Pink is the colour of spring and hope for 2020 in China

Spring has arrived in a world that is still in the grip of the COVID-19 epidemic. However, the epidemic is clearly on its retreat in China and the nation’s food and beverage suppliers are celebrating this with an outburst of pink-coloured products. This blog does not require a lot of explanation; the pictures speak for themselves. Moreover, this post is a good overview of China’s most popular foods and drinks at this moment.

Domestic brands

Mengniu Dairy

Yili Dairy

Shipin Puzi (nuts, seeds, etc.)

Xiangpiaopiao, the top manufacturer of the immensely popular milk tea

Bee & Cheery (Baicaowei) (snacks, candy)

Rio (cocktails)

Hsufuchi (candy, biscuits)

International brands

A commendable number of international brands is participating in this pink spring campaign.

Starbucks

Nestlé

Dove

Glico

Oreo

Lay’s

Hoegaarden

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation.

What Chinese food lovers love most

There are different Chinese expressions for people who love food in Chinese (as there are in English). A classic, more highbrow, term is meishijia, literally: ‘a person knowledgeable of good food’. This term is close to the English concept of gourmet. People like this do cook, but prefer to indulge in the better restaurants. The not only have good taste, but also do not lack of cash to fund their likings. In recent years, the term chihuo has become popular. It literally means ‘eat merchandise’. As I prefer an English translation over keeping a Chinese word untranslated, I will use the equally popular English term ‘foodie’ as the, more or less, equivalent for chihuo.

Like Western foodies, their Chinese counterparts do not just like to eat because they crave food, but because they have an interest in new flavours and textures, foods that are linked to things that are fashionable in other sectors of life, like art. They are focused on convenience and leisure foods, but although do not necessarily reject junk food, they are especially interested in novel foods that are ready to eat or at least easy to prepare, but are also healthier than the traditional street food. Attractive packaging is also valued.

Chinese foodies can be unexpectedly traditional in their taste. In many posts of this blog, I have mentioned the special status attached to imported food, which often has a special section in the larger Chinese supermarkets. The novel foods that Chinese food bloggers introduce are often improved, i.e. better packed, more nutritious, versions of traditional Chinese foods. In fact, you can get a good impression of what Chinese foodies like by surfing to the Trends page of my blog. All items introduced there have been taken from the accounts of Chinese food bloggers.

That page is serviced irregularly. I post a product that strikes me as interesting.  Recently (12/3/2020), Tmall, one of China’s leading online shops, has published a Top 20 Products like most by chihuo. I will share that list with you here, with a short explanation of each item. It will give you a valuable insight in what Chinese foods buy online now. The only point for attention in interpreting this list is the possible influence of the corona virus epidemic on this list. I will take it for granted here. Whenever Tmall publishes an update, we will be able to compare the new list with the one introduced here.

  1. River-snail noodles; a dish from Guangxi made from pickled bamboo shoots, dried turnip, fresh vegetables and peanuts and served in a spicy noodle broth flavoured with river snails.
  2. Turkey noodles; these are actually ordinary instant noodles originating from South Korea, so quite spicy. The Chinese media have shown contests in turkey noodle eating in 2019, which is probably the reason for the popularity of this product. Chinese love games and contests.
  3. Cherries; mind that the Chinese term here is chelizi (a transliteration of the English word) and not yingtao, the regular Chinese word. I have not (yet) detected a difference between berries offered in China under the name chelizi and those marketed as yingtao, but the former are praised a rare treasures. Well, as long as it sells.
  4. Instant noodles; I guess these are all instant noodles, minus the turkey noodles.
  5. Self-heating pots; these are ready to eat foods that can heat up by themselves through a chemical reaction started by squeezing the bottom.
  6. Spicy strips; this is real junk food. They are strip made from a starchy product mixed with chili. Reports have been published exposing the bad average quality of the hot strips, but they remain popular snacks.
  7. Self-heating hot pot; this is a special type of self-heating pot, emulating the popular hot pots eating in restaurants all over China. These usually are soups with chunks of meat, fish and vegetables.
  8. Hot and sour glass noodles; glass noodles are made from starch rather than flour; they are flavoured with pickled vegetables and chili.
  9. Boneless chicken claws; chicken claws are a regular item in the Cantonese dim sum; boneless prepared chicken claws are easier to eat as a snack.
  10. Hot pot stock; I already mentioned above that hot pot is immensely popular; hot pot restaurants and now also many seasoning companies, are producing chunks of fat with all the seasoning in it; just throw it in your pot at home, heat it, and have a feast.
  11. Strawberries; like the cherries above, a berry regarded as a rare delicacy.
  12. Milk tea; this fashion has started in Taiwan, entered China in the South, but has now also reach the North; milk tea comes in an endless array of flavours, and is often spiced up with bits of dried fruit, chunks of jelly, etc.
  13. Potato crisps; no comments needed.
  14. Nuts; same; this category has been made famous by the products and marketing campaigns of Three Squirrels, introduced in several posts of this blog.
  15. Custard tart; this is an example of a reasonably traditional product that has suddenly become fashionable; the custard tart (danda) is a Portuguese influence on the Cantonese dim sum. In case you didn’t know: Macau used to be a Portuguese colony. This is the second dim sum in this list that has gained national popularity.
  16. Ice cream; no comments needed.
  17. Chocolate; ditto.
  18. Hand-pulled pancake; this is plain version of the onion pancake popular in Taiwan. It consists of several thin layers that are easily pulled off when you pick them up, hence the name. A reason for their popularity could be that it is easy to combine them with any dish. You can wrap a few spoons of the dish in a pancake and eat it with your hands, as a Chinese type of wrap.
  19. Haidilao; this is the only brand name in the list, and not one of a food, but of a hot pot restaurant. By now, even inattentive readers will have noted that hot pot is a popular type of food and Haildilao has grown into the leading chain in this business. What puzzles me is how you can get Haidilao from Tmall. Perhaps Tmall can also be used to book a table.
  20. Thin cream; Chinese traditionally do not like dairy products and the main reason is that most of them have a problem with the creamy taste of milk. The very fact that thin cream appears in this list, even though at the end, is a revolution. However, its main use is raw material for whipped cream, in which the creamy flavour is partly masked by the added sugar.

