China is home to many food and beverage brands that are well-known on a national level, comfortably catering to the country’s 1.4 billion-strong population, but many of these also have next to no footprint outside of the country.
With China’s international trade having opened up significantly since the worst of the pandemic, many brands have been keen to explore additional revenue and expansion opportunities in other markets but found this difficult due to a variety of possible factors from stable high-quality production to the difference in distribution channels overseas.
Industry leaders from the dairy and baijiu alcohol categories in particular believe that regulators need to provide more policy incentives for industry players to improve.
“There is no doubt that China needs to further analyse and introduce targeted incentive-based policies for the dairy industry in order for it to achieve further growth in and out of the country,” Mengniu Global R&D Innovation Centre R&D Director and National People’s Congress (NPC) member Shi Yudong told the floor at China’s high-level political Two Sessions meeting.
“This is crucial in order to smoothen dairy companies’ paths towards innovation and new product development, as well as to guide the industry towards better and stronger product research.”
In particular focus was the need to incentivise and support technological innovation in operations, especially seeing the success that current industry players such as Yili have already achieved after its focus on this area.
“The Chinese dairy industry urgently needs to strengthen its grasp of key technologies within the industrial chain, and transform operations according to these advances,” Yili Global Innovation Centre Director of Scientific Research and NPC member Wang Caiyun added.
“This is the only to improve each company’s independent innovation capabilities which will in turn accelerate the overall dairy sector towards employing a more modern industrial system, and thus keep ‘China’s milk bottle’ firmly in our own hands even when looking towards global expansion.”
This need for policies to support technological development was echoed by the baijiu sector as a whole.
“The first area that the Chinese baijiu industry should be looking at improving is in terms of productivity, we really need to cultivate much stronger production chains as well as approach this from a more modernised industrial perspective,” Yanghe Distillery Chairman and NPC member Zhang Liandong said.
“This will mean overall transformation for the industry in many ways, such as connectivity, an end-to-end supply chain, a sustainable production process based on green principles, utilising ‘aggregation’ in strategising, and better overall industry integration.”
Baijiu as an world heritage liquor
With many countries increasing focus on unique local alcohol products - such as Japan’s focus on Japanese whiskey and Japanese wine – China is also keen to not be left behind, given the low-hanging fruit of baijiu as an existing option for global trade, leading to calls for concerted efforts to promote baijiu as a ‘world heritage’ product in order to enhance the image of the industry.
“It is of course important to develop policies focused on alcohol sales per se, such as international alcohol trade policies and international liquor promotion activities – but at the heart of it, there is a cultural element here that should not be forgotten as it can be a good advantage,” Luzhou Laojiao brand owner and NPC member Zeng Na added.
“As such, the Chinese baijiu industry should join forces to apply for world heritage status for baijiu, in addition to promoting the relevant brewing techniques and culture all over the world, in order to enhance the status and influence of baijiu internationally.”