Food and Hotel China (FHC), is one of the biggest trade shows in China and China Skinny was on the floor to scope out the latest trends, newest product entrants and to hear from attendees on their China experience. This year had less of the X-factor of editions past, but there were still main takeaways that hint towards new developments and indicate how ongoing trends are taking shape. Below are China Skinny’s top three takeaways from the 2017 show.
Everywhere one looked there was pizza and cheese at this year’s FHC show. While there is typically a good showing it seemed as if this year there was enough cheese to feed China’s 1.4 billion people. There were parmesan rings, mozzarella sticks and flavoured cheese as well as bulk cheese. Much of the cheese was topping the pizzas that were being slung left and right. To indicate the range of pizzas there was even something called “Cake Pizza”.
The vast number of cheese and pizza offerings bodes well for the growing out-of-home dining market. According to the 2017 China shopper report, the value of dining out grew 10% from 2013-2016 compared to in-home meal prep at 3% and food delivery a robust 44% over the same period. The fact that products such as cheese and pizza were ubiquitous signifies that consumers are becoming more adventurous and increasingly have a taste for Western style products when out and about. This is a good sign for direct-to-consumer food sales too. As ingredients and dishes become more common outside the home, it’s more likely the Chinese consumer will try, become familiar with, and eventually buy for in-home consumption.
Western-style offerings are typically far fewer outside of Tier 1 cities (Shanghai, Beijing, Guangzhou, and Shenzhen). But with improving cold chain logistics and increased familiarity, lower tier cities are quickly following suit. But the offerings must be tailored to each specific area. China Skinny research across Tier 1-3 cities has found distinctly different styles and offerings between restaurants which reflect consumer preferences and their choices while buying for in-home. For example, restaurants in Shenzhen tended to a lighter fare and more subdued restaurant design. Chongqing proved to be adventurous in fare and lively in atmosphere, compared to a more sophisticated experience and food in Shanghai. These are representative differences to take into account when selling nearly any consumer product in China.
Despite the clamouring over pizza and cheese the health trend is still going strong in China. It is estimated that China’s health food market will grow from ¥260 billion ($39 billion) in 2016 to ¥400 billion ($60 billion) in 2021.
More brands are positioning themselves as the healthy choice. Brands pushing the ‘healthy’ claim left much to be desired: many were too general in just saying they are the ‘healthiest’ or ‘the best’ which will be caught up by regulators who don’t allow superlatives. The relevant and differentiated positioning of a brand is vital as health foods are becoming less of a treat and more integrated into everyday diets.
While there are many brands trying to capture health-conscious consumers with general marketing, a few savvy brands were getting down to the core. Punchy, short claims are preferred among Chinese consumers. This is especially relevant for new-to-China brands, who are competing in an already crowded market.
Products lauding extra protein were among the most common targeted health products. The success of targeted products depends on a well-considered entry plan. Concepts like added protein may resonate with a specific target market, such as health and fitness aficionados. Other products used such claims as “gluten free”, something which is still early days in China.
In terms of other food products, the offerings were fairly standard. There were not as many inventive products or eye-catching packages as in years past. Additionally, a large majority of exhibition booth staff failed to spur excitement. If they engaged, they would meekly suggest to scan a QR code linking to uninspiring Official Accounts. Including a call to action, a personalized message or special offer to encourage engagement is likely to have gone over better.
In years past the number of inventive beverages have been impressive. This year there were only a small number of beverage innovations. A line of soy milk attracted a number of interested tasters and distributors while beautifully packaged Italian water is already selling in China and hoping to expand its presence to smaller tier cities.
China has become the largest bottled water market in the world, overtaking the United States in 2013, and it is projected to expand 58% by 2019. Coca-Cola, who sought to sell a $9 water in China earlier this year, is an example that just because a category is hot, doesn’t mean anything will sell. As Coca-Cola learned, price point isn’t everything, but it is a crucial part of the puzzle. Consumption habits vary by region, with domestic companies tailoring to meet the needs of local consumers.
The presence of foreign wines at FHC’s ProWine hall was notable. Australia, Italy, Chile, the U.S. and Canada all had a strong showing. The different offerings and regions were more expansive in years past. Exhibitors stated that interest was strong and knowledge among the passersby was stronger but still much education was needed.
Country of origin (COO) is vital in marketing wine and countries did well in presenting a strong front. But beneath the COO brands must remember Chinese consumers are still relatively new to wine culture. This can get tricky as Chinese consumers value a wine’s brand over its COO, grape variety or quality level. Zeroing in on consumers’ detailed perceptions of a brand’s qualities, including its COO, will help position wine brands to stand out among consumers. The wine sector in China continues to progress quickly and wine brands must keep pace to remain relevant.
The FHC show this year was as popular as in years past, but the lack of innovative products, packaging and marketing was notable. Staying inventive in your offerings and top of mind among Chinese consumers is an ever-evolving task. Get in touch to learn how China Skinny can help you enter or expand in China and for imaginative and resourceful marketing tactics.