The China Skinny team was out and about this past week taking in the latest trends, innovations and happenings in China’s food & beverage and craft beer scene. Attending last week’s SIAL China and Craft Beer China gave us the opportunity to reflect on how the industry has developed since the 2016 editions. Through this three-part series we will share our observations and insights into the notable trends driving the market.
The health trend is still going strong in China. With 72% of consumers last year worrying that the food they eat is harmful to their health, brands are quickly adapting to offer healthier products. With the health trend well-established for several years now, new products trying to capture untapped healthy niches caught our interest.
From quinoa crisps to fruit snacks, organic offerings to natural, healthy desserts, the range of healthy food and snack options was bigger than before. Meat products were a particularly contentious area, with Canadian meat producers touting superiority over their U.S. counterparts, which they attributed to healthier farms and safer processing. Health is clearly being promoted across a wide variety of products with more detail and attention given to individual selling points.
Nuts and dried fruit are healthy and popular snacks in China with 40% of urban Chinese consumers eating more nuts and seeds this year compared to Fall 2016. Nuts and dried fruits were ubiquitous this year but compared to last year flavoured products were far fewer. Past years touted a swathe of flavour combinations, from honey butter almonds to chili pistachios and candied walnuts. This year, the field was dominated by plain, shelled nuts. Additionally, the nut exhibitors lacked slick marketing with many staffing booths operating solely on hired helped, displaying unattractive bowls of nuts and QR codes with no added engagement. Fun mascots, WeChat connected games, and cool sample dispensers were all absent; a missed opportunity for B2B marketing.
Innovative flavours in oils, honeys and drinks were prevalent. From orange, avocado and cedar nut flavoured honey to creamed honey in a tube, honey was one of the most experimental categories. Oil had a strong showing with flavoured olive, hazelnut and walnut oils. Flavoured olive oil was also presented in a convenient spray-able canister. When it comes to oil use, Chinese consumers re-purpose it well beyond just eating. However, we spotted only one olive oil booth that also displayed their olive oil based skincare. The brand manager noted that the skincare products had received positive reviews from the Chinese audience but hesitation regarding the ‘boutique’ price.
Fusion drinks were popular with many touting the health card by adding nutritious ingredients to make the offerings more interesting. Many of these drinks combined their products with home-sourced ingredients to give brands provenance as a further avenue to market. Maple syrup infused cranberry juice from Canada, Australian fruit cocktails and fresh French fruit and vegetable smoothies were all available. One of the more innovative products was Dip and Sip straws from Hungary that delivers flavour that stays in the straw until you suck. Straws were available for both water and milk.
Frozen products were more prevalent than years prior. Russian ice cream, Italian gelato and Californian ice pops were all available and luckily giving out samples! The ice cream was typically marketed as a treat whereas the ice pops took the note of healthiness, offering dairy-free and fruit and vegetable variations. Domestic players also had a strong showing in frozen categories. Most of the products present were straightforward with little experimentation.
The variation of frozen products coupled with a complete hall dedicated to cold chain logistics demonstrates how serious China is taking logistical development. Increasing demand of fresh food, particularly through B2C ecommerce, continues to drive growth in the cold chain industry. It is expected that by 2020 the cold chain industry will be valued at RMB 400 billion allowing delivery to both big and small cities all over China.
China’s fast growing and dynamic market offers abundant opportunities, but consumers are diversifying along with brands. The health trend still going strong. Ever-growing product innovation and introduction means a more crowded market. That requires a smart entry or expansion. Get in touch with China Skinny if you’d like to know more about how we can assist in your specific product category, product innovation or China plan.