1、CPG SECTOR:Chinas Food&Beverage Industry Post COVID-192CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Key TakeawaysThe outbreak of COVID-19 in China has produced fundamental changes in the nature of the CPG food and beverage industry which have persisted,even as life has largely returned to normal in Ch

2、ina.C2 Global conducted a survey of 1,135 respondents in Mainland China in September 2020 in order to gain insights into how COVID has changed consumers attitudes towards making food and beverage choices.During the lockdown,Chinese consumers boosted an already advanced online grocery and meal delive

3、ry industry and shifted their purchasing habits away from wet markets and traditional supermarkets.Consumers now demand a multi-channel grocery experience to ensure convenience and the highest safety standards.What started as a trend to combat the virus has now caught on as a new way of life for Chi

4、nese consumers.The popularity of fresh food,and plant-based foods and beverages has sky-rocketed over the past year and is slated to continue to grow.What started as a trend to combat the virus has now caught on as a new way of life for Chinese consumers.The popularity of fresh food,and plant-based

5、foods and beverages has sky-rocketed over the past year and is slated to continue to grow.Retail is shifting towards an“Offline to Online”multi-channel experience for consumersHealth-consciousness becoming the norm post-Covid 19Companies are introducing more nuanced products and placements to fit a

6、wider range of consumersThe Retail Food and Beverage Market Over the past five years,China has continued to see 7-9%year over year growth across the retail sector to reach nearly 18 trillion CNY(US$2.7 trillion)in 2019.Although“Store-Based Retailing”has stayed relatively flat,the growth has been dri

7、ven by the E-Commerce sector of“Non-Store Retailing”.YEAR20202.5%20219.1%20228.6%20237.1%20246.4%PROJECTED GROWTH RATESource:Euromonitor3CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Retail in China is seeing an increased focus on localization and digitization,and that trend is expected to continue in

8、the next 5 years.Retailers are becoming more agile and successful at meeting numerous different types of consumer needs through omni-channel offerings,thus raising sales.Euromonitor projects overall retail sales to fall to roughly 2.5%growth in 2020 due to the coronavirus pandemic,but bounce back at

9、 9%and 8.5%growth in 2021 and 2022 respectively.BeveragesBeverages as a whole have grown slightly over the past 5 years,with the category as a whole being led by multinational corporations.Local enterprises are catching up as consumers preferences change and theyre able to keep up with nuanced shift

10、s.These shifts have been mainly away from traditional sugary soft drinks towards bottled water,tea,and even plant based hot-drinks.Euromonitor predicts“moderate growth”over the next few years as consumers trend more towards healthy lifestyles and companies innovate to create products that meet those

11、 needs.YEAR20202.9%5.0%20213.8%5.4%20222.7%5.2%20232.5%5.5%20242.2%5.5%PROJECTED GROWTH RATE SOFT DRINKS(RSV)PROJECTED GROWTH RATE HOT DRINKS(VOL.liters)Source:EuromonitorSource:EuromonitorSource:EuromonitorSource:Euromonitor4CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Packaged FoodsAs consumers disc

12、retionary income has grown,theyve moved away from home-cooked meals and more towards on-the-go snacking,pre-cooked foods,and healthier alternatives to fit their busy lifestyles.The sector has seen huge growth in 2020,especially within“staple foods,”which includes baked goods,rice/pasta,processed mea

13、t/vegetables/fruit,and cereal.YEAR20206.5%20215.4%20225.8%20235.9%20245.7%PROJECTED GROWTH RATEFood and Beverage TrendsAccording to a September 2020 survey conducted by C2 Global,nearly 60%of buyers make food&beverage purchases based on the health benefits and taste of their food.This is in line wit

14、h a rise in popularity of healthier foods and beverages across the country post-Covid 19.Food safety and price were also huge drivers for consumers when making food&beverage purchases.Healthier for YouEuromonitor predicts these trends in urbanization and busy lifestyles to continue to push the packa

15、ged foods market forward in the next few years,but with some constraints.Brands are facing the need to expand to smaller cities to reach new consumers and will need to capitalize on convenience stores expansion to those cities to achieve further growth.Source:EuromonitorSource:Euromonitor5CHINAS FOO

16、D&BEVERAGE INDUSTRY POST COVID-19From which of these food/beverage categories have you recently purchased?Along those same lines,the same September 2020 survey shows roughly half of consumers recently purchasing some sort of low calorie/low fat/low sugar food.Additionally,plant-based beverages and f

17、oods have started rising in popularity throughout 2020.This follows the devastating 2019 African swine fever,which ravaged the Chinese pork industry and led to an 86%increase in pork prices as of August 2020 compared to a year prior.What are the most important factors for you when choosing to purcha

18、se food&beverages?LocalizationChina is also facing a wave of“l(fā)ocalization”post Covid-19 as consumers are supporting local Chinese businesses and farmers.Roughly one-third of consumers believe that local food and beverage is higher quality and more trustworthy than foreign equivalents.Close to half o

