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

The recent HKTDC Research survey on the mainland packaged food market [1] identifiednine major consumer characteristics [2], which have been examined more closely in atwo-part analysis. The first part of the analysis looked at those characteristics numberedone 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 arebecoming increasingly popular due to consumers’ growing preference for diversity andattractive packaging. The seventh is that consumers are looking not just for better qualitybut also trendiness. The eighth is that, in pursuit of quality, consumers are paying moreattention to freshness and as a result, long “best-before dates” (the length of timebetween a food product going on sale and the expiry of its best-before date) arebecoming less popular. Lastly, because of the availability of a diversity of brands, anample supply of products and better informed consumers, stockpiling is becoming muchless common.

6. Small and Individual Packs Increasingly Popular

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

“Nowadays I tend to buy different productvarieties (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 onoffer.”“Today there are many more individual packs, which are hygienic and clean. Even thoughthey are more expensive, it is acceptable.”

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

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7. Better Quality and Trendiness

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

“Flimsy packaging can easily cause damage to the food while it’s being transported. Inthe 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 canput people’s mind at ease; it also shows that the quality of the company’s products can’tbe 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 veryinteresting.”

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“Some trendy styles are targeted at students, while others are more interesting orpositive, which appeal to consumers of all ages.”

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

8. Shorter Best-before Dates

Consumers have always attached great importance to the date of manufacture of foodproducts, but in the past, that mainly expressed itself in concern about whether theproduct’s best-before date had expired or not. Even the most demanding shoppers woulddo 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 wasabout 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-

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before dates” – i.e. a long period between the date of production and the expiry of thebest-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 beenadded, which is harmful to human health.”“I would do my best to buy products that have a short best-before date and requirerefrigeration.”“Products may have relatively long best-before dates but I would usually pick those whichare 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 alsoopt for small packs and would not stockpile.”

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

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

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9. Stockpiling a Thing of the Past

It used to be common for consumers to stockpile goods, particularly of a certain brand atpromotional sales. That is now largely, it seems, a thing of the past thanks to theavailability of a diversity of brands, an ample supply of products, and better informedconsumers. 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 ofnumerous brands for us to choose from.”“These days we eat ‘fresh foods’ (those with relatively short best-before dates), buy insmall 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 thesake of saving money but would rather buy again after finishing the food; freshness andtrying 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 theiryounger counterparts.

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Conclusion

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

Sampling food from around the world/diversity: trying different brands or products notonly offers more experiences, but also provides different nutrients.

Packaging design/small packs/individual packs: trendy, well-designed and attractivepackaging 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. Newproducts/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 growingand are becoming better established. Despite their declining popularity,supermarkets/hypermarkets are still the leading offline channel for consumers buying

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packaged food. A number of offline sales channels have also emerged, including small-sized imported food supermarkets, general snack stores, and medium- to high-endgourmet supermarkets.

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

Appendix

Survey Background

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

The economic and social environment on the mainland has undergone significant changeover recent years. To provide a useful reference for Hong Kong companies interested inventuring into the mainland market, HKTDC Research conducted a consumer survey inOctober 2017 to gauge the changes in consumer preferences, spending mentality andtrends of the mainland packaged food market. This updates the findings of a similarstudy 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 driedproducts, and convenience food (including chilled and frozen food).

Methodology

The survey was carried out during October 2017 in 10 major mainland cities. A total of2,400 consumers were polled by online questionnaire. Before conducting thequestionnaire survey, six consumer focus group discussions were held in Shanghai,Wuhan and Chengdu (two in each city). The objective of the focus group discussions wasto further understand mainland consumers’ spending mentality by way of qualitativeanalysis.

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[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 consumercharacteristics, please see China’s Packaged Food Market: Major Consumer Trends andChina’s Packaged Food Market: Defining Characteristics (Part 1).

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