholic drinks

• China is now the fifth biggest export market for Scotch Whisky worldwide, with a market size above £200 million according to 2021 global export figures released by the Scotch Whisky Association (SWA). This is a significant increase from the £108.7 million the year before, and an even more remarkable increase from its below £10 million market value that was recorded twenty years ago. Compared to mature export markets such as Japan (worth £138.4 million in 2021), China remains an emerging market with a growing demand for imported whisky from both new and well-established brands. Home to more than 361 distilleries and £4.5 billion worth of exports per annum, the UK is well positioned to dominate the Chinese whisky market with a wide range of products across bulk, blended, and single malt whisky, addressing the market’s evolving needs from both short and long-term perspectives.
• On the topic of gin, China imported a total of $13.6 million (£10.4 million) worth of gin between January and December 2021 according to data from China Customs, an increase of 83.9% from 2020. This shows that the gin market has recovered significantly from the decline seen in 2020 that resulted from Covid-19. As a new generation of consumers are willing to explore the chic lifestyle associated with gin and gin cocktails, UK gin distilleries are now presented with unprecedented opportunities in China market.

Non-alcoholic drinks

• China's juice market is dominated by low-concentration juice drinks, accounting for 74.3% of sales, whereas 100% fruit juice accounted for only 5.9% of total sales. Since China's 100% fruit juice market share is relatively small when compared to some developed countries, there can be numerous opportunities for UK juice exporters.
• As obesity is on the rise and consumers increasingly pay more attention to their health, sugar-free drinks are becoming the general trend in the beverage industry internationally, with carbonated drinks and tea drinks in particular making waves. This same sugar-free trend is also rising gradually in China: a number of international and Chinese drink brands, including Nongfu Spring, Uni-President, Master Kong, Genki Forest, Hey Tea, and Yili, have already entered this sector. The competition is fierce, but many opportunities are still to be found.

Snacks

• At present, China is one of the largest leisure food markets in the world. The market size of China's leisure food industry was RMB 774.9 billion (£91.5 billion) in 2020, with a compound annual growth rate of 6.6% from 2015 to 2020. Sweets, chocolate, and candied fruit take up the largest share in China's leisure food market, accounting for 24.2% in 2020.
• Through CBBC’s conversations with Chinese importers and distributors, categories including confectionaries and crisps are constantly in demand and very popular. Nutritional snacks targeting children and low-calorie snacks targeting young women have also gained popularity in recent years.

Consumer Behaviour and E-Commerce

Consumer behaviour has also changed in the post-pandemic era. For example, Chinese consumers no longer primarily focus on food safety when making purchasing decisions; they now pay more attention to choosing foods that will help them maintain a healthy diet with balanced nutrition and reduced sugar and fat. In terms of purchasing channels, it is found that Chinese consumers are increasingly turning to digital mediums when making purchases: 71.0% of Chinese consumers say that they are happy to shop directly on social media and social commerce platforms —around 30% higher than the global average. The proportion is even higher among millennials and Gen Z, reaching 80%.

As for more traditional trade and e-commerce (Compared to general trade and domestic e-commerce), cross border e-commerce (CBEC) is a more direct business to consumer (B2C) sales channel for UK brands to enter the China market. According to data from iiMedia Research in 2021, 65.3% of users believe that they have seen an increase in their usage of CBEC platforms.

Livestreaming is yet another sales and marketing tool that has gained popularity among young Chinese consumers during the pandemic. Various platforms including Taobao Live provide opportunities for KOLs and KOCs to directly promote and sell products via livestreaming to millions of viewers. According to the 2021 Taobao Live broadcast report, the transaction value of food categories in Taobao live broadcast rooms increased by 184% year-on-year in 2020.