Fresh Food Market boosted by Covid-19 in China
Although the CPI in China increased by 5% in February, people’s demand for fresh food was not affected. In fact, Kantar Worldpanel’s household panel data shows a continuous growth momentum in fresh food category in contrast to other FMCG categories since the outbreak of COVID-19. We presumed that there are three reasons to explain the strong market performance of fresh food category.
Observation 1. Strict Quarantine Policy leading to more spare time for in-home cooking
According to Kantar Consulting’s nationwide survey in February, 75% of respondents claimed that they followed the quarantine policy and cancelled social activities during the pandemic. In the meantime, from Kantar Worldpanel’s survey conducted in North China, we found out that nearly half of respondents claimed that they are buying more fresh food than before. The high year-on-year growth of seasoning products after the Chinese New Year also implies that consumers spend more time in the kitchen preparing meals.
In addition, quarantine makes in-home cooking a fun activity to kill time. Shown in our data, top growing sauces are broth, curry and cheese due to people’s interests for new cooking recipes. On Weibo, “homemade dish challenge” became a trending topic with over 2,260 million views. Also, an increase in the number of searches for new cooking machines like rice cookers, barbecue grills, and blenders on e-commerce platforms further proved that new occasions of cooking are getting more popular in China.
In short term, the “revenge-consumption” caused by COVID-19 will raise people’s interest in cooking and demand for new cooking recipes and ingredients. With more time spent with families and close friends at home, consumers will possibly keep the habit of in-home cooking, which implies that they will maintain their high demand and requirements for fresh ingredients. More importantly, “convenience” is a key consideration for in-home cooking due to people’s shortage of time. Curry, ketchup and other easy-to-cook sauces will be optimal choices for consumers.
Observation 2. Fresh food’s nutrition properties fits with people’s concern of health
There’s no doubt that the outbreak of COVID-19 has increased people’s attention on health. The search number of keywords like “health” and “immunization” increased by over 1000% after the outbreak. Mainstream media like CCTV also reported that nutrition like protein and vitamins in fresh diary and vegetables can boost your immune system. Moreover, more young people started to share their in-home cooking of veggie smoothies, healthy diets along with in-home workouts through vlogs, which further incentivize more people to adopt a healthier lifestyle. The Silver generation also claimed that they would spend more on fresh food than before to keep in good health.
In addition, many live-poultry markets are permanently shutting down and being replaced by industrial processes, such as large scale poultry farms and cold-chain transportation, due to authority’s strict enforcements to butcheries. Nevertheless, fresh meat, live fresh water fishes and seafood are still popular with consumers since their perception of being fresh is associated to healthy, high-quality products.
People’s increased attention on health will not decline as pandemic goes away. On the contrary, ¾ of Kantar Health’s survey respondents said that they will be more concerned about health after the COVID-19 pandemic. It will bring new opportunities for manufacturers to add “nutritious” and “healthy” to their messaging to follow this consumer trend and promote public healtheducation. Healthy fruit/vegetable snacks also have some market potential. On the other hand, fresh retailers should not overlook the importance of poultry and meat products’ freshness and nutrition to attract consumers.
Observation 3. Outbreak acts as the catalyst for digital purchase behavior
Driven by the rapid development of mobile e-commerce and delivery, fresh delivery is sky-rocketing since 2018. Traditional channels like free-marts will continue to lose share. In 2019, the average number of channels shoppers buy fresh food from reached 5 channels. As expected, consumers demand for fresh delivery surged during the COVID-19 period. Many O2O and E-commerce platforms like Miss Fresh also introduced “contactless” delivery to avoid direct contact. In January 2020, O2O and online penetration for fresh food reached 20% and 22% respectively in Urban China. The online penetration shows a fast-moving trend toward less developed areas: tier 2 and 3 cities; and the silver generation with their increased mobile usage. Wechat is another popular channel for community or neighborhood purchases of fresh food. A Kantar Consulting survey research found that 35% of respondents used Wechat for fresh food purchases in February nationwide.
With the arrival of O2O 2.0 bringing in new buyers, fresh food retailers should consider of how to retain them after COVID-19. By 2022, Online + O2O is expected to triple its market size, projected to reach 15% market share in the fresh food category. According to Kantar Consulting, 42% of online new buyers claimed that they will consider a combination of online and offline shopping after the pandemic, which means that Omni-channel is the key trend for fresh food purchasing.
On the other hand, as online limits consumers’ selection process, one of most common complaints is the consumer’s low satisfaction of fresh product quality. Therefore, especially for O2O channels, it is really important to retain consumers by providing high quality, fresh products. Meanwhile, retailers should collaborate with manufacturers to adapt their offer to new consumer needs who order from O2O or Online. For example, since convenience and health are two significant market trends, offer “convenient” combination packs, such as multi-fruit snack packs. Moreover, in view of different family sizes, fresh dish ingredients packed along with recipes to satisfy specific family needs could be more attractive. Also, the nutrition facts summary and health benefits could be added in the product page description in addition to the fresh delivery details.
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Managing Director, Great China
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