This is what a hand-pulled pancake looks like

Well, this is the Top 20 most popular food products purchased from Tmall mid March, 2020. I will refrain from guesses and inferences about what it could mean for suppliers who want to cash in on this reasonably affluent segment of the Chinese market. Most of them will be able to make that step and Eurasia Consult is always there to help out.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation.

Is China the future for chocolate?

Chocolate is one the most appreciated gifts to friends in East Asia

The confectionery industry is a sweet line of business by itself, but it can be even sweeter in China, where market potential and a growing confectionery culture is leading to a new bonanza of sweets and chocolates.

Chocolate sales in China grew 58% from 2009-2013. They are expected to expand to USD 4.3 billion by 2019, rising nearly 60% from USD 2.7 billion in 2014, lifted by outstanding demand from the growing urban population, Bert Alfonso, president of Hershey International, forecast in a recent webcast at the Consumer Analyst Group of New York conference.

China has become such an important market for chocolate suppliers, that Barry Callebaut had chosen Shanghai as the place to introduce its inhouse-developed ruby chocolate to the world in September 2017. Barry has further opened a new Chocolate Academy in Beijing in 2019 – the company’s 22nd globally – to meet demand and better serve the Chinese market.

High-end market

Sales of China’s chocolate and confectionery boomed over the past five years after a handful of Western brands began entering the country in the 1980s. The maturing chocolate culture has prompted Chinese consumers to begin asking for a greater variety of premier products. China’s chocolate consumption is increasing 10% to 15% a year, as living standards rise and there is a growing acceptance of Western lifestyle.

So far, the top 20 chocolate makers have already presented themselves in the market. In a common supermarket in Shanghai, you can easily find over 70 brands of chocolate. Most of them are foreign brands. The big four (biggest four companies in China chocolate market: Dove, Ferrero, Cadbury and Leconte) have taken over 70% of the market. Of these, only Leconte is a local brand (Owned by COFCO, possibly Nestlé’s main international challenger). Among the three foreign brands, Dove alone has taken one-third of the market. Dove has charmed Chinese consumers by its special taste. Secondly, Dove chocolate has nice packaging with a neat wrap which leaves a deep impression of delicious and good quality in the consumers’ mind. In addition, Dove always produces new products with special packaging which propose meaningful designs. Chinese consumers care about the packaging of a product, because chocolate is also a good choice to buy as a present. How the chocolate appearance has been the most vital factor for the purchasing decision as a gift.

Foreign players go into lengths to ensure the quality of their products on the Chinese market. E.g., Hershey’s indicates on its packaging that it uses 100% imported milk.

HersheyImpMilk

Don’t think that this market is only accessible to the big multinationals. Belgian chocolatier Filip Esprit runs a chocolate shop in Weihai, Shandong province. This is good location, close to China’s unofficial Food Capital Yantai.

