What are the most important food and beverage trends in China to watch out for? The FMCG industry is by its very nature, well, fast-moving, and in China that happens at (what else?) China speed… So what should you be considering?
Already since around 2014, there has been a huge move towards ore premium products in China, and post pandemic (if we can already speak of that in the country at a time when localised lockdowns are still ongoing) consumers have become even more aware of what they put into their bodies. This makes premiumisation the longest standing of the food and beverage trends in China.
Driven by the Rising Middle Class
This trend to premiumisation is clearly driven by the increasing purchasing power of the rising middle class. China’s middle-class is actually well documented, and its sheer scale means businesses worldwide get excited about the opportunities the market can still offer.
Back in 2000 China’s middle class made up just 3% of the population but in the last decade it has grown to over 740 million people with spending power of over 10,000 US dollars per capita in 2019. As of 2022 the middle classes spending power that represents 24% of China’s GDP.
This group is more willing to spend money on quality products, and premium brands and they also have a high level of trust and brand awareness.
Importance of Lower Tier Cities
It’s estimated that around 90% of Chinese consumer growth in the next couple of years will come from lower tier cities. (You can find my previous article on this topic here). These cities represent 45% of total household consumption in the country. In Guiyang for example, household consumption has doubled in the last few years.
Domestic travel has also contributed to the continued success of lower tier cities as domestic tourists are bringing money and opportunities to less developed regions in the country. This trend will probably continue as right now not only due to the borders being closed but also because people are choosing different lifestyles, some people become digital nomads, choosing to move to more remote places. And some chose to stay in their villages or small cities.
Live streaming for example, eg streaming from farms or from areas of natural beauty became popular and that’s where young people are needed. No longer do China’s youth necessarily need to move to the huge tier 1 cities in order to have a successful career.
This trend has accelerated during the pandemic as Chinese consumers’ focus turned inwards, and pride in Chinese achievements increased The FMCG sector is one that has benefited hugely from this, especially the food and beverage industry. 10 years ago (or even 5) there was still a huge distrust in the quality of local products, which has in many cases been replaced with national pride.
There has been a huge upswing in new products such as snacks and bubble tea flavours, based on traditional combinations with a modern twist and Millennial consumers love them.
Baidu searches for Chinese brands more than doubled in the last decade. This idea of going back to the roots and being proud of Chinese culture also prompted a wave of nostalgia inspired licensed packaging. Perhaps this was a comforting reminder of childhood during the lockdowns, as the sentiment always sells well during difficult times. Eg White Rabbit (a famous sweet brand) or the way IP collaborations have reminded consumers of childhood memories.
Another IP collaboration that capitalised on the nostalgia of young consumers was HeyTea with the historical drama “Dream of Splendor”.
Innovations driven by consumers
Tmall and JD (as well as many other platforms) have also explored the expansion of guochao market, encouraging local players in the categories to co create products together with their consumers and launch a lot of interesting collaborations. There are specific pages on all their ecommerce sites so if you would like to buy guochao influenced products you can go to that specific section.
This idea of co-creation with consumers is a really interesting one that could almost be a trend in it’s own right.
China is the world’s largest ecommerce market with ecommerce platforms, digital payments, digital healthcare and other services relying on data. Consequently data consumption in the country keeps growing and that leads to the rise of super apps and their expansion into ecosystems.
The younger Chinese consumers are enthusiastic about improving digital services in their daily lives. For example, they innovate and drive a social plus category where a consumer becomes much more than just the consumer but also the microinfluencer, the R&D department (see my point above about co-creation), the business partner, the salesperson, etc.
It’s not only Gen Z who are open for digitalisation; China’s elderly and middle class are also very digitalised. 11% of China’s total internet population in December 2020 were seniors up from just six in March 2020! It is estimated that at least two thirds of total seniors in China will be online in one form or another by 2030. That is 15.9 of the total Chinese population today.
Food and beverage brands can obviously use this big data generated online and the digital footprint to create a customised, better product for different audiences.
Chinese consumers lead exceptionally busy lives, especially in tier 1 cities where the daily commute may take up several hours each day. Add on top of that the unexpected restrictions and lockdowns this year and access to basic goods has often been disrupted and unavailable.
Convenience consequently became one of the most important food and beverage trends in China. Pre-pandemic many people didn’t really cook at home as apartments tend to be small and it’s convenient and easy to eat out. Being confined to home at the drop of a hat for sometimes weeks on end forced people to cook and consider alternatives to take out.
Even for ready to eat meals, consumers demanded healthier options with the pandemic focusing attention on health as in other regions of Asia. According to Radii, an increased number of consumers bought ready meals but pepped them up by adding for example fresh fish or vegetables.
How can you build more convenience into your product offers? Can you make the product easier to prepare at home, offer free delivery in certain regions, participate in subscription schemes or just completely come up with a 100% product innovation??
Having healthier options of absolutely everything became extremely important – remember that in Traditional Chinese Medicine, food has an important role to play in health so culturally you need to consider this point.
