Yoghurt x China
Christiana Zhu has always wanted to be an entrepreneur. It wasn’t until she moved to China however, that she landed upon the idea that would take her there. Developing allergies herself and having observed a lack of good quality lactose-free options in the market she decided to found Marvelous Foods, a plant-based dairy company providing premium snacks starting with Greek-style coconut yoghurt. In this episode we chat more with Christiana about her background growing up and working in NZ’s sustainable tourism space and how that informs her current work. We also discuss Marvelous’ current products, branding and scaling process, as well as the logistical differences that arise when distributing in the Chinese market.
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The manifestation of the plant-based movement can look different across the world. In China, similar to other countries, there’s a current trend amongst the urban population in particular, to seek healthier ways of living and upgrade their current lifestyles. Having moved to China herself to gain on-the-ground experience for what would have been a sustainable tourism company, Christiana speaks first hand about the changes taking place.
Christiana: “They’re looking for a way to improve both their physical and mental health, especially in these post COVID times.”
It’s no surprise then that, being a witness to this trend, Christiana decided to take things into her hands and found her own company. But with her family back in NZ why stay in China?
Christiana: “China has 20% of the world’s population, but only 5% of arable land. With population only growing globally we need to find ways to make nutrition more efficient.”
It’s this realisation that also led Christiana away from working in the sustainable tourism industry.
Christiana: “When I came to China I realised, despite the glitzy skyscrapers on the outside, it’s still a market where the consumers are developing their tastes and there’s a lot more space and need for better quality things lower down in the Maslow’s hierarchy like food.”
This desire for better quality products is something she experienced first-hand.
Christiana: “I started developing allergies - my body was exposed to too many stressors from the wider environment.”
However when she started looking for dairy alternatives, she was surprised that she couldn’t find them anywhere.
Christiana: “I thought okay well that’s definitely a need an opportunity, especially given 80% of Chinese are lactose-intolerant.”
Despite this lactose-intolerance, we were surprised to find out that dairy consumption in China is only increasing, with the country forecasted to become the biggest dairy market by 2022.
Christiana: “Dairy is considered a good way to get premium protein, and has been promoted in the past by the government.”
In particular within the dairy food group yoghurt is considered one of the fastest-growing categories currently worth $17 billion, reflecting a trend that people are not only consuming liquid milk but are wanting added benefits or more premium products. This increase, despite being a disheartening realisation, has a silver lining.
Christiana: “The good thing about China being such a ‘new’ dairy consuming culture is that people here are more open-minded to considering plant-based dairy as another form of dairy, rather than having a huge rejection to it.”
We’ve seen this with the huge growth in the past year of the plant-based diary sector, not to mention other plant-based products such as pork.
As an early-stage startup, Marvelous is currently at the point of scaling, moving from an artisanal set-up that they initially used to sell their traditional greek yoghurt product, as well as rotating seasonal flavoured compotes and frozen yoghurt. Only weeks away from a commercial launch, we delved deeper into what the process has been like and what the future holds for their distribution.
Christiana: “We’re laser focused on scaling up just the greek-style yoghurt. We’re offering it in a granola-type parfait and we’re targeting that premiumisation of snacking occasions.”
Christiana: “In China the leap from artisanal to large-scale is, I think, a little bit different to say in the US or New Zealand.”
This is because in a country like NZ, if a speciality store is willing to stock you and you’re producing something out of a cafe-licensed kitchen you are able to enter, compared to China where you can’t sell through any third parties or platforms like Tmall unless you’re produced in a big factory.
Christiana: “So for us the impetus to scale-up to a commercial model was to be able to get the product to other sales channels to open up to more than just our small direct-to-consumer model.”
Christiana went on to talk about the shift in more detail.
Christiana: “We were only operating on the single city DTC model because the product was initially created just for that community and before 2018-19 there was no real market demand or confidence that we could push plant-based out into the market and we’d be able to scale it up.”
Christiana: “The goal has always been to create a product that can have a broader impact and whilst it was nice to have and service the community with our artisanal products, we think this product definitely has legs to create a bigger impact than that.”
Also according to sales 80% of yoghurt is purchased through supermarkets, but getting into these is not enough. You need to stand on solid ground.
Christiana: “You have to have a strong enough brand pull to make sure that your product can move off the shelves because for them it’s basically a game of real estate.”
Christiana: “If you’re not moving and there are plenty of other things that are then you won’t be there for long.”
To safeguard against this happening to them, Marvellous is leading a brand activation campaign prior to that entry. What does this involve?
1) Creating their own e-commerce store on Tmall so that they can have some DTC experience, build up the brand following and get early conversions and sales.
2) Working with hotels, restaurants and cafes to position brand and amplify awareness.
Christiana: “With restaurants it’s more about branding than sale figures, although there is good business there for sure.”
But the work doesn’t stop there. Working with supermarkets and ensuring how your promotions are executed is very important.
Christiana: “The biggest hurdle is not not getting in if you’re a novel product, they’re all willing to try new things, especially if you’re talking about convenience stores.”
Christiana: “The thing that will make or break you is how you execute that, and I think that’s the same with a lot of things in China. How if you have a promotional slot with them you’re making sure they’re placing your product in the right way so that consumers can see it, and that you’re getting the slot that you wanted to put your product in front of.”
We also chatted with Christiana about the premiumisation of the product and what this means for pricing.
Christiana: “The cogs of a coconut-based yoghurt, especially with a high content coconut yoghurt like ours, is at least 50% higher than cow’s milk yoghurt and there’s not a lot of room to squeeze there.”
Christiana: “We also believe that with this product there are enough consumers who would like to pay the premium, because your price tells them what sort of quality you are.”
Christiana went on to talk about how this may help rather than hinder the acceleration of plant-based products in China.
Christiana: “We also think it will help to build the prestige of plant-based and really communicate that this is a plant-based 2.0 product, not your cheap soy-milk product which has been around and is still quite prominent in daily lives here in China.”
Christiana: “Price communication gives consumers a note that this a different type of product, which we think can help the broader category make a mark.”
She goes on to mention that there has been a launch of plant-based yoghurts at lower prices and that a sudden drop in price (if achievable) may confuse consumers as to where the brand is trying to position itself.
Christiana: “The communication of the brand and the price need to be cohesive.”
As a first-time entrepreneur, we also wanted to ask Christiana what have been some of the moments that looking back on her journey so far, have brought feelings of pride and joy. She spoke about the messages she had been receiving from customers who hadn’t had dairy in years and that her products were able to bridge that gap and allow them to enjoy food again.
Christiana: “Being able to give people a way to think about that (what nourishes us) and take a moment, those are the things that I look for.”
To follow Marvelous Foods you can head to their WeChat channel (yeyo-yoghurt), or learn more on their website.