The Chinese food market welcomes a new year. What should we expect in 2023? What categories are worthy of attention? What trends brands should follow? Here are ChemLinked’s answers to these questions.
Trend 1: low-calorie, low-fat and low-sugar products thrive
Stimulated by COVID-19, consumers have attached increasing importance to health in recent years. An investigation from 36Kr indicated that 57.4% of consumers would pay attention to the information regarding fat, sugar and calorie while purchasing food and beverages. In this condition, the food and beverage industry shows a trend of low-calorie, low-fat and low-sugar products. Baxy, a Chinese ice cream brand, rolled out sucrose-free ice cream. Chi Forest, a Chinese beverage brand, made its name through its zero-calorie, zero-fat and zero-sugar sparkling water. Lay’s upgraded its natural-flavour range of crisp last November by decreasing 50% saturated fat of the products and launched its initial chicken breast crisp featured in low calorie, low fat and high protein last December. The Health China Initiative 2019-2030 released by the State Council of China also implies that the Chinese government would restrict the production and sales of high-sugar products in the future and encourage the development of low and even no-sugar products. With the guidance of the national-level movement, Chemlinked believes that the research and development of low-calorie, low-fat and low-sugar products will be a trend in the food and beverage industry in the following years. But consumers’ requirements for tasty and joyful food and beverages will not reduce with the decrease of calorie, fat and sugar.
Trend 2: health regimen becomes a hot topic
Besides health products, consumers intend to keep health through the foods they eat in daily life. Snacks and drinks become two popular categories for the development of health regimen products.
The sales figure of novel health snacks on the Taobao and Tmall platforms reached RMB 1.35 billion in the first half year of 2022, with a 22.26% increase compared with the same period of 2021. The sales volume came up to 35.47 million in the same period, with a 30.89% increase.1 Snacks containing white kidney beans, linseed etc., are widely welcomed by consumers. White kidney beans can hinder the digestion and absorption of starch to help lose weight. Linseed is rich in Omega-3 fatty acids, which can promote cardiovascular health and reduce the risk of heart disease.In terms of drinks, many offline milk tea and coffee shops adds ingredients for health regimen like ginger, Chinese wolfberry, white fungus, etc. in their products. Some ready-to-drink beverage brands have also rolled out new health regimen products. For example, The Whole Thing, a beverage brand in China, has unveiled a product containing a piece of ginseng. With consumers’ regard for preserve health, more health regimen products are to be expected in 2023.
Trend 3: functional food keeps in demand
The Chinese functional food market size in 2020 arrived at USD 45.42 billion, with CAGR reaching 9.47% from 2012-2020.2 On the one hand, the fast-paced lifestyle and working pressure in cities promote the development of functional food for health improvement. For example, office workers with high workload tend to have irregular work and rest schedule, and not do any exercise, which seriously affect their digestive health. Probiotics are effective in solving digestive problems with the function of adjusting intestinal flora balance and maintaining intestinal health. Euromonitor estimated that the probiotic market would have an annual increase of 15% in China and the market scale would come up to RMB 90 billion in 2022. In the recent two years, the upstream and downstream enterprises in the Chinese probiotic industry chain have increased their market research and development in probiotics. On the other hand, the comparatively high earning in cities and people’s chase for lives with better quality foster functional products in beauty. A study focusing on female over 30 found 30% of interviewees purchased double oral beauty products in 2022 compared with 2017. A trend released by Natural Grocers indicated that an increasing number of consumers would adopt more comprehensive methods towards their overall skin health, which will foster the demand for oral beauty products containing collagen, antioxidants, etc.
Trend 4: the consumption of mood food increases
Amid the burden from work, family, pandemic, etc., consumers have a demand for food that could relieve pressure and bring happiness. In neurology, positive moods like happiness, relief and satisfaction are mainly controlled by four hormones: dopamine, endorphin, serotonin and oxytocin. which means food contains sugar, caffeine, alcohol can bring delightful mood to consumers. Coffee, as a representative food which provides caffeine, is attractive to consumers.
The demand for coffee in the Chinese domestic market is rising year by year according to the customs data. The import volume of coffee to China from January to October 2022 was approximately 53,242.7 tons. Qianzhan predicts that the coffee market will rise to RMB 217.1 billion in 2025. There had been 117,300 coffee stores in Chinese mainland by May 2022, with 15,000 stores newly added compared to the same period of the previous year and a year-on-year increase of 14.6%. The combination of fruit with coffee, tea with coffee, and a set menu of coffee and traditional Chinese refreshments like deep fried dough sticks, pancakes, etc., are popular among consumers.
But the thriving also brings competition. The coffee market in China is extremely competitive nowadays. Brands like Starbucks, Tims, Luckin, Manner etc. have been competing fiercely on the market. With abundant specialty coffee stores emerging, the competition has been intensified. Whereas, despite the competition, coffee brands still attracted 31 pieces of financial support in 2022, with the investment amount exceeding RMB 100 million for some brands such as Tims. It approves the coffee market is still promising.