Remember that the concept of healthier has to be culturally adapted as well for China. So whilst sugar free products, reduced fat or low sodium items are becoming more popular as well as plant based milks and meat alternatives then certain ingredients may be perceived as causing “internal heat” or cooling too much in certain situations and therefore not be considered too healthy.
Meat consumption is starting to reduce (China consumes around 1/3 of the world’s meat, including half of the pork) – this grew strongly in the past 50 years with purchasing power, but historically China has a huge amount of vegetarian and vegan traditional dishes.
Whilst alcohol consumption is still increasing (China is forecast to surpass 10l per capita by 2030!) young people are turning to lower or non-alcoholic alternatives.
How can you offer healthier alternatives for the Chinese market? Make sure you do your research, especially if you are considering incorporating local ingredients and make sure you understand the cultural implications.
Of course packaging is a prime topic here, but there is also an increasing awareness for organic food or free from antibiotics grass-fed meat for example. Chinese consumers are also becoming increasingly sensitive to the concept of greenwashing so it’s important that brands embrace sustainability for its own sake and not primarily for marketing purposes.
Additionally, due to increased awareness of sustainability among China’s younger generations, the country’s market for plant-based meat substitutes has boomed. It is expected to reach 17 to 24 billion USD in 2030.
Especially younger consumers expect more and more personalisation from the brands they identify with – this is valid also in the food and beverage space. The most obvious example is Coca Cola with personalised names on the bottles but it could also include giving them a memorable and exciting experience in the shop (online or offline) or creative, adventurous flavours that are co created (think of something like MyMuesli).
How can you build this into your brand strategy?
Marketing for Food and Beverage Trends in China
Remember that trends can change & evolve extremely fast, nowhere more so than in China, so you really need to observe the market closely in order to keep on the pulse.
As with many other areas of doing business in China, you need to take care of your relationships with your customers. Not only are Chinese consumers amongst the most spoilt and picky in the world, the market is becoming saturated so you need to ensure you maintain customer loyalty.
You need to invest in your CRM systems in order to not go unheard in the noisy environment. How can you leverage the technical solutions which are available to tailor personalised messages to your loyal fans?
Make sure you use the data and insights which are available to send appropriate content and messaging to consumers.
WeChat offers the advantage of “private traffic” (communities where outsiders can’t see in) so you can use this, together with high levels of automation to create engaging content for your consumers.
KOLs and Microinfluencers
For several years now it was accepted that in order to really give a brand a huge push on social media, you needed to work with 1 or 2 of the top influencers (KOL = key opinion leader) together with a whole raft of smaller bloggers and so-called microinfluencers.
That balance seemed to have changed with 3 of the biggest KOLs being taken off air in summer 2022 after coming into conflict with the Chinese authorities. However just this week (mid-September 2022) Austin Li reappeared again in a livestream, to smash sales out of the park… What does that mean going forward? Rather too early to tell I’d say (Viya is under investigation for tax infringements so that’s less likely to be solved so quickly).
However, it still seems like you will need a whole hoard of micro-influencers in order to create the word of mouth buzz needed on social media to drive your brand’s awareness levels.
Give a peek behind the curtains
This has long been a successful technique in China marketing. Chinese consumers love to see behind the scenes shots or videos of how products are made, talking about the brand story or learning about the heritage of the region the products originate from.
This desire has become even stronger in the last couple of years now that people are unable to easily travel themselves.
Think about how you can increase the traditional “know, like & trust” factor for your consumers by showing them the human side of your brand. That doesn’t mean you have to give away your secrets, but demonstrate what makes you unique as a company as well as showing how you work.
Corporate Social Responsibility
As mentioned above, the sustainability aspect has become increasingly important to Chinese consumers so you need to demonstrate in your marketing that you “walk the talk”.
It’s not simply about the environment though, it’s about showing that you are invested in China and care about your Chinese consumers. That means ensuring that you are supporting regions affected by natural disasters and truly taking care of your teams on the ground in the country.
The BS metre of Chinese consumers is highly developed so make sure that you are taking genuine action, not just alibi steps, or you could find yourself at the centre of a media scandal, the likes of which you’ve never seen…
Pioneer New Marketing Methods
I mentioned above that the Chinese love to adopt new technologies so make sure that you keep your marketing activities fresh by adapting to the latest ideas. You can’t simply apply your strategy from other markets in China and adapt it to the channels available, you probably will find that China will drive your ideas about how to market in the rest of the world.
How can you build AI augmented reality and using the metaverse into your marketing? Look at how the Chinese are using bots and consider if they are appropriate for your brand.
Technology should first and foremost make the customer experience smooth and as convenient as possible.
FMCG Industry in China is Evolving All the Time
As with other industries, the China FMCG market is evolving fast meaning that in order to be successful long term you need to constantly evolve and develop. It demands not only agility, but also understanding of the market needs in your international HQ. It’s too easy to fall into the trap of believing that your product or brand doesn’t have to consider food and beverage trends in China because you have a long tradition of standing for Italian quality or UK tradition, but that isn’t enough anymore. It’s a little Darwinian but you need to evolve to survive.
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