What parts of the instant food market are on the decline?
China’s instant noodle market
The ready-to-eat market consists of two parts: Instant meals and snacks. In this review, we discuss the instant food market in China. Instant food includes instant noodles, instant meat, canned food, instant rice, quick-frozen food and etc. Among them, instant noodles are the most popular one. Since 1970, China has started to manufacture instant noodles and international instant food brands entered China in the 1990s. For now, instant noodles have a history of 60 years. According to the World Instant Noodles Association’s research, in 2014, the total instant noodle demand around the world was 103.96 billion packets, which China consumed 44.4 billion packets. However, as the graph shows, the demands for the instant noodles are slightly decreased from 2014 to 2018; in 2018, the forecasted total demands dropped to 36.8 billion, which demonstrates a 17% decrease.
China’s canned food market
As for the canned food market, the market is expected to reach USD 118 billion by 2023, at a CAGR of 3.8%, during the forecast period (2018-2023). China has been the largest canned food producing country with around 12.9 million tons produced in 2017, but a large of them exported to other countries, which means the actual consumption of this canned food in China can be decreasing. China’s annual per-capita consumption of canned food is 8kg, which is much lower than USA (90 kg) and Western Europe (50 kg). According to the graph below, the sales revenue of canned food market in China are fluctuating from 2014 to 2018, from 163.17 billion RMB to 180.69 billion RMB.
Chinese instant food market: The reason behind the sales decrease
The possible main cause for the significant decrease in instant noodle sales and fluctuation relating to the canned food market would be the fast development of Chinese food delivery system. According to The Economist’s analysis, by the end of June in 2017, the registered users for the food delivery system had risen to 295 million, which was a 40% more than at the end of last year. According to Chinese Industry Information, as China’s industrialization and urbanization is continuing, the food delivery market penetration rate will reach 10% in 2020, which means the whole industry will expand to more than 500 billion RMB; if the penetration rate can reach 15%, the transaction level will then become more than 500 billion RMB in 2020, which is indeed a vast market. Therefore, such high penetration rate will certainly affect the willingness of the consumers to consume instant food; instead, calling for food delivery from local restaurants might be healthier and more rational choice.
Consumer analysis: What do Chinese consumers want?
Texture and flavor are Chinese consumers two main criteria instant food
According to the survey results below from HKTDC research, in China, the most important purchasing factors for instant food are texture, flavor, brand image and word-of-mouth, manufacturing and expiry date. It can be assumed Chinese consumers choosing the instant food focus on taste and brands.
In addition, KOL’s opinions can affect consumer choices. On Weibo, XiaoHongShu and Zhihu, there are numerous KOLs who are sharing their opinions about the instant food and snacks. At the same time, at the end of the post, they usually make recommendations for certain types of instant food. Accordingly, Chinese Netzines value these recommendations and are willing to purchase these products and give them a try. This trend also develops the individual business on WeChat stores at the same time.
Consumer’s interest is related to Chinese traditional holidays
According to the Baidu Index of “Canned Food” (shown below), the number of searches of canned food reached the lowest point in February 2018 for the Spring Festival and the number of searches of dried fruit sharply increased early February and reached the highest point in the Spring Festival, correspondingly. Spring Festival is one of the most important holidays in China and Chinese people usually prepare food as gifts to their families. Therefore, the demand for canned food will drop significantly as it is not considered an appropriate gift for the holidays. Dried fruit, on the other hand, is a traditional gift for the Spring Festival. Therefore, the search results increase indicating that the consumers are having a stronger interest of dried fruit during the spring festival than other periods in the year.
The similar trend is also observed for “instant food” and search results on Baidu index. The search index of “instant food” fluctuated around its average value and reached the lowest point during February 2018, Spring Festival, likely for the same reasoning as “canned food” can be applied here as well. Additionally, the number of searches of “puffed food” showed decreasing and reached the lowest point during September and October 2018 for the Mid- Autumn Festival and the Chinese National day, when people travel and do not need to store too much of the puffed food.
A semantic approach of Baidu Index
The popular search relating to “dry fruit” and “potato chips” can also be analyzed in a semantic manner. For example, the most related keywords of “Dried fruit” are “Cashews”, “nuts”, “wholesales market of dry fruit” and “dry fruit from Xinjiang province”. This means the consumers are trying to search for the product which is of the highest quality, especially from its original producing place, while still considering the price factor, as they would like to purchase the products from wholesales market, which usually offers a much lower price than regular markets.
The most related keywords of “Potato chips” are “Lays”, “Lays potato chips”, “Copico/Copico potato chips”, “Pringles” “fries”, “the way of making potato chips” and “potato chips brands”. Demonstrating that for potato chips, the brand is the most important factor that consumers consider.
The results for “cookies” and “cooked food” are also intriguing: The most related keywords of “Biscuits” are “Cookie”, “original taste cookie”, and “Lady Finger” (a kind of biscuit from Italy). This approach means that Chinese consumers are more interested in differentiated types of biscuits and even recipes for homemade cookies, instead of purchasing from the market.
The most related keywords of “Cooked food” are “Cooked food franchise”, “top 10 brands of delicatessens” and “Tianfuhao” (a Chinese processed food brand).
Chinese consumers concerns and information gathered on the instant food market
There are several social media platforms in China, including Weibo, XiaoHongShu and Zhihu. On Zhihu, questions and answers about instant food can fit into one of two categories: 1) Products recommendation based on different needs (mainly about tastes, convenience and safety); 2) Knowledge about instant food, such as production process and nutrition. From former buyer’s experience, the consumers can have a more in-depth understanding of the product and can make their most “correct” choice.
On WeChat, most posts and articles about instant food are recommendations of instant food with good taste, both international and domestic brands. Different kinds of instant noodles brands are very popular among those posts and the writers will share their experience eating these instant foods as well. Moreover, health and safety issues are also very important concerns for the readers and some of the writers will share their experience of how to eat instant food in a healthy way.
On Weibo, the main posts relating to instant food are the sharing of instant/processed seafood, noodles, meat and dumplings. International brands and domestic brands are both popular among those posts, many consumers like instant food from other Asian countries, such as South Korea.
On social media, pictures about instant food are usually taken from the consumers’ home, cars, supermarket and convenience stores, most of the pictures are recommending different kinds of instant food because they are cheap, tasty and super convenient. Domestic brands and international brands are both very popular among Chinese consumers. Therefore, a large variety of instant food has gradually become a part of daily life for a part of the netizens.