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China’s Packaged Food Market: Defining Characteristics (Part 2) podcast

The recent HKTDC Research survey on the mainland packaged food market [1] identified nine major consumer characteristics [2], which have been examined more closely in a two-part analysis. The first part of the analysis looked at those characteristics numbered one to five. This second part discusses the remaining four (numbered six to nine).

The sixth characteristic to be identified is that small packs and individual packs are becoming increasingly popular due to consumers’ growing preference for diversity and attractive packaging. The seventh is that consumers are looking not just for better quality but also trendiness. The eighth is that, in pursuit of quality, consumers are paying more attention to freshness and as a result, long “best-before dates” (the length of time between a food product going on sale and the expiry of its best-before date) are becoming less popular. Lastly, because of the availability of a diversity of brands, an ample supply of products and better informed consumers, stockpiling is becoming much less common.

6. Small and Individual Packs Increasingly Popular

Larger packs used to be popular with consumers because they provided better value for money than smaller packs. However, survey respondents participating in the focus groups highlighted the growing popularity in the last few years of small packs and individual packets. Among the comments made in the focus groups were these:

 

“Nowadays I tend to buy different product varieties (in small packs) at the same time, instead of larger packs of the same product.”
“Small packs are easy to carry and shopping is so convenient these days.”
“Even rice and oil are bought in small packs, so each time I can choose the freshest on offer.”
“Today there are many more individual packs, which are hygienic and clean. Even though they are more expensive, it is acceptable.”

The survey’s findings make it clear that, when it comes to food products, people are becoming less concerned with economy and are more interested in diversity and attractive packaging. 81% of respondents agreed with the statement: “Instead of bulk purchase with good value for money, I prefer buying products in smaller or individual packaging because they look more attractive and hygienic”. The higher the income of the respondents, the more they like buying food products in small, individual packets.

Chart: Small and individual packs increasingly popular
Chart: Small and individual packs increasingly popular
Table: Small and individual packs increasingly popular (by city)
Table: Small and individual packs increasingly popular (by city)
Table: Small and individual packs increasingly popular (by gender, age and income)
Table: Small and individual packs increasingly popular (by gender, age and income)

7. Better Quality and Trendiness

Consumers are, it seems, not only looking for attractive packaging design, but also pay attention to the “material” (quality) and “trendiness” of the packaging of food products. Survey respondents said they would opt for packaged food with sturdier and better quality packaging. The following comments were heard at the focus groups:

“Flimsy packaging can easily cause damage to the food while it’s being transported. In the case of milk, that can mess up the whole crate of milk.”
“Flimsy packaging gives people the impression of low quality.”
“Packaging should be sturdy and yet easy to open, so the material must be high grade.”
“Nowadays people don’t mind paying more for the packaging. High quality packaging can put people’s mind at ease; it also shows that the quality of the company’s products can’t be too poor.”

Other comments made it clear that trendy packaging attracts both youngsters and adults. Among those comments were the following:

“If the packaging is trendy, it means that the product is keeping abreast of the times.”
“Some packaging has trendy internet slang printed on it, which makes it seem very interesting.”
“Some trendy styles are targeted at students, while others are more interesting or positive, which appeal to consumers of all ages.”

High quality packaging and attractive, trendy packaging design, then, can help strengthen the image of a company or brand of food products. In the survey, 78% of respondents agreed with the statement: “The material used for packaging food reflects the quality of the product, and the packaging of good products is normally high quality and trendy.” Female respondents in particular tend to judge the quality of a food product by its packaging. The higher the income of the respondents, the more they reckon that the material of the packaging reflects the quality of the product.

Chart: Opt for packaged food with better quality packaging
Chart: Opt for packaged food with better quality packaging
Table: Opt for packaged food with better quality packaging (by city)
Table: Opt for packaged food with better quality packaging (by city)
Table: Opt for packaged food with better quality packaging (by gender, age and income)
Table: Opt for packaged food with better quality packaging (by gender, age and income)

8. Shorter Best-before Dates

Consumers have always attached great importance to the date of manufacture of food products, but in the past, that mainly expressed itself in concern about whether the product’s best-before date had expired or not. Even the most demanding shoppers would do little more than avoid products which were close to reaching their best-before dates. Some consumers would even intentionally choose products whose best-before date was about to expire as they were normally sold at a lower price.

But it now seems that consumers are shying away from goods which have “long best-before dates” – i.e. a long period between the date of production and the expiry of the best-before date.  In the survey’s focus groups, these comments were heard:

“Usually it is clear that the longer the best-before date the more preservatives have been added, which is harmful to human health.”
“I would do my best to buy products that have a short best-before date and require refrigeration.”
“Products may have relatively long best-before dates but I would usually pick those which are no more than half-way before their expiry dates.”
“I hope to buy fresher products, so apart from paying attention to the date, I would also opt for small packs and would not stockpile.”

These comments reflect the increasing demand among consumers for freshness when buying packaged food, and the greater attention they are paying to their health. 80% of respondents in the survey agreed with the statement: “Compared with products whose best-before date is expiring soon, I prefer to buy fresher – albeit costlier – products of the same type.” And 74% agreed that: “Relatively speaking, I prefer packaged foods with shorter best-before dates, because that means less additives and fresher.”

