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The Fourth Meal: Understanding China’s Snack Food Sector

  •   8 May 2019
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“Snacks are not a specific category of food, but every food category can be a snack—if the products are delivered in the right format.”

The sixth Food and Beverage Innovation Forum 2019 (FBIF 2019) was held at Hangzhou International Expo Center from 23rd-25th of April. 120+ global speakers, 4000+ decision makers from 700+ leading companies gathered at FBIF2019. During the forum organized on April 25th, Patrick Mannion, managing director of Innova Market Insights University & Research, Annie Yang, strategic marketing manager Greater China of DuPont Nutrition & Health and Jingyue Wang, co-founder of Baicaowei expounded their ideas about China's snack food sector.

The Fourth Meal: Snacking

During the forum, both Patrick and Annie offered insights into the snack food sector using the concept of "the fourth meal". Patrick Mannion from Innova Market Insights shared that for most consumers, snacking is an important part of daily life now. It is no longer the optional extra, but an important daily habit and ritual. In China, 52% of consumers snack once a day.

Source from: Innova Market Insights

Analysis of Consumer demographics

  • Who Are They?

According to a 2018 online snacking consumption report [1] released by CBNData & Alibaba, snacking is common amongst all demographics but older Chinese from 51-70 years of aged snacked the least.

  • What do They Consume?

As revealed by data from a 2018 Mintel report [2], nuts are the most widely consumed category of snacks. The sales value of snacks totaled to 546 billion yuan and nuts accounted for a sales value of 160 billion yuan in 2018.

Source from: Mintel

Another report from Innova Market Insights [3] also showed that consumers also tend to seek healthy, indulgent yet convenient snack solutions that fit their busy lifestyle. The data tells that 63% of millennials are replacing meals with snacks due to their faster pace of life. 50% of Gen X are inclined to avoid consumption of sweet snacks while 67% of baby boomers are making changes to their diet to become healthier.

 Source from: Innova Market Insights

  • Consumption times

Consumer's today consume snacks throughout the day and at different times. 11% of consumers will snack over three times a day. 41% of consumers consume snacking products 1 to 2 times a day. Afternoon tea and late night are the peak periods.

Opportunity: Creating Functional and Emotional Value

As stated by Innova Trends Survey 2018, 50% of Chinese consumers think "the feeling of comfort is important when consuming food & beverage", compared to just 40% of US consumers. During this forum, both Annie and Jingyue Wang from Baicaowei mentioned the importance of creating products with both functional and emotional value.

Annie illustrated the different categories of snacking products using the following chart.

  • How to create a product which can offer both the functional and emotional value?

Yogurt is a perfect example here. Besides aiding digestion and supplementing nutrition, the sensory qualities of yogurt can help improve mood and decrease stress. It can be delivered in a variety of ways ranging from a sumptuous decadent dessert to a functional food product used to aid digestion and improve gut health.

Another classic case would be the "HUG ME", a nut product launched by Baicaowei in August 2016, which is a combination of one jujube and one walnut. The product is marketed anchored to an interesting "sharing is caring" concept. It is a unique product which sold over 300,000 boxes in 18 days and achieved 10 million yuan in a month. Today the product has maintained its popularity and boasts average sales of 50 million yuan per year, according to the co-founder of Baicaowei, Jingyue Wang.

How to Create a Popular Product/Case study: Baicaowei

Baicaowei is the second largest snack company in China and achieved sales of 5 billion yuan in 2018. It is a platform which mainly relies on its product and marketing team to select and sell high-quality snacks to consumers.

  • Business idea: solving consumers' demands under different consumption scenarios

Jingyue Wang, the co-founder of Baicaowei shared her business idea during the forum. She said many enterprises found it is hard to find their main consumers and are confused about consumers' needs. She also stated her belief that different consumer groups have different demands, but may have similar demands under identical consumption scenarios. Thus it is essential to consider consumers' primary demands under different consumption scenarios which will be influenced by different factors, for example, the time or occasion he/she needs a snack.

Jingyue Wang also expounded why consumers in first or second-tier cities have become more rational regarding their consumption habits which she attributed to it now being harder for them to find products which are more suitable for their lives. Based on this, Baicaowei will offer more solutions to cater to different consumption scenarios and evolving demands.

  • How to figure out consumers' demands?

Companies need to carefully analyze the daily lives of consumers and find out why a consumer needs a product, what they need and when they need it etc. Based on this analysis, Baicaowei has expanded its product portfolio with the following products which have all performed extremely well.

         ► Baicaowei's Daily Nuts, it contains different kinds of nuts in one small package which can satisfy consumers daily nutrition demands.


► The Spring Festival Pack is another great example. It was China's bestselling snack products and gifts during China's spring festival since it is affordable to consumers and it offers a better and healthy solution for them to send gifts for families and friends.

Interview: Q&A Section

During the FBIF 2019, ChemLinked interviewed Jingyue Wang. Main contents are selected as below:
Q: Baicaowei was set up in 2003, however, it still remains one of the most innovative and popular snack food companies. What is the secret to maintain your brand vitality?

A: The core secret is to keep creating hot products, which requires you to make brave decisions and stay sensitive to the demands of consumers. Companies must also remain receptive to evolving demands and be willing to dynamically adjust staff organization, adjust staff's KPI and optimize the workflow to help with production innovation.

Q: What's your next step in product innovation and development?

A: Firstly, we'll develop more products and expand on our current snack categories. For example, we recently launched a nut beverage product early this year, since nuts is our main category, we want to expand further into subcategories of nut-based snacks and beverages.

Secondly, we will continue to innovate and optimize our current product lines. In the next several years, we will launch brand new flavors and offer new experiences and sensations focusing on seasonal changes in consumption scenarios and other unique experiences.

Q: You just mentioned "health" is a trend these years. What will you do to meet the demands presented by this trend?

A: I think there are important things to be addressed when developing a healthy snack. Firstly, safety is paramount. Secondly, the snack shall contain less additives and minimize any detrimental impact on the body. Thirdly, a snack shall be natural or free from additives. The last thing is meeting the nutritional demands of consumers, just like what we offer through our "Daily Nuts". Currently, at Baicaiwei we are really focusing on innovating on the additives we currently use. We are trying to extract natural additives and sweeteners from plants and to remove unnecessary additives from all our products.

Q: What's your understanding of "new retail"? And how will you lay out your offline sales channels in future?
 
A: The essence of "new retail" is the enhancement of retail service using innovative digital technologies. It not only refers to the enhancement of the operational efficiency of enterprise but also to the enhancement of consumption scenarios and consumer experience.

Our sales channels are one of the key ways we can communicate with consumers. In order to satisfy their demands under different consumption scenarios, we will expand and develop our offline sales channels. For example, white-collar workers may go to the convenience stores near their company during the lunch break to buy some snacks for afternoon. Or they may want to order food online after work, and we can deliver the snacks from the nearest offline stores to their homes. In 2019, Baicaowei will open several offline stores to meet these demands. The first one will be opened in June in Hangzhou.

Reference Link:

[1] Online snacking consumption report 2018
[2] China Consumer Snacking Trends Market Report     
[3] Top Ten Trends for 2019 by Innova Market Insights 
*Data mainly from the speeches on the FBIF 2019
 

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ABOUT THE AUTHOR

Lennie Tao

ChemLinked editor, having expertise in food regulations.