Since the outbreak of Covid-19, there have been several shifts in consumer behaviour and preference in China’s food and drink market. This article looks at some of these trends, providing examples and predictions for the future.

It is important to realise that Chinese customers generally conduct a great degree of research into products prior to purchase. Brands need to ensure that detailed product information is readily available online and in Chinese, such as ingredients and the types of certifications that either the brand or product has received.

The health revolution

Although Chinese consumers have long been on a trajectory towards healthier diets, Covid-19 caused the focus on health to skyrocket. Especially among Chinese youth, healthier food and beverage offerings are becoming a core driver, with many looking for keywords like “low fat” and “low sugar”, and “0 fat”, “0 sugar” or “0 calories” in relation to their drinks. Many consumers are now showing an increased willingness to pay premium prices for products that are considered healthy.

The push for healthy products is not just among snacks and beverages, but also for instant or ready-to-eat meals or meal replacement products. More than ever, Chinese consumers are looking at food and ingredient labels prior to purchase and conducting research on each of the ingredients.

“0% sugar” is clearly displayed on the packaging of yogurt from the brand Simple Love. Source: 简爱酸奶Simplove on Weibo

 The ‘she’ economy

Over the past several years, China has seen the emergence of the ‘she’ economy. With a higher level of education and income, the more than 400 million Chinese women that are aged between 20-60 years old are increasing their consumption power within the food and beverage market.

Previously, women were often in charge of purchases for the entire family, but now they are becoming more willing to make purchases for themselves. Therefore many brands have begun developing products aimed at perceived female interests, including meal replacement products, zero fat and zero sugar beverages, as well as protein bars and milkshakes among many other offerings.

Milk alternatives

Plant-based milk alternatives have stepped into the spotlight in China, as more Chinese consumers become familiar with products such as oat milk, almond milk and rice milk. This is in addition to Chinese consumers expanding their view on soy milk, a traditionally popular beverage in China, beyond a simple breakfast item. In fact, the plant-based protein beverages market in China saw an 800% surge in year-on-year growth in 2020.

An advert for Oatly oat milk. Source: Oatly on Weibo

As cafes have risen in prominence in China, particularly in tier 1 cities, most locations offer milk alternatives, further popularising plant-based milk options. Part of the reason for this surge may be due to increased market education and exposure to Western drinking habits, in addition to the high percentage of Chinese consumers who are lactose-intolerant and prefer to avoid traditional milk.

Meat alternatives

Over the past decade, China has emerged as a heavy consumer of meat, with Chinese consumers eating 28% of the world’s meat supply and half of its pork. However, plant-based meat alternatives are beginning to make an appearance, slowly growing from a niche phenomenon to a more widely accepted lifestyle decision among Chinese consumers.

The outbreak of diseases such as Covid-19 and swine flu, an increased awareness of the environmental impact of consuming meat, and the belief that plant-based alternatives are healthier, are all factors contributing to the growth of this market.

Source: Beyond Meat on Weibo

In 2021, the plant-based meat market in the Asia Pacific region was valued at RMB 1.1 billion, of which China contributed RMB 780 million – more than 70%. When looking at the rest of the world, China already accounts for 53% of the global meat substitute industry compared to the 5.5% contributed by the US.

With that said, although the market in China is large, new brands need to face the challenges that come with China’s history of eating soy alternatives to meat due to the influence of Buddhism. Therefore, new brands need to continue to conduct market education to differentiate themselves, while also understanding under which circumstances plant-based meat alternatives are most likely to be consumed. Some of the top identified consumption scenarios include in hot pot, during Chinese-style barbecue, as snacks, and in prepared foods (ready-to-eat and ready-to-cook offerings).

The coffee and tea obsession

Tea has always been a staple among Chinese consumers, but coffee is rapidly becoming more widespread, growing at a rate of 15% annually, compared to the global growth rate of 2.2%.

Coffee drinkers tend to be white collar workers aged between 20 and 40 and living in higher-tiered cities. They are more educated and have higher disposable income. Gen Z and millennial drinkers are interested in novelty experiences, which means they will seek out new cafes and new methods of drinking coffee. Depending on the region in China, consumers can differ in terms of which factors they place more emphasis on, for example new concepts, pricing or quality.

The expansion of the coffee market is not limited to cafes, but also includes at-home drip coffees and ready-to-drink (RTD) canned options. In fact, China’s RTD tea and coffee market is estimated to reach a market size of RMB 182 billion by 2023.

Even as coffee consumption rises, tea consumption has not been left behind. The demand for tea has continued to rise, with new flavours and ways of drinking tea becoming popularised through the expansion of tea and beverage chains like Hey Tea and Gong Cha in China. In 2021, the sales value of domestic tea consumption reached RMB 300 billion.

Chinese consumers are increasingly looking for new experiences and flavours from the food and drink products they buy. As a result, brand loyalty to food brands has dropped, and new product development has become essential to staying ahead of the competition. This is especially true as the food and beverage market in China becomes more and more saturated, with both foreign and domestic brands vying for consumer attention. Prior to market entry, brands need to ensure that they understand the Chinese consumers that they want to engage and know the trends that they can take advantage of to capture attention and interest.

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s market research services can help you build knowledge and understanding of the Chinese market prior to investment.

This article first appeared in the sixth edition of RedFern Digital’s magazine, The Red Edition

The post The biggest trends in China’s food and drink market appeared first on Focus - China Britain Business Council.

As the repercussions of the Covid-19 pandemic continue to impact people in China, young, urban consumers are increasingly acknowledging the importance of self-care – and buying products to help them on their wellness journey. People are looking for solutions to previously ignored issues such as anxiety, insomnia and work-related stress, and putting more effort into looking after themselves.

