Since the outbreak of COVID-19, Chinese consumers have experienced drastic changes in the way they purchase and prepare food. With the spread of the virus being gradually contained in provinces outside Hubei, some of these temporary phenomena will disappear, but some will remain – and have long-term effects on the industry.

The boom in fresh produce e-commerce

Even before the outbreak of COVID-19, the popularity of wet markets in China had been declining. It is ever more difficult to find these markets in the centre of Chinese cities, and the visitors are mostly older people with the luxury of time. The virus outbreak has just dealt another blow to the offline retail market, and especially wet markets.

Authorities have banned the sale of wild animals and it is expected that stricter hygiene regulations will be imposed on markets around the country. As well as new regulations, consumer confidence in wet markets will be at an all-time low.

Online shopping for groceries has a relatively low penetration rate in China – around 3.8 percent in 2018, compared to 7.1 percent in Japan or 8.3 percent in South Korea. The lock-down has forced many residents – even older consumers – to familiarise themselves with e-commerce apps that sell fresh produce. At the time of writing, visiting offline supermarkets isn’t safe. E-commerce platforms including Miss Fresh, 100me, JD’s express home delivery, and apps developed by large retail groups have observed booms. Miss Fresh has allegedly achieved over 300 percent of its normal Chinese New Year sales in this period.

A rise in self-service supermarkets

At the end of February, a number of self-service mini-marts appeared at the entrance to residential compounds in major cities across China. Fresh fruit and vegetables were available for purchase from sealed cupboards. The food is filled up overnight by distributors (some possibly via autonomous vehicles) and customers than help themselves to the produce, paying via WeChat Pay. No human contact needed. Expect self-service supermarkets to take off in the near future.

Hot meals preferred

A belief that the COVID-19 virus can be killed in high temperatures has led to a current preference for hot meals over cold dishes. This might have an impact on ready-prepared food or food items that are meant to be eaten cold, including salads, some sandwiches etc. The catering sector, as other sectors that require in person gatherings, suffer the greatest impact from the virus outbreak. Home deliveries will continue to be popular in the near and mid term future.

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The annual ritual of record online shopping that is China’s Singles Day always occurs in the same week that FHC (Food and Hotel China) – the country’s best established international food and drink trade fair – convenes in Shanghai. Although a coincidence, it highlights the market’s appetite for quality nutrition and innovative branded products. About 10 percent of all online sales in China are Fast Moving Consumer Goods, and each Singles Day a new champion on Chinese online platforms for food product innovation is unveiled.

As China’s prime trade exhibition for international food and drink brands, FHC Shanghai always attracts a sizeable group of UK exhibitors and visitors and this year was no exception. Some 60 UK brands, operating in the dairy, alcoholic drinks, beverages, tea, coffee, confectionery and snack sectors, all took part in FHC sector initiatives during the week of 11^th – 15^th November. Alongside this, CBBC had a strong programme of content and events to maximise UK companies’ presence in the market during that busy week.

Singles Day (11 November) saw the CBBC food and drink sector team lead UK companies on a retail safari through four of the leading grocery stores in Shanghai. Store managers and procurement leads at G Super, Ole, City Super and Alibaba’s “new retail” format Freshhippo met with UK visitors to introduce the stores’ operations and discuss the demand for imported products.

UK products on the shelves of these Shanghai retailers are still limited to spirits, snacks, cheese and children’s nutrition and the message from all hosts reinforced the need for more variety in order to cover hot commodities in the Chinese market such as other dairy, high protein products and a wider variety of snacks.

On the last day of FHC, the question of how to succeed in China’s super competitive grocery space and reach millennial and younger consumers beyond the first-tier cities was among the topics discussed at a CBBC masterclass with RedFern Digital and omni-channel marketing group Pingcoo.

UK companies had the opportunity to deep dive into the purchasing habits of “small-town youth” and learn why now is the best time to start focusing on regional centres beyond the biggest metropolises. Both speakers emphasised the need for personalisation and the relevance to China of products being launched. Personalisation will no longer be an option but a requirement for foreign brands, according to Ryan Molloy, CEO of RedFern Digital.

As the three-day FHC show was coming to an end some 20 UK companies were busily preparing to take part in CBBC’s Meet the Buyer programme. These included gin companies like Zymurgorium, Warner’s Distillery, Aribikie and Orkney Distilling, and Lye Cross, Somerdale and Grasslands Farming on the dairy side. Meanwhile, a cluster of leisure food and confectionary companies – Infinity Brands, Eat Real, Keat Chocolate and Park Cakes – and Rare Tea and Nairobi Coffee rounded off the UK offer with some distinctive products.

During the course of four very busy hours UK brands met with Chinese buyers across different channels – distributors, retailers and e-commerce platforms, including Summergate Wine and Spirits, Bakkavor, Namchow, TMall, G Super and many more. Penguin Guide, a mobile application with wide outreach and an authority on gourmet experiences and new food and drink products was present at the event to learn about UK brands, as was Whisky Magazine.

It was “the best-organised network session I’ve been to,” commented Michael Nield of Warner’s Distillery.

With FHC now looking to launch regional shows in Chengdu, Guangzhou and Tianjin next year, the food and drink sector is only getting busier. Trends in China change faster than anywhere in the world and the importance of first-hand market intelligence through market visits such as these around FHC cannot be emphasized enough.

For more information on the F&B sector, contact Antoaneta Becker at antoaneta.Becker@cbbc.org

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