Frost & Sullivan releases 'White Paper on Trends in China's Prefabricated Food and Lotus Root Industry for 2024'

The prefabricated food industry in China started relatively late, but has developed rapidly in recent years driven by the catering chain model and online food delivery services. The industry has gone through three main stages. The first was the budding period before 2010, during which the prefabricated food industry faced problems such as limited sales areas, a large number of enterprises, and low concentration due to immature early freezing technology and high cold chain transportation costs. During this stage, prefabricated food companies such as Haolai and Xincong Cook were established in 2002, and the 'General Rules for the Labelling of Prepackaged Foods' was introduced as the first national standard in 2004.

From 2010 to 2020, prefabricated dishes were in a period of development. During this phase, the chain operation of the catering industry and the construction of central kitchens gradually advanced, leading to the gradual development of the prefabricated dish industry. However, it also faced issues such as overcapacity and high operating costs. The establishment of Meituan Food Delivery in 2013 drove the growth in demand for B-side meal kits. In 2018, Anji Foods established the 'Frozen Mr.' outsourcing business unit to further expand into the prefabricated dish market.

From 2020 to the present, it has been an acceleration period for prefabricated dishes. Affected by the pandemic in 2020, demand for prefabricated dishes on the consumer side has surged, driving rapid development of the industry. Companies have started to launch prefabricated dinner package gift boxes to further expand the consumer market. In 2021, the first stock of prefabricated dishes, Weizhi Fragrant, went public. In 2022, Dingdong Grocery established a prefabricated dish business unit. In 2023, prefabricated dishes were included in the No. 1 Central Document for the first time. These key milestones mark the gradual acceleration of China's prefabricated dish industry from its infancy, with continuous technological progress, sustained market demand, and broad industry prospects.

The Chinese prefabricated food market is mainly divided into two segments: the B-side and the C-side. In terms of the B-side market, the scale of China's catering industry continues to grow, from 4.7 trillion yuan in 2019 to 5.3 trillion yuan in 2023. The cost of meal ingredients accounts for about 41%, indicating that prefabricated food has broad application prospects in the B-side market. It is expected that the scale of China's B-side prefabricated food market will grow from 2.2 trillion yuan in 2023 to 2.7 trillion yuan in 2028.

In the C-end market, China's household food expenditure has continued to grow, rising from 9.1 trillion yuan in 2019 to 11.7 trillion yuan in 2023, and is expected to reach 14.4 trillion yuan by 2028. Referring to the 10% expenditure share of Japanese households in the pre-packaged food sector, it is estimated that China's C-end market for ready-to-eat meals will reach 1.4 trillion yuan by 2028, demonstrating tremendous market potential.

Overall, both the B-side and C-side markets for prefabricated dishes show a continuous growth trend, bringing tremendous development opportunities to the prefabricated dish industry. In the coming years, the prefabricated dish industry will see more investment and competition in both the B-side and C-side markets, with increasingly fierce industry competition. This growth trend not only reflects changes in consumer demand but also indicates that the prefabricated dish industry will become an important part of the future food market.

The pre-packaged dish industry in China is in a stage of rapid development, with its growth rate significantly faster than the overall catering industry. Despite the current low penetration rate, the industry has broad prospects for development. With multiple driving factors such as consumer upgrading, industrialization of catering enterprises, development of cold chain logistics technology, and favorable policies, the pre-packaged dish industry in China has risen rapidly. In 2023, the growth rate of the pre-packaged dish industry reached 22.5%, significantly higher than the 20.4% of the catering industry. This rapid growth benefits from technological progress, increased market demand, and policy support.

During the period of rapid development, the prefabricated dish industry has continuously innovated and improved product quality against the backdrop of consumer upgrading, meeting the growing diverse and convenient needs of consumers. At the same time, the industrialization process of catering enterprises has accelerated, significantly enhancing production efficiency and quality stability through central kitchens and standardized production. In addition, the development of cold chain logistics technology has ensured the transportation and storage conditions for prefabricated dishes, effectively extending the shelf life of products and ensuring food safety and freshness. Favorable policies have also provided strong support for the industry's development, with governments at all levels introducing a series of encouragement and support measures to promote the healthy and rapid development of the prefabricated dish industry.

The future development prospects are very optimistic. It is expected that by 2028, the growth rate of the prefabricated food industry will reach 13.1%, far higher than the 5.2% of the catering industry. Currently, the penetration rate of the prefabricated food industry in China is only 12.0%, which means there is broad room for future development. The market is in a competitive blue ocean stage, with great potential and opportunities. As consumers' demand for convenient, healthy, and high-quality foods continues to increase, the prefabricated food market will continue to expand. Enterprises need to increase R&D investment, continuously launch new products, meet market demand, and enhance competitiveness.

Compared with developed economies, the competition in China's prefabricated food industry is highly fragmented, and there are no dominant leading enterprises yet. The market share of the top ten companies (CR10) is only about 15%. In contrast, the prefabricated food industry in the United States and Japan is highly concentrated, with the market share of the top five companies (CR5) exceeding 65%, among which SYSCO from the United States, as a leading enterprise, occupies 16% of the market share. China's prefabricated food industry urgently needs integration, and industry giants may emerge in the future. By integrating resources and improving efficiency, they can further drive the development of the industry. By drawing on the experience of developed countries, China's prefabricated food industry is expected to achieve an increase in concentration and market share in the next few years.

Overall, while the prefabricated dish industry in China is developing rapidly, it will also face more investment and competition in the future. With market maturity and integration, the prefabricated dish industry will become an important part of the food market, possessing tremendous development potential and prospects. Enterprises should actively explore new models and technologies to improve production efficiency and product quality, and seize market opportunities. At the same time, the government should continue to increase support for the prefabricated dish industry, promote its standardized and regulated development, and jointly contribute to the prosperity and progress of the prefabricated dish industry.

