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China’s packaged food market: growing in size and quality podcast

Urbanised lifestyles and rising incomes are fuelling the growth of China’s packaged food market. Mainland consumers are also increasingly concerned with issues such as “food safety” and “healthy diet”. According to Euromonitor International, from 2009 to 2013, the sales of packaged food in China expanded at an average annual rate of 12.3%, with total sales in 2013 exceeding Rmb1,260 billion.

Buying more packaged food

The changing lifestyles brought about by urbanisation and the quickening tempo of life are all driving an increase in demand for packaged food. On the supply side, the improving quality of packaged food and the ever-increasing product variety on offer also contribute to this rising demand. According to a study on China’s packaged food market conducted recently by the Hong Kong Trade Development Council (HKTDC), 81% of the respondents say that “I am now buying more packaged food than before.”

Chart: Attitude towards buying packaged food
 

Greater brand awareness

Mainland consumers’ concerns over food safety and quality are rising rapidly and they tend to use brand to judge quality. Compared with the past, people are attaching greater and greater importance to brands and are more inclined to buy branded products. In one of the focus group discussions, for example, a participant pointed out that:

“Branded items offer better quality assurance. Particularly for categories which have been reported to have food safety problems, I tend to choose products from trustworthy famous brands because they are safer.”

In the survey, 62% of the respondents say they “prefer buying packaged food of famous brands even if prices are higher.”

Chart: China’s packaged food market: growing in size and quality
 

Increasing health awareness

As income rises and food quality concerns prevail in China, consumers’ health awareness is growing continuously. In the survey, 70% of the respondents agree that they are “now buying more than before food that is advertised as healthy even if prices are higher”. Some 61% say they “trust the health claims on the food packaging”. What is more, 75% of them say they will read package information carefully in choosing what to buy, and the majority will choose to avoid products with uncommon chemical ingredients or modified genes. 

Chart: China’s packaged food market: growing in size and quality
 

Trying out different products

As people’s income rises and their horizons broadened, one result is that their consumption mix becomes richer and they are trying out different types of food. 60% of the respondents say they like to try out packaged food of different types/flavours and the percentage is even higher in first-tier or coastal cities. Moreover, it is learnt from the focus group discussions that urban consumers like to buy exotic or novel food to reward themselves or please their family and friends, or use such experiences as talking points or to show off at social functions. 

Chart: China’s packaged food market: growing in size and quality
 

It is worth noting that, though consumers like to try out packaged food of different types/flavours, 74% of them agree that “I hope that imported packaged food can offer choices that are adapted to local tastes.” In other words, consumers would appreciate it if, out of all the flavours available, one with traditional local flavour is on offer.

More attention on packaging features and appearance
 
Packaging plays a role in product differentiation. The convenience features of packaging are getting increasing attention. In the focus group discussions, participants mentioned several types of convenience features such as small individual packing, easy-tear design, drawer-like box for potato chips, chewing gum dispensing box and funnel-shaped spouts. Also mentioned are zip pockets for easy storage and resealable design such as sealed canister package (metal can and resealable can with clasps) etc. In the survey, 72% of the respondents agree that they are “paying more attention to packaging features and will opt for those that are convenient for use, storage and repeat usage.”

Since there is now a richer selection of product types in the market than before, the key to grasp the attention of consumers at the first opportunity is exquisite and unique packaging. In the focus group discussions, participants reckoned that novel, unique and appealing packaging will attract them to try out a product, while interesting packaging is also effective in attracting consumers. Thus, the design and features of packaging can effectively draw people to buy. In the survey, 67% of the respondents agree that they are “easily attracted by exquisite packaging to buy food that I have never tried before.” 

Chart: China’s packaged food market: growing in size and quality
 

It is worth noting that a considerable number of focus group participants pointed out that excessively crude packaging or “piggyback branding” by imitating others’ packaging will draw the resentment of consumers or make consumers sceptical about the quality of the product concerned. In the survey, 69% of the respondents agree that they “resent ‘piggyback branding’” where the packaging is copied from famous brands. Therefore, in packaging products, attention must be paid to avoid imitating the packaging of famous brands and causing consumer resentment.

Criteria for high-quality food

As people nowadays are paying increasing attention to health, the respondents also agree that they are attracted by the health claims made by various products and they also trust the health claims made by manufacturers. Among the choices available, consumers will choose as best they can products that claim to be healthy in order to satisfy their requirement. The results of the questionnaire survey also confirm such viewpoints. When asked what constitute high-quality packaged food, 76% of the respondents choose “brand reputation”, followed by “eco-friendly, organic and natural” and “nutritious and healthy”. In the minds of consumers, brand reputation is a reflection of product quality and good brand reputation implies high quality. In addition, claims of being eco-friendly, organic, natural, nutritious and healthy can also contribute to the perception of high quality.

Content provided by Picture: Billy Wong
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