COVID-19 has significantly impacted China’s economy last year. But, we have identified the latest trends for the businesses to understand where to focus on China's next market opportunities. For us, as running a Chinese marketing business, a key success factor is our capacity to anticipate changes in the consumers’ behaviour and set up relevant long-term or short-term strategies, in order to adapt to the speedy recovery from last year in various industries.
The pandemic has directly impacted the consumer’s view of well-being, pushing them to pay more attention to the quality, nutritions and benefits of healthy food.
Dairy and plant-based dairy alternatives have benefited from the consumer’s focus on nutrition. Low or zero sugar beverage products are becoming more popular, particularly among young consumers. New raising brands such as Yuan Qi Sen Lin (元气森林), are promoting the concept of zero sugar and healthy eating. Classic brands like Coca-Cola and Sprite are also beginning to initiate their zero-sugar concept in their new products.
New habits and back to normal
There is an interesting mix of new habits and a desire to return to the norm during the Covid-19 pandemic. On the other hand, there is a switch of lifestyle from "eat out" to "cook home". We found a trend of using more cheese and butter to cook tasty food, resulting in a 60% year-on-year spike.
During the pandemic, soda drink brands such as Coca-Cola seems reached a peak in sales; this category soared by more than 20%. It has become a necessity for consumers at these trying times.
Some food categories such as ice-cream used to have a peak season in the summer while people were outdoors, but home purchasing has become a trend this year.
For the necessity brands, Instant noodles and frozen food grew in lockdown. It seems that they have continued to maintain their stock afterwards as these categories are still enjoying positive growth.
The categories which suffered a lot in lockdowns such as alcohol, coffee and Chinese pastries, have had a recovery post-pandemic. While there is a new normal now, it mixes with consumers keen to go back to the normal but also willing to adapt to some new habits. Brands need to understand this state of mind in their marketing communications.
The Online-to-Offline (O2O) is where a shopper can learn about a product online before purchasing in store. In 2019, 57% of urban families bought FMCG products via O2O, avg. 5.5 times per year. On average, people are willing to pay 30% more with O2O. The driving force for this behaviour is the convenience and the ability to get all the shopping items from one place. China is different from other countries in the respect that their online shopping platforms (such as Taobao, JD) host the full range of brands and categories.
The pandemic will positively impact the overall Online to Offline service and it is a very important channel that brands need to make sure that they understand and exploit appropriately if they are about to grow their business in the new norm.
In 2020, major retailers have reacted rapidly to the challenges from both the booming Chinese e-commerce and COVID-19 pandemic. They have done this through the expansion of their neighbourhood stores, strengthening the fresh food offer, as well as embracing new technologies and omnichannel deployment to enable better user shopping experiences.
Among the top players, Sun Art maintained its leading position thanks to RT-Mart’s recovery, recording a market share of 7.2%. Despite a lukewarm performance in the total market, RT-Mart was able to drive shopping frequency by tapping into Alibaba’s Online-to-Offline infrastructure and shopper traffic from Taobao.
Yonghui (supermarket chain) maintained robust growth of 19% in Q2 2020, achieving a historic market share of 4.9%. Most other regional players showed an equally strong performance. Bubugao Group (Food, shopping mall, supermarket) also achieved remarkable growth of 10.9% in Q2, driven by an increased user base. To achieve this, BBG has not only expanded its fresh food range but also offered the choice of both store collection and home delivery to further attract new shoppers.
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