Older consumers and those with higher incomes are more likely to infer that a shorter best-before date means a food product is fresher and contains fewer additives. Perhaps unsurprisingly, the higher the income of the respondents, the more willing they are to pay more for fresh products.

Chart: Increasing demand for freshness
Chart: Increasing demand for freshness
Table: Increasing demand for freshness (by city)
Table: Increasing demand for freshness (by city)
Table: Increasing demand for freshness (by gender, age and income)
Table: Increasing demand for freshness (by gender, age and income)
Table: Prefer packaged foods with shorter best-before dates (by city)
Table: Prefer packaged foods with shorter best-before dates (by city)
Table: Prefer packaged foods with shorter best-before dates (by gender, age and income)
Table: Prefer packaged foods with shorter best-before dates (by gender, age and income)

9. Stockpiling a Thing of the Past

It used to be common for consumers to stockpile goods, particularly of a certain brand at promotional sales. That is now largely, it seems, a thing of the past thanks to the availability of a diversity of brands, an ample supply of products, and better informed consumers. The following comments were made at the focus groups:

“We no longer fix our eyes on a certain brand only, but choose different brands of food.”
“Today different brands often offer promotional sales, resulting in the availability of numerous brands for us to choose from.”
“These days we eat ‘fresh foods’ (those with relatively short best-before dates), buy in small quantities and buy again after finishing.”
“Today I buy more, but only as reserves and not stockpiles.”

78% of survey respondents agreed with the statement: “I don’t like to stockpile for the sake of saving money but would rather buy again after finishing the food; freshness and trying different brands are now my priorities.” Older respondents were more likely to say: “I don’t like to stockpile and would rather buy again after finishing the food” than their younger counterparts.

Chart: Stockpiling a thing of the past
Chart: Stockpiling a thing of the past
Table: Stockpiling a thing of the past (by city)
Table: Stockpiling a thing of the past (by city)
Table: Stockpiling a thing of the past (by gender, age and income)
Table: Stockpiling a thing of the past (by gender, age and income)

Conclusion

This latest HKTDC Research consumer survey on the mainland packaged food market discovered four leading market trends and nine consumer characteristics [3]. Among the key findings are:

Sampling food from around the world/diversity: trying different brands or products not only offers more experiences, but also provides different nutrients.

Packaging design/small packs/individual packs: trendy, well-designed and attractive packaging proves to be more attractive to consumers.

Quality certification: the importance attached to quality certification has clearly gone up.

New products/new flavours: consumers’ appetite to try new products is strong. New products/new flavours of all kinds of food prove to be more attractive to consumers.

As far as sales channels are concerned, online shopping platforms are the fastest growing and are becoming better established. Despite their declining popularity, supermarkets/hypermarkets are still the leading offline channel for consumers buying packaged food. A number of offline sales channels have also emerged, including small-sized imported food supermarkets, general snack stores, and medium- to high-end gourmet supermarkets.

As for consumers themselves, it is clear that in the five packaged food categories covered by this survey (grains, oils and dried products, seasoning products and sauces, convenience food, snacks, and dairy products), three market segments show the strongest purchasing power and greatest desire for trying new products. These are females, the post-90s generation, and high-income earners.

 

 

Appendix

Survey Background

Thanks to rapid urbanisation and rising incomes, China’s packaged food market has grown steadily over recent years. Today, mainland consumers place more emphasis on “food safety” and “healthy diet”. A more westernised lifestyle also has an impact on packaged food market development, offering opportunities for Hong Kong and international brands keen to enter or further expand into the mainland market.

The economic and social environment on the mainland has undergone significant change over recent years. To provide a useful reference for Hong Kong companies interested in venturing into the mainland market, HKTDC Research conducted a consumer survey in October 2017 to gauge the changes in consumer preferences, spending mentality and trends of the mainland packaged food market. This updates the findings of a similar study commissioned in 2013.

Packaged foods consist of numerous varieties. The survey covers five major categories, namely dairy products, seasoning products and sauces, snacks, grains, oils and dried products, and convenience food (including chilled and frozen food).

Methodology

The survey was carried out during October 2017 in 10 major mainland cities. A total of 2,400 consumers were polled by online questionnaire. Before conducting the questionnaire survey, six consumer focus group discussions were held in Shanghai, Wuhan and Chengdu (two in each city). The objective of the focus group discussions was to further understand mainland consumers’ spending mentality by way of qualitative analysis.

Table: Design of Focus Groups
Table: Design of Focus Groups
Table: Design of Online Questionnaire Survey
Table: Design of Online Questionnaire Survey
Table: Average Monthly Household Income of Respondents
Table: Average Monthly Household Income of Respondents
Table: Marital Status of Respondents, by City
Table: Marital Status of Respondents, by City
Table: Education Level of Respondents, by City
Table: Education Level of Respondents, by City
Table: Occupation of Respondents, by City
Table: Occupation of Respondents, by City

[1]  See Appendix for details of the survey.

[2]  For details of the other five characteristics, please see China Packaged Food Market: Defining Characteristics (Part 1)

[3]  For details of the four leading market trends and the first five of the nine consumer characteristics, please see China’s Packaged Food Market: Major Consumer Trends and China’s Packaged Food Market: Defining Characteristics (Part 1).

Content provided by Picture: Billy Wong
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