Trend 5: sustainable development remains vigorous
In order to cope with global climate change, China proposed the goals “to peak carbon dioxide emissions by 2030 and to achieve carbon neutrality by 2060” (More details on Chemlinked). Driven by the goals and enterprises’ concern for environmental protection, a number of sustainable campaigns are come up with in food and beverage industry. Many food and beverage enterprises have carried out a number of sustainable activities from production, supply and consumption perspectives. Dairy enterprises are making efforts to reduce greenhouse gas emissions from cattle breeding to product production, such as building ecological farms, improving the energy utilisation rate in the manufacturing process, using sustainable packaging etc. Beverage companies are also taking steps such as founding zero-carbon factories, utilising recyclable materials, recycling empty bottles etc. to reduce carbon emissions (More details on Chemlinked). Under the guidance of China’s sustainable targets and enterprises’ awareness of social responsibility, more sustainable campaigns can be expected.
In addition, plant-based products, especially plant-based milk have developed rapidly in China over recent years, for a fairly large number of people Chinese people have the trouble of lactose intolerance and plant-based products generate less greenhouse gas emissions than animal food. The market size of plant-based milk was RMB 55 billion in 2020 with CAGR expecting to be 2.4% from 2019 to 2024.3 Oat milk is a shining star among plant-based milk products. In 2020, the market size in China reached RMB 1.75 billion, with a year-on-year growth rate of 153.6%. In 2021, the market size doubled with a year-on-year growth rate of 141.7%. Moreover, the market size is expected to keep rising in the next four years, with a year-on-year growth rate of about 50%.4 Meanwhile, a wide range of other plant-based milk like coconut, soybean, walnut, and almond milk is also welcomed by large quantities of consumers. Currently these plant-based milk products are applied extensively in coffee and milk tea stores. More different categories of plant-based dairy are to be expected in the following years.
Trend 6: pre-made dishes flourish
The market size of pre-made dishes in China was RMB 345.9 billion in 2021, with a year-on-year increase of 19.8%. In 2023, it was estimated to reach RMB 510 billion above a 20% increase rate.5 Pre-made dishes appear abundantly since the outbreak of COVID-19. The intermittent home quarantine and the decrease in offline consumption fostered more chances to cook at home. Consumers demand a more convenient way to cook dishes which need complicated cooking processes. Currently, brands in the frozen food industry, like CP Food and Anjoy Food, and in the chain catering industry, like Haidilao Hot Pot, Taier Chinese Sauerkraut Fish etc. launched wide varieties of pre-made food. Several electrical device giants like Gree and Galanz have planned to develop related equipment to support the growth of pre-made food.
The overall cancellation of COVID-19-related restrictions may decrease part of consumers’ need for pre-made dishes. But the eating habits and health awareness cultivated in the previous three years will still benefit this industry. Enterprises can attach importance to improving the flavour and safety of food in pre-made dishes so as to capture more market share.
Trend 7: rational consumption is pursued
The market size of near-expired food in 2021 was RMB 31.8 billion and was estimated to reach RMB 40.1 billion in 2025.6 In 2021, the near-expired food industry was developing at a more accelerated rate and attracted more capitals. Influenced by the uncertainties caused by the pandemic and economic pressure, consumers’ purchasing concept has transformed towards rational consumption. Currently, the cost performance of commodity determines the purchasing decision, instead of the popularity and celebrity effect. Brands with cost-effective products such as Luckin Coffee develop rapidly under this trend. A report released by QuestMobile indicated that in the China Double Eleven Shopping Festival 2022 consumers compared prices among different online shopping platforms when purchasing the products they want .
Trend 8: digitalisation offers highlights
With the development of digitalisation, more digital tools are applied in the marketing of food and beverage industry. Many brands like McDonald's, Mengniu Dairy and Naixue created their representative virtual characters. Some brands established virtual spaces to provide immersive experiences for consumers. For instance, coffee brand Seesaw founded a virtual coffee store on the brand’s tenth anniversary. The virtual coffee store displayed Seesaw cafe’s classic layout and limited tie-ins in a straightforward and extraordinarily vivid way, which effectively attracted a number of consumers. Heineken built a virtual brewery in its meta-space platform Decentraland and launched a 100% computer-generated virtual beer, "Heineken Silver". Consumers can also experience digital products under some brands’ marketing campaigns. KFC has creatively transformed its family bucket into a high-tech helmet and rolled out a brain wave measurement activity. The helmet could monitor the brain frequency of the wearer and an application linked to the helmet could analyse the pressure level of the wearer. As technology develops, more surprising digital methods can be applied to the food and beverage industry to attract consumers and offer enjoyable purchasing experiences.