It is getting harder to tickle the taste buds of Chinese consumers due to their rapidly-changing preferences and the lightning-fast pace of social and cultural trends. This market dynamic means that China’s food and drink industry is constantly being shaken up, pushing market players to keep their fingers on the pulse of consumer palates and cater to the preferences of savvy shoppers like never before.

With cooling summer treats coming to the forefront under the blazing sun, Dao Insights takes a closer look at three food and drink categories gathering pace as the country heats up.

Ice cream

Ice cream has always been the best remedy for a hot summer’s day, but it has been undergoing a transformation in China in recent years. China’s ice cream market has grown into the world’s biggest, with a market value surpassing RMB 160 billion (£20.08 billion) in 2021.

This growth has brought about a market reshuffle, and the glory of formerly sought-after foreign players is fading, due in part to scandals such as Unilever’s Magnum being accused of having “double standards” after it was found to be using powdered milk instead of fresh for its products in China. As a result, Chinese consumers are turning their backs on imported brands, and there has been a rise in homegrown ice cream brands, with local players like Chicecream, Zhongjie1946 and Modern becoming the country’s most popular choices.

A Weibo poster for Chicecream’s low fat, low sugar chocolate ice cream

While this new market structure has yet to be solidified, the industry is certainly going through a round of “premiumisation” driven by increasing consumer awareness of ingredients and health benefits, sustainability, and the socio-cultural value of products. This has given rise to more sustainable practices in the industry, such as adopting low carbon manufacturing technology and using more organic, plant-based ingredients, as well as cutting down on “unhealthy” components such as sugar and fat.

There is also an increasing trend of crossover marketing among ice cream brands with the goal of rejuvenating and refashioning their images to cater to the social requirements of China’s young generations. This has given birth to innovative ice cream flavours including bubble tea, coffee and alcohol. Other trends include icy snacks in the shape of places of cultural or historical interest, such as the Temple of Heaven’s iconic circular Hall of Prayer for Good Harvests, which creates a strong connection to Chinese culture that appeals to nationalistic young consumers, as well as plenty of shareable photo opportunities.

Summer energy drinks

Energy drinks are emerging as the dark horse in China’s drink industry, spurred on by the country’s growing enthusiasm for fitness. At home fitness in particular took off thanks to Taiwanese singer-turned-live streamer Liu Genghong and his up-tempo workouts that got popular during recent lockdowns.

China’s energy drink market is reported to have reached RMB 51.3 billion (£6.44 billion) in 2021, with strong penetration five years in a row and a compound annual growth rate of over 10% – the fastest in the beverage category. As the temperatures go up, energy drinks are also expanding their foothold in the market, popular among fitness fanatics keen to restore electrolytes in the hot weather.

For a long time, energy drinks, whether intentionally or not, tended to be designed for male consumers, reflected in their flavours and packaging designs. However, the sector is changing as young people, in general, pursue exercise and healthier lifestyles. Female consumers contributed to a three-fold year-on-year increase in sales of energy drinks in 2021 with white collar, professional middle-class and Gen Z crowds forming the backbone, according to a report by Alibaba’s e-commerce arm Tmall Innovation Centre.

Like the evolution of the ice cream industry, the needs of a more health-conscious generation is what is driving the sector forward. Thanks to the perceived “scientific” solutions they provide, these products have also been drawing in non-sporty consumers, with numbers in the new consumer market growing 12-fold on Tmall between 2019 and 2021.

Chinese new-style tea

Chinese consumers have long been fond of milk tea drinks, but these beverages have been evolving beyond a simple combination of tea leaves and dairy in recent years. The “new-style” tea category has expanded to include tea-based drinks made with fresh fruits, edible flowers and textural add-ins like tapioca balls and fruit jelly, enhancing their health and aesthetic value.

First emerging in 2016 and pushed by local market disruptors such as Hey Tea and Nayuki, the new-style tea trend has been growing rapidly over the past few years and is set to reach an estimated market value of RMB 294 billion (£36.9 billion) by the end of 2022, and hit RMB 375 billion (£47.07 billion) in 2025.

A perilla and peach-flavoured tea drink created by Hey Tea in collaboration with popular drama series A Dream of Splendour

Even American fast-food giant KFC has hopped on the bandwagon with the launch of its first tea-only spin-off brand in Suzhou. Called Grandpa’s Comfy Tea House, and with a logo featuring a cartoon version of Colonel Sanders holding a bubble tea, the brand focuses on healthier drinks made with fresh fruit and rice milk with zero trans fats.

China’s fever for new-style tea has also been fuelled by the recent Chinese historical drama A Dream of Splendour (Meng Hua Lu), which became an immediate nationwide hit, clocking up 1.6 billion views in just two weeks. The ancient Chinese tea drinks seen in the drama soon attracted consumer interest, especially among the young, who are curious to figure out how those “elegantly-made” drinks were produced, particularly one made of perilla leaves and peach. Chinese tea brands like Hey Tea and Nayuki were quick to identify this trend, introducing collaborative new drinks featuring the two most craved flavours, which generated hundreds of millions of views on China’s biggest microblogging site, Weibo.

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 food and beverage market prior to investment.

The post Three hot summer food and drink trends in China appeared first on Focus - China Britain Business Council.

