New Research Examines Food and Beverage Purchasing Decisions in China

bowl of colorful chinese veggies with noodles

The homebody mindset, product cost and renewed interest in home cooking and immune health are shaping the new food and beverage landscape in China

As more countries begin to lift COVID-19 restrictions, consumers in China, which is in the recovery phase, are signalling their eating habits may be permanently changed. Concerns about health and the rapid digital adoption of safe, contactless channels have shaped a ‘homebody’ mindset and are influencing consumer spending and shopping habits in the short and long term as people reassess what they’re eating and where it’s from.

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To cut through the noise and speculation around these new consumer food and beverage behaviours, at the end of April 2020, Kerry conducted primary research on pre- and post-COVID-19 habits in Tier 1 and 2 cities in China, specifically Nanjing, Wuhan, Chengdu, Guang Dong, Shanghai and Beijing.

Avinash Lal, Market Research and Consumer Insights Director at Kerry APMEA and a lead author of the new research, sat down with Ming Rodrigues of KerryDigest to share data and insights on what global food and beverage industry players can expect in the coming months.

The pandemic has seen multiple consumer insight reports on China. How different is Kerry’s proprietary research?

Avinash: Our objective is to understand change in consumption behaviour, not sales. We need to discern that while people might have bought more in the initial months of the crisis, due to panic buying and stockpiling, it does not necessarily mean they are consuming more.

KerryDigest: What do the findings reveal?

Avinash: Interestingly, with a few exceptions, there is no significant change in consumption across food, beverages and meat. But while consumers are sticking with familiar categories, they are more discerning and careful with their budget and look for value for money, especially since many are now regularly buying ingredients to cook meals at home rather than eat out. However, our research found a few notable shifts, especially among those who used to consume specific products frequently.

Carbonated and non-carbonated beverages saw a significant decline amongst heavy consumersthose who consume more than once a daybut there was no change among regular and less frequent users. Heavy consumers of meat snacks are also indulging much less.

There was also a marked decline of 6% among regular consumers of fish, seafood and meat snacks. Meanwhile, consumption of food sub-categories such as snacks, ice cream and desserts, dairy products, confectionery and bars remain unchanged.

Health and wellness, driven by the need for protection, are primary drivers of consumer behaviour with cost consciousness coming in second.woman eating nutrition bar

KerryDigest: Can you identify the key drivers of this consumption behavioural pattern?

Avinash: Health and wellness, compelled by the need for protection, are primary drivers. Next is cost consciousness due to reduced confidence in the financial situation. In March, 64% of consumers rated their health and that of their family as most important; a month later in April, that figure rose by 3%. Concern over high cost of living went up a notch from 42% to 43%. Higher priced private labels or house brands like Sam's Club and Metro are falling out of favour as people are more cautious with spending, given the hit to the economy. Bolstering this is an increased focus on food safety and efficacy of ingredients, with the importance of food product safety inching up by 2% to 48%.

Regarding food safety and efficacy of ingredients, what do consumers value?

Avinash: Limited human interaction during production and distribution of food items is most important, surging by 23% following COVID-19. Other parameters that saw a major jump were the quality of certifications of manufacturing plants where food is produced, proven health benefits of ingredients and natural or organic certifications.

KerryDigest: Immune health continues to be top of the agenda, with rising interest in health and preventive medicine.

Avinash: Yes, strengthening immunity remains a key focal point. The figures bear that out: we see a significant 6% increase in interest in immune-boosting products and health supplements.

People are leaning towards natural immunity-enhancing ingredients like turmeric, garlic, ginger, carrot and green tea. The popularity of these ingredients is reflected in our proprietary artificial intelligence platform, Trendspotter, which is a social listening tool.

Chinese consumers also regard probiotics and proteins as good for health, with 45% drinking lactobacillus beverage to support the immune system and 60% believing protein to be an immune booster. Currently, fruit tea, fruit juices and fruit gummies and candies are popular categories associated with immune strengthening ingredients. This presents a huge opportunity for food and beverage manufacturers to look at other categories to deliver on the benefits.

Overall, consumers in China are discerning, willing to pay more for food with high quality functional ingredients if they boost their overall health, and they are drawn to customized offerings such as food and beverages created to target specific, shared health concerns.

KerryDigest: When it comes to dining out, what are consumers’ considerations?

Avinash: While there are people who continue to eat out, there is a notable decline among regular and occasional diners across different types of outlets, including food courts, hot pot restaurants, branded international outlets, branded Chinese outlets like HaiDiLao and cafes. Research shows a 10% drop in the number of people dining out once a week in food courts, 9% less in branded eateries and 8% for cafes.

Adding to the drop in frequency, a large percentage of consumers want to spend less at both local and international branded food outlets. The ‘homebody’ mindset is evident: right now, 78% of consumers prefer to cook at home, whether from scratch or relying on meal kits, up from just 5% in March. This includes not just preparing regular meals but also indulgence food and café-style beverages.

Home delivery, on the other hand, remains un-impacted, both in terms of frequency of delivery and spend per person.

cooking stir fry at homeThe ‘homebody’ mindset is evident with 78% of consumers preferring to cook at home, whether from scratch or by relying on meal kits, up from just 5% in March.

KerryDigest: Retail has seen shifts on several levels, can you elaborate?

Avinash: At retail, average spending per person at wet markets remains unchanged. With branded products, pre- and post-COVID-19 spend remains the same. However, as I mentioned before, more consumers say they want to spend less at higher price points on private labels and house brands. And for the first time, supermarkets have fallen out of favour as online shopping has gained huge momentum, with more consumers preferring to buy online than through brick and mortar stores.

Generally, Chinese consumers still seek new food experiences such as flavoured beverages, dessert-inspired beverages and bubble coffee. In these areas, spending remains steady. Indulgence, as a way to counter stress, is visible.

Consumers want premium food and beverage products like steak and speciality coffee. However, price sensitivity is not to be overlooked as many are reluctant to fork over huge sums of money and are looking for a more affordable premium line of products.

One growing movement we see is a resurgence of national pride which is shifting favour towards local brands, with 76% now saying they want to support local businesses by buying more Chinese brands. In the past few months, the pandemic has changed consumers' confidence in foreign products, with a majority believing that imported products are not necessarily safer. This sense of localism could encourage the pivot towards a more Chinese-oriented lifestyle.

To learn more about how COVID-19 is affecting the food and beverage industry, including changes in consumer preferences and purchasing behaviours, visit Kerry’s COVID-19 resource page.

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