Have you heard of Oatly? If so, chances are you know a little about the market for milk alternatives. But what are the prospects for milk alternatives in China?
Read on to find out what China’s market for milk alternatives looks like today, with a focus on oat milk.
Growth Tailwinds for Oat Milk In China
Before getting into some of the tailwinds, it’s worth noting that Chinese cuisine already has a number of alternative milks, like soy milk, almond milk and peanut milk. Indeed, these kinds of milk are alreadt enjoyed at breakfast tables across China. We think this means the barriers for consumers to accept alternative milks are lower in China than other countries. Further, when you consider some 90% of Chinese adults may have some level of lactose intolerance, you get a sense of alternative milks’ potential in China.
So, what does the size of China’s alternative milk market look like?
In 2020, China’s alternative milk market was worth RMB55 billion (USD$8.5 billion). This includes a wide-range of beverages, principally soy milk, almond milk, oat milk, walnut milk, peanut milk and coconut milk. You could say 2020 was a watershed moment for plant-based milks in China. Tmall’s Plant-based Protein Beverage Innovation Trend Report showed an 800% increase in plant-based protein beverages sold through the platform.
We expect this market to grow between CAGR 2% and 4% to 2025. Outside of lactose intolerance, the other factors driving growth in alternative milks are:
- Perceived nutritional benefits
- Low fat and low cholesterol properties
- Purchase convenience, availability and affordability
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Early Movers for Oat Milk In China
Oatly has had much success in China. Indeed, some commentators have gone as far as to say that Oatly’s future fortunes are tied closely to success in China. However, Oatly isn’t running this race alone. In May this year, it was observed that there are over 50 oat milk brands on Alibaba’s Taobao and Tmall, an increase of 152% year on year. Of these, the brands who have raised VC funding and have a compelling go-to-market proposition include:
- Cereal Planet
Ongoing Themes for Oat Milk In China
Whether optimizing their own nutrition, pursuing new beverage trends or experimenting with healthier lifestyles, Chinese consumers will likely have plenty of alternative milks to choose from.
What’s particularly interesting about alternative milks in China is that it marks the intersection of a number of themes in China’s food and beverage market: weight concerns, changing lifestyles and new preferences.
We’ve seen similar themes in functional dairy and sports nutrition. If you’ve got an interesting food or beverage proposition, talk to us.