Factors Affecting Consumer Purchasing Decisions in China’s Functional Drinks Sector

Preface:

As a preface to this discussion it’s necessary to carefully delineate key differences in the definition of a “health food beverage” and a “functional drink” in China as these terms are sometimes confused given their different utilization in regulatory frameworks and markets outside of China. In China health foods are a specific category of food articulated within and legislated for by China’s Food Safety Law (2015) which bear a “Blue Hat” certification mark on their label, have specific standards regulating their production, efficacy/safety testing etc. and which require either:

1. Registration: for products bearing labeling claims purporting to alter physiological parameters generally considered risk factors in development of diseases

2. Filing: for vitamin/mineral supplements manufactured using ingredients contained within a positive list of approved raw materials 

Functional drinks in China is not a specific regulated category of foods but is instead an umbrella term used to describe beverages which do not fall under health food beverage regulatory requirements but are still considered as conferring health benefits. The scope of functional drinks in China are mainly sports beverage, nutritionally fortified beverages, energy beverages, electrolyte beverages and female targeted beverages.

Asia Functional Drinks Innovation Summit: Key Takeaways

During the Asia Functional Drinks Innovation Summit 2018 held in Shanghai on Sep. 20 and 21, Gui Min (Director of Nutrition and Health Research Center of Research Institute of Bright Dairy & Food Co., Ltd., PhD of Pharmacology and National Primary Public Nutritionist) gave a speech centered around functional drink consumption and new product development. Key takeaways were the importance of consumption experience, movement away from pursuing “Blue Hat” certification and downplaying of the role of brand awareness in consumer purchasing decisions.

The often prohibitive regulatory compliance burden and associated financial and time investments inherent in “Blue Hat” registration of health food beverages has seen enterprise target the lower hanging fruit of China’s functional drinks sector. Over the last several years the ubiquitous and popular Red Bull and more recent entrant “Monster” have been joined by a slew of precocious upstarts scrambling to grab a slice of the lucrative pie that is China’s functional drinks market. In this sector China’s discerning and often brand conscious consumer seems more inclined to choose unknown or new brands and to make decisions based on consumption experience tending to choose products which offer a memorable and enjoyable sensory experience.

5 Key Factors Shaping Consumer Purchasing Decisions:

• Sensory Qualities: it is not all about flavor and taste. Chinese consumers also look for an enticing fragrance and a satisfying mouthfeel. A prime example of a beverage which fits the sensory parameters demanded by Chinese consumers is “HEYTEA” a milk tea product which includes tapioca pearls (known as boba) and herbal jelly and offers an equally appealing visual experience.

• Convenience: Convenience is key in China. Digitalizing the consumption experience is important to piquing Chinese consumer’s interest. Container designs should be easily transportable, storable and sturdy. In addition modular container design which allow inclusion of ingredients in different physical states (solids and liquids) are also appealing.

• Appearance: Beverage appearance and packaging are important.

• Function: 5 popular functions/health benefits in functional beverages: Fatigue resistance, skin water replenishment, hangover alleviation and stomach protection, GI pro-motility, and satiety

• Expectation: consumers buy functional drink products with certain expectations, including the name and packaging, its functions, nutrients, clinical evidence etc.