Where To Go For Brands in China New Consumers Market - There is No Endgame For the F&B Industry
食品饮料赛道没有终局，新消费市场下的品牌何去何从
Looking back to November 2021, there were 128 investment and financing events in China market. Among them, the F&B (foodand beverage) field was still the most favored by capital, accounting for half of the investment and financing in nearly a month.
F&B as part of large consumer industry plays an important role in the national economy. As early as 2018, F&B has become the hottest track in the new consumer industry. In the early stage, the marketing of F&B industry mainly focused on offline, but due to the impact of COVID-19 and the increasing popularity of new forms of e-commerce platforms, the marketing focus has gradually shifted from offline to online.
Picture source from: Sohu
Time comes to 2020, another remarkable year of consumption. Under the trend of consumption in China, more and more emerging domestic consumer brands of F&B continue to rise. In addition, the F&B consumer market also has big opportunity for a large number of imported brands to flux in.
The Pandemic Exploded Imported F&B Consumption Spree
The Pandemic has triggered people's demand for healthy food, and the staying at home caused by the pandemic control has aroused people's enthusiasm for further diversified food consumption. The sales volume of imported food has increased rapidly. Data show that in 2020, the size of China's imported F&B market has exceeded 500 billion yuan, led by Tmall and JD.com international online shopping platform, the imported F&B sales also showed double-digit growth. High-quality European F&B products have become the focus of Chinese audiences at the 2021 China International Import Expo.
1. Beer and Fruit wine are in great demand in The Chinese market. Beer is one of the top three drinks consumed in the world, but the overall production of beer in China tends to decline. Currently, tipsy fruit wine is a new beverage choice for dinner and social gatherings. Nowadays, it tends to replace soft drinks such as white wine and carbonated drinks. However, in China, tipsy fruit wine category is relatively rare, and its taste is also in the stage of innovation and exploration.
2. Consumers still have a high-quality consumption concept towards imported products. For example, when it comes to beer, mineral water, soda water, roast coffee, chocolate and honey, people with consumption ability still prefer imported brands that have been examined for long time in taste and quality. Aside from brands already in China, there are other thousands of brands to be introduced to China market, the outbreak of the demand opened up new potential and ideas for imported F&B agency and distribution market;
3. The model of Chinese capital + foreignbrands is gradually emerging. Although affected by the pandemic, cross-bordere-commerce is still gaining momentum, especially in the field of health careproducts, where imported brands have always occupied a place in the domesticmarket due to their quality assurance.
In the Context of Import Food Sales Boom, How Should Companies Seize This Market Dividend?
With the rapid economic development, the per capita disposable income of residents increases, and the consumption expenditure on F&B increases accordingly. Although more and more excellent domestic and foreign consumer brands enrich our daily life, and the industry forecast report shows the huge development potential of the industry, data shows that China's soft drink industry alone is expected to reach 1.3trillion yuan in retail sales in 2024. But from an industry perspective, how to build a brand? How to keep creating productsthat favored by consumers? How to choose distribution channels? How to battle the market competition? These practical questions remain pain points for consumer businesses.
Industry development potential forecast of China softdrink industry in 2021
Data Source from Chinabaogao
From a global F&B market perspective, The Innova market insight shows that " sustainability is likely to be akey decision-making factor for hesitant consumers in 2022." Peopleare actively looking for food and drinks that meet their needs, ethics and quality assurance, and will even work with brands to create products that meet their needs. The entrepreneurs realize that brands should help consumers understand their contribution to the society, and capital market will pay closer attention to entrepreneurs' initial intentions and attitudes towards products development.