Major potential

China’s current per capita chocolate consumption is very low at about 100 grams a person, compared with more than 10 kilograms in Europe. Even in Japan and South Korea, the figure is close to 2 kg. However, by 2016, 340 million Chinese will be middle class – more than the population of Western Europe – creating a huge market. Greater purchasing power – and the growth of large foreign retail chains – will boost consumption. This leaves plenty of room for business growth in China.

Insiders estimate the total value of chocolate sales in Chinese retail in 2019 at RMB 22.4 billion; up 4.4%. The further expect an annual growth of 3.5% for the coming 5 years.

Milk chocolate is still the favourite flavour with Chinese consumers. However, in some developed regions of China, such as in the east, sophisticated customers are more likely to choose dark chocolate as it has an image of being healthier. This flavor’s share of retail value has more than quadrupled in five years to 34% in 2013. Of all the chocolate fillings, nuts are the most popular.

Selling Points of Chocolate

What are the factors to getting Chinese people buying chocolate ? A report shows that the No.1 factor Chinese consumers consider is the taste (30%), following by brand (18%) and price (7%).

  1. Taste

It’s true that in China, taste is the most important factor, but compared to western consumers, Chinese consumers don’t care about the taste nearly as much. A report shows 66% western consumers put taste as the most important factor, while only 30% of Chinese consumers think it’s the top factor.

  1. Brand

When chocolate came to China’s market, it was branded as an exotic food product which is an added extra value. And now the brand has become even more important. First of all, a big part of imported chocolates purchased in China are for gifts or ceremonial use like wedding candy.

For young Chinese men, chocolates, especially luxurious delicately packed chocolates have become a must to show their love to their girlfriends. During the Chinese Valentines’ Day this year, half of the top 10 items sold online were chocolates. That’s why imported chocolates are sold as high class food product.

Apart from their fancy look, imported chocolates also enjoys a fame of high class ingredients. With the growing concern for health and food safety, consumers are becoming more careful about the ingredients of chocolates and imported chocolate are trusted for containing more coco or milk.

  1. Price

When chocolate first appeared in China, the price for a box of imported chocolates was sky-high. Today, chocolate has become a common food product that most people can afford. But some chocolate brands are still famous for their high price such as Ferrero because Ferrero targets on high class chocolate market where price is an important tool to show its value.

A Chinese consumer can easily find reasons to buy a box of imported chocolate for its taste, brand and price. And what chocolate makers need to do is to produce nice chocolate, promote its brand and label with a suitable price.

Local players

Local competitors are still finding it hard to set up a premier brand recognition among Chinese consumers and adopted cheaper compounds to secure price competitiveness. The 415 producers active in 2018 produced a total of 2.9 mln mt of chocolate products. Almost 75% of that volume was produced in Fujian, Guangdong, Hunan, Hubei and Anhui.

 

LeConte holds 6.7% market share and another local company, Golden Monkey (Shanghai), with 1.5% market, was acquired by Hershey in 2015 (after acquiring an 80% stake in the previous year). However, Hershey sold the Chinese subsidiary again in July 2018 to a local party Yuxiang Food Technology (Henan), a company co-founded by Xizang Cangying (literally: Tibet Goshawk) Investment Management Company and Henan-based Youshi Foods, which has become one of the biggest bakeries in central China.

LeConteMCGM-mchoc

Ingredients listed on the packaging of domestic chocolates:

  • LeConte milk chocolate: sugar, cocoa butter, whole milk powder, cocoa mass, skimmed milk powder, lactose, food additives (soybean lecithin, food flavour), cocoa butter 35% min., cocoa solids 40% min., milk solids 26% min. The cocoa beans are imported from Ecuador.
  • Golden Monkey milk chocolate (cocoa butter alternatives):sugar, hydrogenated vegetable oil, cocoa powder, milk powder, whey powder, salt, food additives (lecithin, polyglycerol ricinoleic acid ester), food flavour.

On the other hand, the higher prices of global players also scare away Chinese customers, who do not have the purchasing power of their Western counterparts. There is still room for growth in second-tier cities dominated by these lower-end products. This applies particularly to China’s vast rural population. The challenge for domestic players is to develop affordable chocolate products that apply to the various local tastes and habits.

Perhaps foreign tourists can be charmed into buying chocolate replicas of the famous terra cotta soldiers from Xi’an.

chocolateWarriors

Russian chocolate making progress

Chinese imports of foods and beverages from Russia have been rising during the past few years and chocolate is one of the favourite categories. One Russian chocolate, Krokant, chocolate filled with toffee crunch, is hard on the way to become the most popular chocolate in China. Chinese refer to it as ‘Purple Candy’ due to its purple wrapper. Similar Russian products are also available.