19、f consumers also believe that local brands are less expensive than foreign brands.Source:C2 Global 2020Source:C2 Global 20206CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Do you prefer to purchase local brands or foreign brands in the following categories?Have you experienced firsthand any of the follo

20、wing“Clean Plate Campaign”initiatives?Earlier this summer,President Xi Jinping announced a country-wide initiative called the“Clean Plate Campaign”to encourage awareness around food waste.As of September 2020,roughly half of respondents had already experienced limits on the number of dishes they cou

21、ld order at restaurants.This trend is expected to become even more widespread as local governments implement the initiative.“Clean Plate Campaign”The vast majority of Chinese consumers also prefer to purchase fresh fruit,vegetables,meat,and dairy products from local Chinese brands.However,the majori

22、ty of Chinese consumers prefer to purchase chocolate,cookies,wine,and coffee from foriegn brands.Source:C2 Global 2020Source:C2 Global 20207CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19C2 Global survey respondents cited packaging and coupons as the most important factors in choosing which products to

23、purchase.Social media,influencers and collaborations were also considered important factors influencing food and beverage purchase decisions.https:/ and MarketingHiMilk What incentivizes you to try a new food or drink?Source:C2 Global 20208CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Keep Walking Chin

24、a Wanglaoji https:/ EditionChina 40-year Reform and Open-up(Limited Edition)|https:/ Cola 9CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Coupons https:/ 10CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Chinese consumers have shifted their eating and drinking habits more towards fresh,natural,and organic in

25、gredients.Over half of respondents were spending more on fresh fruits and vegetables,and roughly one-third more on bottled water.Additionally,consumers were notably spending less on seafood post-Covid 19 due to seafood quality scares in the country.COVID Behavior ChangesHas your spending on the foll

26、owing food/beverage categories changed in comparison to 2019?Source:C2 Global 202011CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Starbucks ChinaAs of the end of Quarter 3,2020,Starbucks had 99%of its 4,400 stores re-opened in China post-COVID-19.Starbucks China business is expecting declines of 15%-20

27、%across the entire year,which is better than the international average of 20%-25%declines across the rest of the business.Starbucks also will net 500 new stores in China in 2020,and announced an investment of$130 million USD in a new innovative roasting facility to open in 2022 in Kunshan.China and

28、the U.S.are the two“l(fā)ead growth markets for Starbucks and comprised over 60%of the companys global portfolio.Starting in April of 2020,Starbucks began offering meatless menu offerings with Beyond Meat and Omnipork products as well as oat milk beverages with Oatly oat milk.These items debuted in 4,20

29、0 Starbucks stores,but are a sign of Chinas changing appetite for healthier,more sustainable food and beverages.Throughout 2020,Starbucks has seen a large jump in mobile sales orders,which is in line with other restaurants and grocers as China grappled with the COVID-19 pandemic.Starbucks mobile ord

30、ers reached 23%of sales,including 11%from mobile ordering and 12%delivery,which exceeded 2019s split of mobile orders comprising only 15%of sales.They are also debuting 15“Starbucks Now”stores,which have smaller physical square footage than a regular store,in target urban areas.These stores are desi

31、gned as a“walk-through”experience for seamless,quick,and touchless interactions.COVID-19 ImpactBetter for You PartnershipsPhysical and Digital IntegrationFood and Beverage Case StudyFood and Beverage Case Study|Starbucks ChinaStarbucks Contactless DeliveryStarbucks Beyond Meat,Oatly,and Omnipork Off

32、erings12CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19PepsiCo ChinaFood and Beverage Case Study|PepsiCo ChinaAs many Chinese consumers were under lockdown orders in early 2020,their snack volume and at-home beverage consumption grew.PepsiCo Chinas snack earnings as a result had double-digit growth comp

33、ared to 2019 throughout Quarter 2,and low single-digit growth across their beverage categories.The traditional grocery retailer has seen increased competition from larger hypermarkets,both rural/urban convenience stores,and more tech-savvy supermarkets.Of those,supermarkets have the most accelerated

34、 growth due to their ability to meet consumer needs through different types of stores and formats.The Grocery MarketYEAR20203.4%2021-0.6%20222.5%20232.3%20242.7%PROJECTED GROWTH RATEIn February of 2020,PepsiCo made a major move to acquire Be&Cheery(Baicaowei),one of the top three largest local snack

35、 companies in China,for$705 million USD.Be&Cheery has had success in China selling their products direct-to-consumer on their app and website,and have capitalized on the recent health trends with their focus on nuts,dried fruits,and dried meats.Focus on Direct-to-Consumer GrowthCOVID-19 ImpactFood a

36、nd Beverage Case StudySource:Euromonitor13CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Euromonitor projects a continued decline in larger hypermarket stores,and growth mainly coming from convenience stores and smaller format supermarkets.During the Covid-19 lockdown in China,consumers accelerated the

37、switch to online grocery ordering,grocery/meal delivery,and away from wet markets,and more traditional grocery stores.“Offline to Online”merges the traditional in-store grocery experience with mobile app engagement,delivery,and intelligent supply chains to create a multi-channel experience that meet