Lotus root is a nutritious traditional Chinese ingredient, rich in dietary fiber, vitamins, and protein, among other nutrients. It is deeply loved by consumers for its unique taste and health benefits. As an ingredient, lotus root can be used to make a variety of delicious home-cooked dishes, such as lotus root meatballs, lotus root sausages, shrimp paste lotus dumplings, crispy fried lotus strips, fried lotus crab, stewed lotus root soup, fresh lotus root stewed pork ribs, and cold lotus root slices, demonstrating its diverse culinary applications.

In recent years, with the rapid development of the prefabricated food industry, lotus root prefabricated dishes have also embraced new opportunities. The industrialization and branding level of prefabricated dishes have continuously improved, driving lotus root, a classic traditional ingredient, into a high-growth vertical track within the prefabricated food industry. Through modern processing and innovative technologies, lotus root prefabricated dishes not only retain the traditional deliciousness and nutrition but also greatly enhance cooking convenience and efficiency, making it easier for them to enter thousands of households. This development has not only met consumers' demand for healthy and convenient food but also brought new growth points and market opportunities to the lotus root industry chain.

China is one of the world's major lotus root growers, with an absolute leading position in terms of planting area and production globally. Currently, China's lotus root cultivation areas are mainly concentrated in Jiangsu, Hubei, Zhejiang, Shandong, Hebei, and other places, among which the lotus roots from Honghu Lake in Hubei and Baoying in Jiangsu are the most famous.

The planting area of lotus root in China has reached over 6 million mu. Hubei Province is a leader in lotus root planting area and production in China, with a planting area exceeding 2 million mu, accounting for one-third of the national total lotus root output. The Honghu region of Hubei is famous nationwide for its lotus roots, which are known for their crispness, tenderness, and rich nutrition due to its unique geographical and climatic conditions. Jiangsu Province ranks second with a total lotus root planting area of 1.5 million mu, relying on waters such as Taihu Lake. The lotus roots in Bao Ying, Jiangsu are not only abundant in quantity but also of excellent quality, widely popular in the market.

The lotus root varieties planted in Hubei Province are mainly the E Lian series, with a coverage rate of over 85% nationwide and even over 90% in Hubei itself, making it the main cultivated variety of lotus roots in China. This series of lotus root varieties is widely used in the production of various lotus root products due to its high yield, disease resistance, and strong adaptability. The Baoying lotus root brand in Jiangsu Province is known for its diverse range of products, including fresh-keeping lotus roots, boiled lotus roots, pickled lotus roots, frozen lotus roots, lotus root starch, lotus leaf tea, lotus root juice beverages, lotus root dumplings, fragrant glutinous lotus roots, condiments, and snacks, among others. The products are rich and varied, meeting the diverse needs of the market.

China's lotus root cultivation not only has an advantage in terms of area and output, but also offers a wide variety of products with sufficient market supply, capable of meeting the needs of consumers at home and abroad. This has laid a solid raw material foundation for the development of the pre-prepared food industry, and at the same time, it has brought new opportunities for farmers' income growth and regional economic development. With the application of modern agricultural technology and continuous improvement of the industrial chain, China's lotus root industry is developing in a more standardized, scaled-up, and branded direction, with very broad prospects.

The Chinese lotus root prefabricated food market is developing rapidly, showing significant trends towards branding, standardization, and scale. As a classic traditional ingredient, the industrialization and branding level of lotus root has been continuously improving, gradually becoming a high-growth vertical track in the prefabricated food industry.

• Branded

• standardization

• scale-out

Currently, the Chinese lotus root prefabricated dish industry is developing towards branding, standardization, and scale. By establishing a strong brand, ensuring product quality, and improving production efficiency, enterprises can stand out in the fierce market competition. At the same time, the cost advantages and supply stability brought about by large-scale production have further promoted the development of the lotus root prefabricated dish industry. With the continuous deepening of these trends, lotus root prefabricated dishes are expected to become an important part of the prefabricated dish market, with broad market prospects and development potential.

Jiangsu Hexian Food Group Co., Ltd. was established in 1993 and is a national key leading enterprise in agricultural industrialization focusing on deep processing of lotus roots, dedicated to creating the 'No.1 Lotus Root Brand in China'. The company has built a central kitchen for lotus roots and has developed customized deep-processed lotus root products according to different channels such as Chinese chain restaurants, group meals, hotel catering, light food catering, Japanese and Western cuisine, and new retail. These include the 'Whole Lotus Root Banquet' products in both room temperature and frozen formats. The company has also created popular staple products such as fragrant glutinous lotus roots, lotus root jade child balls, and shepherd's purse lotus root dumplings.

The group headquarters is located in Baoying County, Yangzhou, with nearly 10,000 mu (about 667 acres) of GAP-managed production bases and nearly 100,000 square meters of modern food processing plants. It is equipped with nearly 30 production lines and produces more than 100 varieties of lotus root and other vegetables. HeXian Group has over two decades of experience in lotus root processing and export, with products sold to Japan, the United States, Europe, Southeast Asia, as well as major cities within China.

Hexian Group has won multiple honors, including being recognized as a national key leading enterprise in agricultural industrialization, a member of the 7th Board of Directors of the School of Food Science at Jiangnan University, and one of China's outstanding agricultural product enterprises in 2020, as well as a member enterprise of the China Campus Group Meal Alliance. These honors not only reflect the company's leading position in the industry but also its outstanding achievements in product quality, technological innovation, and market expansion.