Eurasia Consult’s database of the Chinese food industry includes 123 producers of chocolate products.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation.

 

Leisure food – A food group strongly embedded in Chinese culture

The existence of a category like leisure food in Chinese food statistics is rooted in the laid back nature of Chinese culture

Entering a typical Chinese supermarket and looking around at the distribution of foods and beverages on the shelves, one indication that may strike you as unfamiliar, of even odd, is ‘Leisure food’, xiuxian shipin in Chinese.

Leisure and food are a match made in heaven in any culture, but there is no nation that created a more harmonious marriage between those two concepts than the Chinese. Visit any historic site in a Chinese city, and you will be amazed about the choice of snacks and drinks that are on sale in small shops or by street vendors.

When you then zoom in on the domestic tourists, you will have a hard time spotting one who is not eating or drinking, or at least visibly carrying food in their bags, ready to take it out and have a bite.

Before getting to those sites, or scenic spots, you need to travel. China is a huge country, so travelling can take time, and the best way to kill time in any culture is . . . eating. Chinese airports, train stations and long distance bus terminals are genuine food streets, offering everything the easily bore passengers may want to keep themselves, and their facial muscles in particular, busy. Eating has thus become the favourite way to pass the time on long haul rides in China.

Chinese high school and university students are also an important consumer group of leisure foods. Bakery products and meat snacks are their favourite foods during breaks.

All this has led to the coining of the category leisure food in the Chinese food industry.

It has become an officially recognized term. The library of Eurasia Consult has a collection of Food Industry Yearbooks starting with 1985 until the early 2000s, when the Internet rendered those paper information carriers unnecessary. Leisure Food is a separate section in those books, like the separate shelf for those products in Chinese supermarkets.

Leisure food is a hybrid collection of foods comprising:

One source divides leisure foods in the following subcategories:

Type main market customers outlets consumption mode
Private consumption home family members Residential areas, special shops, convenience stores At home
Travel food travelling travellers local special shops, supermarkets , airports, railroad stations, tourist spots Travelling, gift giving
Gifts Gift giving people in need of gifts special shops, supermarkets Gift giving

What I especially like in this division is the category of ‘gifts’. It always a nice gesture to bring home local delicacies when returning from a trip. And with a country as large and varied as China, there are more local specialties than a person can bring home in a life time. Moreover, gifts play a key role in Chinese culture. This is why Chinese airports and larger railway stations sell local foods in fancy gift packaging. People do not buy those to eat themselves, but to give them to relatives and friends.

The following graph shows the market shares of various categories of leisure food of December 2019.

 

Market size and value

There are more than 4000 manufacturers of leisure food in China.The leisure food industry in 2018 was worth RMB 1029.7 bln; up 12%. Insiders expect that the value of this market will reach RMB 1298.4 bln by 2020.

Ingredients

It is an interesting market for suppliers of food ingredients. Preservation is key term here, not only referring to keeping the bugs out, but also the preservation of the flavor, color and texture.

This sector is also an interesting market for suppliers of food packaging machinery. All of the above mentioned products need to be packed in small portions, that can be conveniently stowed in ones pocket or hand bag. The preferred size is the single-portion package; a pack you open and empty in one leisurely moment, without the need to close and seal it for the next moment.

Image

Trends for 2017

  • Leisure food should be tasty, novel and healthy. Snacks are by definition tasty. Consumers will only make repeat purchases and remember the brand if a snack is delicious. Chinese consumers are eager to try new leisure foods. As long as a product is novel and interesting, they are willing to give it a go. As Chinese are becoming increasingly health conscious, growing numbers place great emphasis on the nutrition facts of nibbles, such as those that are low in sodium, sugar and fat. This also includes additives in general. If more flavourings are added in order to create exciting taste, it can may Chinese consumers, who are now avid readers of ingredients lists, suspicious.
  • Small Packs are the trend. A very prominent trend is packs are getting smaller and smaller. Factors driving the growing demand for leisure food in mini packs are convenience, hygiene, pricing and visual impression. Mini packs can satisfy consumers’ demand for “convenient and hygienic one-off consumption”. They are particularly popular with female consumers who prefer snacks that can be eaten in one go. With large packs, if the food inside cannot be consumed straight away after they are opened, some consumers would not want to eat it again afterwards as they would consider it to be neither fresh nor hygienic.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975 and regularly travels to the remotest corners of that vast nation.