“There has been an attitude shift in China post-Covid,” Joanna Zhou, China Manager for Holland & Barrett, tells FOCUS. “Especially after the recent strict Covid lockdowns, people are reprioritising health.” And it is not just fear of the virus that is driving this shift. It comes at a time when many people in China – particularly Gen Z – are questioning the value of the country’s all-or-nothing 996 work culture, which leaves little time for exercise or nutritionally balanced meals.

Despite this revaluation, people continue to lead hectic work lives, and as a result, interest in products to improve sleep quality or combat the effects of repeated late nights such as melatonin is growing. Holland & Barrett has observed that ‘sleep’ as a sub-category is one of the top three categories that Tmall is promoting.

With time at a premium, Zhou says that many consumers are looking for convenient, on-the-go wellness solutions, i.e., products that they can consume “in the gym, in the office, on the go and at night.” This includes protein drinks and nutrient dense snacks, as well as vitamin supplements in the form of gummies or jellies.

For Chinese consumers, prevention is better than cure

When it comes to health supplements, young Chinese consumers are sophisticated and well-educated. “Rather than generic solutions, they are looking for targeted solutions for immunity or bone health, for example, or probiotics with a range of benefits,” says Zhou. Consumers often compare the formula, dosage and ingredients of different overseas and Chinese brands to find the product that best fits their wellness goal. As a result, brands need to clearly market the specific functionalities and selling points of their products.

Compared to the UK, Chinese consumers are more likely to take supplements for prevention, rather than to cure existing conditions. As Zhou notes, the concept of yangsheng in traditional Chinese medicine, which can be loosely defined as a sort of holistic approach to self-care that targets the root causes of conditions rather than the symptoms, has always been influential in China. “While international brands have often struggled to find common ground with TCM, the current focus on wellness actually offers unique opportunities to tap into this cultural value within the Chinese market,” says Pearl Zhu, UK Sector Lead, Retail & E-Commerce, China-Britain Business Council.

Prevention is also the watchword in the skincare market, where anti-ageing products are not exclusively reserved for those of advancing years. “Chinese consumers are willing to invest in anti-ageing products from a younger age,” says Zhou, pointing to the popularity of products containing grape seeds or rose hips.

How to market wellness solutions in China

For Holland & Barrett, influencer marketing has been key to accessing the company’s target consumers. “We work with different influencers across different social platforms, with clear purposes for each collaboration. We make sure individual influencers have shared target consumers that are aligned with our brand positioning,” Zhou says. This targeted approach extends to e-commerce, where Holland & Barrett targets health-conscious affluent consumers in Guangdong, Shanghai, Zhejiang, Jiangsu and Shanghai via cross-border e-commerce platform Tmall Global.

She cautions that healthcare brands need to think carefully about the positioning of their content, especially when introducing new products or products with technical formulations. “There needs to be a fine balance between hardcore educational brand content and light-hearted content that taps into social and cultural phenomena.”

Holland & Barrett has also seen success working with influencers who create British lifestyle content, taking advantage of the brand’s popularity among current or previously UK-based Chinese consumers, particularly students. “For Chinese consumers pursuing a British-style lifestyle, it may be one of only a few ways to experience a taste of the UK while China’s zero Covid policies are still in place.”

Call +44 (0)20 7802 2000 or email enquiries@cbbc.org now to find out how CBBC’s Launchpad service gets your company boots on the ground in China quickly and cost effectively.

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The consumer health foods market in China is heavily regulated by the Chinese government. Despite this, the market value amounted to RMB 2.9 billion (£338 million) in 2020 and can still be considered a promising market, expected to continue to grow annually by 8.5% between 2021-2025. In October 2021, the sales revenue for the overseas food and supplement market was greater than RMB 1.1 billion (£128.5 million), and during this year’s Double 11 (Single’s Day) shopping festival alone, the total sales volume of imported health supplements reached an impressive RMB 2 billion (£233.6 million).

The most popular product form for health supplements is still tablets, capsules, powders, granules and liquids. It is worth noting that the chewable or gummy format has also been demonstrating strong growth recently. Some of the newer brands in the health foods category that are popularising chewables and gummies are American vitamin brand Olly, and Australian brand Unichi. Unichi has differentiated itself by focusing on its “bear gummies.” In innovating their product formats and moving away from traditional capsules, these brands have attracted the younger generation, which has allowed them to achieve fast development in the China market.

What are the most popular health food supplements in China?

The categories and health effects that Chinese consumers were most concerned about during this year’s Double 11 shopping season included heart health and other cardiovascular issues, bone and joint care, beauty nutrition (e.g., supplements aimed at strengthening hair and nails), and probiotics and other microbial supplements.

According to Alibaba’s 2021 Tmall Healthcare Trend Report, products addressing hair loss, weight loss and a lack of sleep also continue to be popular categories. Sales of sleep aids, including supplements, sleep patches and electronic devices, demonstrated a 220% growth rate this year. This feeds into the growing backlash again China’s notoriously gruelling work culture.

Alibaba Health also identified a 56% rise in healthy foods that are conveniently packaged to eat on-the-go, including products such as sesame balls, bird’s nests and goji-berry beverages. The report described their growing popularity as part of the “fragmented healthcare” trend, meaning increasing numbers of Chinese consumers are looking for products or treatments to manage their health in their spare time.

An advertisement from the front page of Australian supplement brand Unichi’s Tmall Global page

What are the top five health supplement brands in China?

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