Healthy living is rapidly shaping up to be one of the top priorities for the urban Chinese consumer. This desire for a healthier lifestyle comes as a promising move at a time when China boasts of one of the highest obesity levels worldwide, as well as rate of related diseases such as diabetes. The Chinese Beverage Industry recently put forward a proposal to make beverages “a medium of good nutrition”. In line with the country’s ‘Healthy China 2030’agenda, this perhaps will be the much needed push for the country’s transformation towards health and nutrition.
China’s shift towards healthy products is not limited to beverages alone, as is clearly reflected in the current urban consumption pattern. Case in point – Till a few years back, Henan Lotus, world’s largest MSG producer racked up sales worth billions in China making it the biggest consumer of the flavoring. Fast forward to today – the company is in much trouble because of the decline in sales of MSG in China, so much so that they’re forced to give an early retirement to thousands of staff and are witnessing the exit of several key stake holders and senior leaders. According to analysts, Chinese consumers have turned against MSG because it is perceived as unhealthy.
According to Summer Chen, senior food and drink analyst at Mintel, “concerns about food have shifted more towards nutrition”. Predictably, it is not just MSG that has felt the impact of this trend. According to a survey by Bain & Kantar World panel, Chocolate and Confectionary sales too have seen a decline of 6 and 4% respectively, while Chewing Gum sales have seen a massive dip of 14%.
The fastest growing F&B categories as per the survey were Bottled Water and Yogurt that witnessed a sales growth of more than 10%, clearly driven by the perceived health benefits. Local brands are seen to be benefitting way more than MNCs from this trend, dominating 98% of the FMCG Sales growth in China with a majority share in almost all categories, as per statistics from 2017. In the Fruit Juice category, local brands such as Nongfu and Infinitus achieved share dominance over international brands like Coca–Cola. They achieved this by cashing in on the health trend and making their product desirable to the consumers by offering 100% juice vis. a vis. Cocal Cola’s offering of a concentrate based product such as Minute Maid.
It will be interesting to note how MNCs in China react to this trend. They have premium products but the need of the hour is for them to innovate and catch on to the consumers’ changing consumption preferences, at the moment very clearly inclined towards healthy and nutritious food. Else, they might find themselves wrong-footed by this trend, just like Coca-Cola did.