PepsiCo has partnered with Jiangsu Rilong Food Co Ltd to establish an oat production facility in Jiangsu province as it aims to enhance efficiency and optimize costs, while strengthening its presence in China’s growing oat market.
The move to build the oat plant is in response to growing health conscious trend in China which leads to rising demand for premium oat products, particularly by seniors.
The new plant requires an investment of Rmb 500 million (US$68.6 million) and will occupy 100,000 sq.metres. It will have annual production capacity of 160,000 metric tons. Initially, it will produce more than 10 oatmeal varieties in diverse packaging options. The plant will commence production by end-2025.
PepsiCo’s global expertise combined with Jiangsu Rilong’s production and supply chain capabilities will aim to meet Chinese growing demand for nutritional cereal products.
Anne Tse, CEO of Asia-Pacific Foods, PepsiCo said, “This initiative aligns with PepsiCo’s commitment to the ‘Healthy China’ strategy, driving innovation in healthy foods and tapping into the ‘silver’ economy.” Earlier in 2022, PepsiCo partnered with the Chinese Nutrition Society to establish the ‘Chinese Nutrition Society – PepsiCo Nutrition Innovation Center’.This initiative focuses on cereal nutrition, gut health, nut-based products and healthy snacks.
Zhu Danpeng, an independent food and beverage analyst, said that demand for nutrient-rich and versatile foods like oats is propelled by 4 key aspects namely appearance, weight, nutrition and overall health management. Zhu highlighted the growing demand for oat-related products among the elderly in line with rising health awareness trend in the country.
Euromonitor International estimated the retail value of China’s hot cereals sector to reach Rmb 6.95 billion (US$959 million) in 2024, up 5% from the previous year. China oats market remains fragmented with the top 3 brands having a combined 51.3% share, suggesting ample room for growth. Mintel research also showed that Chinese consumers prefer natural ingredients in their products, as such oat-related products like plant-based protein drinks have good growth potential as they are perceived as being more natural than dairy-based drinks.
