Jason Yu, general manager, Kantar Worldpanel Greater China, shared with FoodNavigator-Asia that young mothers and families in China are spending much more on consumer goods than others.
According to Yu, many women born in the 1990s have now become mothers. On top of wanting to provide quality products for their babies and families, these women were raised in a relatively affluent period of time in China, so the way they approach spending, consumption and their lifestyle is very different from the more traditional ‘70s or ‘80s generation before them.
This means that they make very different purchasing decisions.
“They have a good level of disposable income, they are early adopters of the Western lifestyle, and their philosophy of spending and shopping is very different from the previous generation,” said Yu.
“This obviously provides a lot of opportunities for brands and retailers.”
According to Yu, this younger generation of mothers with substantial purchasing power want to bring a better quality of life to their families, and spend more on premium products. They set the bar higher in terms of product quality, as compared to other families or demographics.
Moreover, health and safety, including relating to air quality and pollution, are increasingly important to younger middle-class Chinese families.
“That’s why a lot of imported products are doing very well, such as infant milk from New Zealand,” said Yu.
“The selling point is that it comes from a country with no pollution, no water quality problem, and so on. That is actually a big hook for Chinese consumers.”
Implications for F&B
Because these families pay more attention to quality, it cannot be compromised. This also means products can demand a considerable price premium if there is sufficient quality differentiation compared to other options in the market.
“Across almost all categories, premium brands (costing at least 20% more than the average market price) are growing much faster than mainstream products. Premium price offerings are actually winning consumers,” said Yu.
He said manufacturers also needed to consider how to bring convenience to these families.
He gave the example that some frozen instant food companies have been successful in China with baby or child food. Some of them have come up with animal-shaped dumplings or buns, that are not only attractive to kids but also easy to prepare within a few minutes.
Lastly, he said the products need to contribute to the experience or happiness of the family. That would truly give it “a place”.
Successful brand strategies
Yu shared that a lot of FMCG brands in China have already identified and seized opportunities to target and market products specifically to families with babies or children under ten years old.
Two successful brand cases Kantar highlights are Mondelez’s Oreo cookies and Le Pur premium yoghurt.
Yu said the biscuit segment is facing challenges in China due to the consumer health concerns.
Therefore, Oreo created an opportunity for consumers to design and order a personalised painted pack on ecommerce site Tmall. It rejuvenated the brand and product’s image through technological innovation and the customer’s personal experience.
Similarly, Le Pur (Lechun) has seen rapid growth even though its premium yoghurt costs 25 RMB per box, nine times higher than the average yoghurt price per kg.
Le Pur advertised and built traction with consumers via social media engagement. This developed brand awareness and drove word of mouth in the market.
Both brands integrated online and offline platforms in their campaigns to further their brand image and to promote new products, and have been very successful.
According to Kantar, the value share of families with young children (aged below 14) in China’s FMCG ecommerce market is 43%.
In terms of offline retail, Yu said they lead a comfortable life and are cash-rich, and are therefore looking for stores that can provide premium shopping experiences.
“If you are a supermarket or hypermarket, you really have to offer impeccable shopping experiences to win shoppers. Either provide memorable experiences or a lot of convenience to shoppers,” said Yu.
Yu is scheduled to give the first talk on Day Two of the Food & Beverage Innovation Forum (FIBF) 2018 in Shanghai, on April 19, on how brands can survive in the "new retail” environment.