The question of how to reach more new people – more customers – is one that pops up in marketing meetings across every sector imaginable, no matter whether the brand is selling lipsticks, chicken wings or museum tours. So, why not just tap into someone else’s audience? Understandably, a partnership with a competitor isn’t going to work, but what about a partnership with a brand that sells something completely different? It might sound crazy but it could open up a new audience that might not have previously been looking in your direction. Here are three of 2020’s unlikeliest brand collaborations.

KFC x Karl Lagerfeld’s limited edition chicken bags 

Fast food outlet KFC has become a master in cross-industry partnerships and a front runner of marketing campaigns in China. Collaborations have included environmentally friendly campaigns with Cargill to produce plant-based products, and working with sustainable fintech platform Ant Forest to allow users to plant virtual trees when buying a KFC breakfast. While these seem like perfectly acceptable and standard examples, KFC’s collabs have expanded to the outright bizarre. Earlier this year, they partnered with Crocs to produce a pair of fried chicken shoes in New York.  

More recently, KFC China has turned to the luxury industry to celebrate KFC’s 80^th anniversary. The chosen brand was fashion giant Karl Lagerfeld, who produced two limited-edition bags. The witty new version of the original Karl Lagerfeld design included a replacement of the central Karl Lagerfeld logo with Kentucky Fried Chicken, and Paris replaced with Kentucky. The bags feature three red stripes, representing the trademark colours of KFC. 

Only three Kentucky Fried Chicken bags were sold this month on KFC’s Taobao official online store. However, the controversial products helped both brands gain more exposure and attract consumers’ attention on Chinese social media. 

However, bold moves aren’t always appreciated by Chinese consumers (see Balenciaga’s tacky Qixi campaign). One of Karl Lagerfeld’s fans commented: “I think this collaboration is bizarre and also farcical. Karl Lagerfeld is clearly a brand producing high-market and luxury clothing items, but they have chosen to work with a brand built on fast food for the masses. I don’t know who would spend 2,890 RMB (£300) on a chicken bag.”  

How are retailers catering to millennials?

Only three Kentucky Fried Chicken bags were sold this month on KFC’s Taobao official online store. However, the controversial products helped both brands gain more exposure and attract consumers’ attention on Chinese social media. 

Honor of Kings x MAC’s murderous make-up collection 

Having grossed a record $1.6 billion in 2019, Honor of Kings, produced by Tencent Games exclusively for the Chinese market, is one of the world’s most profitable mobile games. Also skilled in co-branding projects, this time the game – focused on battles and killing – paradoxically chose to collaborate with beautifying experts MAC.  

The special make-up collection comprised a highlighter, lipsticks, eyeshadow palettes and pro-palettes in hues designed to represent the key male characters in the game. For example, character Bai’s unfailing confidence can be seen in the ‘brave’ red lipstick and orange-pink eyeshadows. Character Shouyue’s cheerful and empathetic personality is represented by orange-brown eyeshadows and the Marrakesh lipstick. Complete with packaging inspired by their personalities, the limited-edition make-up was formulated to offer fans an immersive experience.

Why limit yourself to inter-industry partnerships when you could be having this much fun?

MAC is certainly onto something with this collaboration – the popularity of mobile gaming has grown rapidly this year, thanks to COVID-19, so working with the gaming industry can produce lucrative results. The hashtag “MAC x Honour of Kings” hit 630 million views and 5 million comments on Weibo, and the lipsticks sold out on MAC’s Tmall official store an hour after launching. The collections have also been made available in the UK and the US, which represents the success of the cross-brand campaign.  

Pantene x National Museum of China’s ancient beauty styles  

As a result of COVID-19 restricting the number of in-person visitors, museums and cultural institutions across China are embracing technology more than ever. Various technology-driven tools are being employed to offer audiences a vivid cultural experience from their homes, and this includes kooky collaborations. For example, China’s leading tourist attraction, Beijing’s Forbidden City, has already worked with McDonalds, KFC, JD, Eleme, Huawei, Tencent, MINISO, Tmall, Nongfu Spring, and Kindle in a bid to appeal to a wider audience. 

Why China loves brand Britain

So, taking a leaf out of the Forbidden City’s playbook, the National Museum of China opted for silky smooth locks in their collaboration with shampoo brand Pantene. The campaign was based on a famous painting within the museum’s collection, “Qian Qiu Jue Yan Tu”, completed during the Ming Dynasty, and features almost 70 influential female figures in Chinese history. The campaign video featured one of these women, Yang Guifei, who was known as one of the four beauties of ancient China. Netizens were impressed with the actress’ performance showing off the beauty of ancient dance, traditional makeup, and – who would have guessed – her luscious flowing hair.  

This interesting partnership worked as well as one could expect from a museum and a shampoo brand. The message consumers might take away? Pantene is attempting to make its product appear more highbrow and appeal to a more upscale clientele. There have to be benefits for both parties involved, of course.   

Cross-industry partnerships show China’s endless possibilities 

Expensive fried chicken-themed bags, character-reflecting lipsticks and the glossy locks of ancient Chinese beauties show that the possibilities for co-branding in China are endless. Why limit yourself to inter-industry partnerships when you could be having this much fun? Working with other well-known brands, across all industries, can help companies expand their audiences, promote sales and develop a reputation as a creative and fun brand among Chinese consumers.  

Dao Insights publish the newest news, case studies and opinion articles on all things China. Take a look on their website and sign up to their bite-sized weekly newsletter.

The post Three surprising brand collaborations  appeared first on Focus - China Britain Business Council.

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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