Turning back to China domestic market, the F&B Industry White Paper 2021 released by Giant Engine 2021 shows that the stock market fiercely competitive in the F&B industry as itself has low entry barriers and new brands flood in one after another. In order to meet the demand of the new consumer market, old brands seek breakthroughs in product innovation and branding. New and old brands compete on the same stage to find new growth points in the F&B segment. For example, in the beverage market, on the one hand, Moutai, Nongfu Spring and other popular enterprises with market value of billions or trillions of yuan are still making breakthroughs and development; on the other hand, the rise of new consumer brands such as Jiang Xiaobai, Yuanqi Forest and RIO has brought greater potentials to the market. Now the F&B industry products are in the continuous innovation, and marketing strategies are also full of tricks, which makes the industry competition become extremely fierce.
2020 Consumers Interest in Pre-mixed Alcoholic Beverages Analysis
Data sourced from: Kurun data
With the advent of the era of Universal Stores, thanks to the support of "Internet Plus", digital marketing, SaaS model and the influx of marketing platforms have enhanced the operation capacity of F&B businesses. Tea and coffee segments are getting the most attention by capital. Nearly 300+ F&B brands have the potential to become consumer unicorns. The concept of functional healthy diet brings new market opportunities and also arouses the enthusiasm of capital investors. In terms of specific segmentations, compound condiments, quick-frozen convenience food and functional food, Fine wine and low alcoholwine and the new tea and coffee chains in the beverage field that reflecting the development trend of convenience, high-end, diversification and health of the industry are all hot tracks where capitals are competing for.
Baked snacks are gradually shifting from accessories to meals. New Chinese baking brands such as Momo DimSum, Xuanma egg-yolk puff and Luxi River have attracted a large number of young consumers in first and second tier cities with their traditional and trendy tastes. Offline tea drinks rose to prominence, with Nai Xue and Xi Cha becoming the two most popular emerging brands.
2020-2021First Half Year Distribution of Major Financing in F&B Industry
Data sourced from: Blue Shark Consume
Marketing, Production R&D and Innovation
With the increasing popularization of Internet, more and more young people are willing to try new things. The emerging ecommerce marketing and live broad-casting make more channels accessible for them to the new brands and products. CTR data analysis shows online sales budget scale continuous growth for F&B industry with 36.4% in 2020. With strong promotion campaign, it is easier to build up awareness and expand market share for Domestic F&B businesses due to the low unit price, high discount and fast-moving nature. If they integrate diversified high-quality imported products to improve unitprice and establish customer viscosity and loyalty, there is big potential that the business will be in the invincible position of sustainable development.
Ratio of Live Broadcasting Marketing Costs for Different Industries
Data source from: CTR
F&B companies shall also realize that the R&D (research and development) of featured products is the key for a brand. Only the high qualitative products with the help of commercial promotion tools can enhance their confidence in the fierce competitive market. For example, Eastroc Beverage, founded in 1987, had no featured products for long time, the founders invested all they have into theproduct R&D, they finally decided to enter the Energy drink market andsaved the old brand from the "life and death line". At present, Eastroc Beverage are mainly consumed by young generations, ranked second after Redbull. In 2021, Eastroc finally came to the stage of IPO, and its market value reached 76billion yuan. The Eastroc case shows the big potential of the F&B industry.
We can also learn from the successful experience of Coca-Cola, one of the top three most popular drinks in China market. From the first year of enter China with only 25 bottles sales, to the performance recovery and exceeded expectations during the pandemic. The go global and diversified marketing strategy are essential factors supporting its rapid growth. Commenting on the strong performance in The Chinese market, Coca-Cola said it benefited from the previous "strategic planning for the future" and successful implementation in product innovation, supply chain upgrade and digital transformation exploration.
In addition to marketing campaign and production R&D, F&B innovative is one of the most important aspects of establishing barriers to other brands, consumers begin to pay close attention to the function of the F&B such as healthier, more entertaining and other applicable scenarios. It’s the time for brands to continuously make breakthrough.
In fact, there are many segmentations in the fields of F&B other than meal replacement and convenience food that are worthy of our exploration and learning. How to adapt and further develop in this huge China's consumer market, and work together with various strategic partners are topics worthy of our constant attention and study.
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