“Design in China”​ e07 – Simple Love 简爱酸奶 – The Breakthrough Chinese Yogurt Company

This series of articles named “Design in China” will provide a snapshot of new DTC Chinese brands. I’ll review emerging brands in China and outside of China. But all these brands are designed and created from China.

What does going Direct-to-consumer (DTC) mean? Selling direct-to-consumer, commonly referred to as DTC or D2C, means you’re selling your products directly to your end customers. Sellers bypass any third-party retailers, wholesalers, or any other type of middlemen to deliver their products.

Recognizable examples of DTC brands include Casper, Warby Parker, and Dollar Shave Club. However, there are now thousands of sellers undertaking this unique approach. These DTC brands are leveraging mobile and digital channels that are bypassing traditional sales models.

DTC brands are usually sold exclusively online or specialize in a specific product category. However, top growing brands are expanding to other channels like their own storefront or exclusive partnerships with other retailers.

Branding over Sales Performance

China consumption has evolved already. Many start-ups from mainland China experienced new way of purchasing clothes but also electronic accessories and food for years. They’ve already generated high volume of online sales and are now developing more sophisiticated and creative product and online ad campaign to elevate their brand. From a strong product positioning they are creating strong brand to retain existing users and attract new consumers. I’ll comment on the one I found interesting and worth sharing with followers here. #ChineseCulturalConfidence

These brands understand why brands are so important? #为什么要做品牌

“The most important thing really, is this notion that the consumer has changed, and really a lot of retailers are way, way, way behind the curve,” said Paula Rosenblum, co-founder of retail advisory firm RSR Research – source CrunchBase

Simple Love – The Breakthrough Chinese Yogurt Company

The rise of consumer demand for healthy, safe, and sustainable food is gradually making its way to the East, with the world’s second-biggest economy picking up on the trend. But it’s not merely a trend, as, at this point, numerous food and agriculture startups in China are raising major funding to expand their brands. One such name is Simple Love (Jian Ai), a company producing healthy, fresh yogurt products. It has recently raised $124 million in Series B funding with Proterra Asia, the Asian arm of Proterra Investment Partners.

It’s no surprise that global investment firms are making their way into the Chinese food and agriculture market as Asia’s food spending is poised to reach $8 trillion by 2030. Food is a basic necessity, and as a result, unlike many other industries, it’s far less volatile.

Guangzhou-based Honest Dairy Group Co. Ltd owns Simple Love. The company currently produces a line of high-protein and probiotic yogurts, and yogurt-based drinks. Interestingly, the company uses cow milk in its products, as opposed to plant-based milk, which is emerging as the alternative for all kinds of traditional dairy products with a CAGR of 8.8 percent through 2031. Like other Asian countries, many in China are lactose malabsorbers, meaning they cannot easily digest lactose, the sugar in milk. But Simple Love is tapping into China’s newfound appetite for milk. The demand for dairy-based products has been growing steadily in the country, with China now becoming the second biggest consumer of dairy. And yogurt is partly responsible for this new dairy tolerance and acceptance wave. As a fermented dairy product, it is relatively easier to digest, which is why it’s the most popular dairy-based product in China.

Simple Love plans to use the investment to improve its supply chain. Their products are already available on the shelves of every supermarket in every Chinese province. They have set up a new manufacturing plant in Hebei with a massive production capacity. The injection of $124 million by Proterra is just another showcase of how investors across the borders view Chinese businesses and want to tap into the immense potential of its population’s buying power. Besides local investors, companies like Honest Dairy are attracting capital beyond the borders of China. 

The brand stands out from the competition by offering relatively healthy products. For instance, high-protein yogurt caters to the needs of fitness-conscious consumers who want to consume a protein-rich diet. Similarly, yogurt drinks provide the nutritional benefits of yogurt in fluid form, which adds convenience. In particular, low-fat and low-sugar food products are gaining popularity in China, with consumers opting for healthier options on the shelves. Simple Love’s zero-sugar coconut flavor yogurt was an instant hit. It’s also worth noting how the brand distinguishes itself with its short list of ingredients. The packages mention the ingredients with the phrase “there is nothing else” in Mandarin. This smart labeling emphasizes the use of basic, simple, and safe ingredients in their product line, hence the name Simple Love.