Firm steps up localized innovation, digital upgrades to capture mkt trends

The Chinese market remains pivotal to global food and beverage giant Nestle SA's global strategy, as the company intensifies investments and innovations to meet the evolving demands of Chinese consumers.

Kais Marzouki, Chairman and CEO of Nestle China, said the company is deeply committed to the Chinese market, which has become a cornerstone of Nestle's global expansion efforts.

"China is our second-largest market in the world and it really holds a very special place in our heart," Marzouki said. "Over the last five years, we've invested almost five billion yuan ($729 million) in China. We've localized our operations, manufacturing locally to better serve Chinese consumers, developing products tailored specifically for the market."

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The CEO's comments came amid a significantly evolving retail landscape in China, where Nestle is leveraging its deep local insights and global research and development capabilities to respond to the country's rapid shift from quantity-driven growth to quality-focused development.

This "China Speed" — a term Marzouki uses to describe the country's unmatched pace of innovation — has not only reshaped the local market, but also has profound implications for Nestle's broader business model, he said.

"The speed and dynamism of China are really amazing," Marzouki added. "It puts us on a completely different learning trajectory, one that we can then take to the rest of the world. China is an exciting place for us to be, full of opportunities."

In a recent earnings call, Philipp Navratil, Nestle's global CEO, highlighted the company's robust portfolio of both local and global brands in China.

"We have great brands in China — local brands, global brands and great capabilities — and the team is renewed with a lot of energy," said Navratil. "Obviously we all want China to come back to be a growth driver for the company."

Nestle's focus in China is squarely on identifying and capitalizing on emerging consumer trends — such as the pet economy, silver economy and rising health awareness.

According to a China Pet Industry White Paper, the consumer market size for urban pets (dogs and cats) reached 312.6 billion yuan in 2025, representing a year-on-year increase of 4.1 percent compared to 2024. It is projected that by 2028, consumer spending on the urban pet market will reach 405 billion yuan.

With increasing pet ownership, particularly among younger consumers, Nestle has introduced innovative products like the Pro Plan LiveClear cat food, which helps alleviate human allergies to cat hair.

Nestle is also banking on the silver economy, driven by the increasing number of elderly in the country. At the end of 2025, China's population aged 60 and above had reached 323.38 million, accounting for 23 percent of the total national population and surpassing the 300 million mark for the first time.

In response, the company is investing heavily in nutrition and health products designed to meet the needs of older consumers.

Its Yiyang Tanglv Milk Powder, which helps manage blood sugar levels in Chinese consumers with high-carbohydrate diets, is an example of a product developed through a collaboration between the company's R&D teams in Switzerland and China.

Health awareness is also rising, with consumers increasingly seeking products that support healthier lifestyles. At the 2023 China International Import Expo, the company showcased the Nestle NAN 3 Formula, which incorporates Swiss-developed hydrolysis technology to reduce milk protein allergenicity by 1,000 times.

In addition to innovation in product development, Nestle is accelerating its digital transformation efforts in China. The company is leveraging artificial intelligence to boost operational efficiency and gain deeper consumer insights. AI is already being used in Nestle's smart factories to optimize production processes, identify product defects and enhance worker safety.

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"China's evolving consumer trends provide us with new opportunities to create products and services that respond to these shifts," said Navratil. "We are enhancing our digital capabilities, both in product development and in our supply chain operations, to better serve the Chinese market."

Looking ahead, Nestle's growth strategy for China centers on its four key business pillars: animal nutrition, coffee, nutrition and health, and food and snacking.

As Nestle continues to localize its operations and develop more tailored products for Chinese consumers, the company remains bullish on the opportunities the market presents.

Yang Kaiyuan contributed to the story.

Contact the writers at wangzhuoqiong@chinadaily.com.cn