38、s all consumers needs.This trend is popping up in most large hypermarket and supermarket chains across China,as well as in new start-ups like Hema,MissFresh,and JD Daojia.Roughly one-third of respondents noted they would use meal delivery and grocery delivery more because of Covid-19.Also,over half

39、of respondents noted they would purchase less from both quick service restaurants and traditional in-person restaurants because of the virus.Offline to Online(O2O)Which channels do you expect to use LESS,SAME,or MORE in the future as a result of the coronavirus?Source:C2 Global 2020Source:Euromonito

40、r14CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Chinese consumers have shown a recent propensity for food and beverage products that are creating unique combinations with other brands they know and love.Over half of respondents enjoyed the social aspect of sharing new beverages with family and friends

41、.CollaborationsHow do you feel about recent food&beverage products collaborating with other brands?(ex.HEYTEA x Fenty,Oreo Collaborations with Beijings Palace Museum,Lays x Zhou Hei Ya)Perfect Dairy x Oreo cushion compacts Source:C2 Global 202015CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19The makeup

42、kit made by The Face Shop and Coca Cola Netflix x Pearl Studio x Lady M 16CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Everlane x Ele.me Line x Oreo 17CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19As we look ahead into 2021,we expect the following trends to carry forward and drive the growth of the CPG F

43、ood and Beverage sector:Oreo x Forbidden City Omnichannel/Smart Retailing:Look for retailers to continue to lead the market in online/offline integration and next generation smart retail.These improvements will enhance the consumer experience,and provide increased convenience and shorter shopping ti

44、mes.Innovative Collaborations&Marketing:The China market is extremely crowded with brands all competing for these valuable consumers attention.The food&beverage CPG industry is no different-look for brands to roll out creative collaborations,packaging and marketing initiatives to stand out from the

45、crowd and spark consumers imagination.Health&Wellness is Here to Stay:The health and wellness trend has been accelerated by COVID-19,but is here to stay.Look for consumers to continue to shift preferences to organic products,plant-based meat,non-dairy and nutritional/healthy options.18CHINAS FOOD&BE

46、VERAGE INDUSTRY POST COVID-19Sun Art RetailFood and Beverage Case Study|Sun Art RetailSun Art Retail Group operates hypermarkets and an e-commerce business across China under the“Auchan”and“RT-Mart”brands,with 486 outlets in China at the end of 2019.They partnered with Alibaba in 2017 to expand thei

47、r digital presence and explore new multi-format and omnichannel approaches in the food retail sector.In the first quarter of 2020,their daily orders per store were around 750 orders,and that jumped to 1,750 orders by their third quarter.By August of 2020,they had reached nearly 13 million daily acti

48、ve users of their mobile ordering platform.Sun Art Retail Group has piloted a Tmall Inventory Sharing Initiative to offer 1-hour delivery to consumers less than 5 kilometers away,and-day delivery to customers within a five to twenty-kilometer radius of the locations.Theyve also created Community Gro

49、up Purchase stations in partnership with Alibabas Cainiao logistic network to take advantage of Cainiaos over 50,000 pick-up stations around the country.Alibaba PartnershipPiloting new grocery delivery/pick-up optionsGrocery Case Study19CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19Hema/FreshippoGrocer

50、y Case StudyFood and Beverage Case Study|Hema/FreshippoFreshippo Pickn Go located at subway stations and you order with the Freshippo app.Food is prepared and kept in lockers.Freshippo F2 located in busy urban areas,with fruit,fresh meals,and drinks available for purchase at a self-serve kiosk.Fresh

51、ippo Farmers Market offers fresh produce in bulk and located right outside megacities in large retail areas.Freshippo Mini smaller neighborhood grocery store and offers hyper-local 1.5 km delivery.Freshippo Mall sells anything you can imagine,from food and drinks to clothes and shoes all can be deli

52、vered within a 3 km radius in an hour.Freshippo Supermarket-more“standard”supermarket,but reliant on tech for supply chain sourcing and an improved consumer experience.Owned by Alibaba,Freshippo(Hema in Chinese)is a mobile-first focused retail store that opened in 2016.They currently have 6 differen

53、t store formats,which allow them to localize and cater to a wider variety of segments.All formats use the same mobile app and 5 of the 6 formats have been implemented within 2019 or later.The in-store experience is best when carrying a mobile phone to check prices,see recipes,and even view the fresh

54、ness and origins of specific items like seafood.Multi-format for ultimate localization20CHINAS FOOD&BEVERAGE INDUSTRY POST COVID-19C2 Global provides actionable intelligence to leaders of brands,retailers,investors,technology companies and service providers as they navigate the China consumer market

55、.C2 Global membership gives access to real-time updates and intelligence,including Tableau-powered proprietary data streams,research reports,case studies and interviews with leading experts and key industry players.Contact membershipc2- to learn more.Copyright 2020 C2 Global.All rights reservedReport contributors:Taylor Foster,Riki Xu,Lu Feng www.c2-