Instead of preparing food at home, many Chinese consumers now prefer restaurant food delivery or dining out, a new report shows.
According to Bain & Company and Kantar Worldpanel’s 2017 report China’s Two-Speed Growth: In and Out of the Home, a shift in trends sees “out of home” (OOH) consumption rising significantly. The report says this signals a major change in how the Chinese choose to consume their food and beverage.
As well as the usual panel of 40,000 households, this year Bain and Kantar Worldpanel analysed the out-of-home F&B purchases via smartphone of 4000 Chinese individuals in tier-one and -two cities. This, combined with other data sources, allowed for an in-depth analysis of eating and drinking channel dynamics.
The results show that while food bought for in-home meal preparation grew by 3 per cent annually from 2013 to last year, food deliveries rose by 44 per cent and dining out grew by 10 per cent over the same period.
“This is the first time we have analysed the Chinese FMCG market with this additional focus on out-of-home consumption, and the results show a fundamental shift in how consumers across the country are shopping for food and beverage,” says report co-author Bruno Lannes, who is a partner in Bain’s Greater China consumer products practice.
“In many ways, this shift provides an extra lens on the ‘two-speed’ trend we identified in last year’s shopper report, high-speed dining out and delivery versus low-speed home cooking.”
In overall FMCG, covering food, beverage, home care and personal care, this year’s report finds two-speed growth continuing, says Lannes. It also shows that annual growth in FMCG value for home consumption remained sluggish across all sectors studied last year, hitting a five-year low of 3 per cent, thanks to a combination of almost flat volume growth and a deceleration of price growth.
“When we identified the two-speed trend last year, we knew it would be game changing in how brands and companies would need to adapt to succeed in China’s retail sector,” says
Kantar Worldpanel Greater China GM Jason Yu. “This divergence in the market was a wakeup call to many companies that have now started to use it in their strategies and thankfully have recognised the importance of recognising the two speeds and they can now also be prepared for this latest trend of OOH consumption.”
The findings from this year’s report have identified a number of key trends impacting the China FMCG market including:
The China e-commerce channel continued to skyrocket, growing by more than 52.6 per cent in value.
Online now represents 7 per cent of all FMCG sales, having doubled its share of the FMCG market in the last two years.
Hypermarkets declined by 2 per cent and supermarkets or minimarkets decelerated to 2 per cent, barely more than inflation, compared to convenience stores which increased by 7.4 per cent.
Categories perceived as healthy or hygiene-related achieved high and growing penetration, as well as personal care categories and more generally most premium SKUs as Chinese shoppers who can afford it demonstrate that they’re willing to pay for higher-quality goods.
As in previous years, when looking at the top 20 brands in 26 categories that have been analysed in greater depth, local brands grew by 8.4 per cent, while foreign brands grew by only 1.5 per cent.
For several food and beverage categories, convenience and grocery channels have huge sales potential for out-of-home consumption.
Food delivery grew by 44 per cent, while out-of-home dining rose by 10 per cent from 2013-16, fuelled by (O2O) food delivery, which has achieved 40 to 50 per cent annual growth over the past three years.