Easy ways ahead for both food vendors and lovers
Tremendous changes have been seen as people keep adapting toward a life with the stay of the COVID-19 pandemic and the fast moving of various technologies. This series looks into these changes and explores what's up next.
The increasing stay-at-home trend has given rise to a wide range of foods and drinks. Many niche sectors in the dining and catering industry is to take center stage as shoppers' demands are quickly evolving.
New brands in niche categories are taking notice of this trend and will continue to emerge in the coming years.
New packaged food vendors, partially cooked meals and pre-prepared meals are catching up in a fast-evolving consumer landscape.
New marketing channels, livestreaming sessions and social media tools are helping new brands to quickly gain recognition from shoppers.
"Preparing food for the family is sometimes bothersome, and thankfully there are plenty of pre-cooked dishes and ready-to-heat food to choose from," said Shanghai senior accountant Jessie Zhang.
An increasing number of pre-cooked meal providers will be seeking to use local flavors and seasonal ingredients to appeal to gourmet seekers.
A local low-temperature meat producer, Benwei, meaning "original taste," received venture capital investment from the social networking site Xiaohongshu (Red) and has successfully rolled out products ranging from frozen sausages, bacon and frozen ham slices to pre-cooked dishes.
Benwei has teamed up with Jiangsu and Zhejiang specialty food brand Centennial Yufu for its latest offering to use Xuefang Jiang-branded Jinhua Ham in its pre-cooked dishes, as pork always has a special position in Chinese families' year-end gathering meals.
The research institute iiMedia expects sales of pre-cooked dishes in China to reach 345.9 billion yuan (US$54.3 billion) by the end of 2021 and will maintain a growth rate of about 20 percent over the next few years to reach 516 billion yuan by 2023.
Most of the pre-cooked meals are still restricted to a relatively limited region, and nationwide players and industry watchers also expect regional companies with distinct features such as specialty flavors that suit a certain geographical location and traditional cuisine are more likely to stand out.
The overall shift to convenience and healthy diets has provided significant growth potential for pre-cooked meal vendors and food service providers, said Kantar Worldpanel China Managing Director Jason Yu.
Shanghai's time-honored brands are responding to a government call to upgrade offerings by leveraging data capabilities.
Bright Dairy has been using Tmall and its own on-demand platform to promote its new probiotic yogurt line which targets digestive health and wellness. Such digital platforms have helped the iconic food company in Shanghai regain market awareness, and it will continue to enhance digitization in latest offerings, including probiotic powder drinks that target the digestive system.
Shanghai has set up a target in the 14th Five-Year Plan (2021-2025) to enhance the position of digital economies.
Digitization shall play a key role in pushing forward the city's high-quality development and economic structure upgrade.
The city eyes further support for leading digital economies to develop new business formats where online and offline models become deeply integrated, and the city could thus become home to a cluster of key digital service providers.
Shanghai-headquartered Bear Coming is another local player capitalizing on the trend of people's hope of cooking nice homemade meals with no need to prepare the ingredients.
Kelly Huang, who is a marketing consultant in Shanghai, said she tried making spaghetti with ready-made tomato bolognese sauce and enjoyed the preparing process.
"It's easy to make a dish that's ready within 15 minutes. I plan to try the salad dressing next time when I choose a healthier meal," she said.
Compound cooking ingredients like barbecue sauces, black pepper, and sea salt powder are also some of its bestselling items.
Targeting those who want to cook a delicious dish with only one cooking ingredient, the company has included leisure cooking and bakery cooking ingredients.
Starting out with online storefronts on JD, Tmall, and short-video sites like Douyin and Kuaishou, it also extended its reach to offline retailers and is expected to cover 5,000 outlets of major supermarket chains by the end of this year.
China's compound cooking ingredient market is estimated at 189 billion yuan this year with Western-style compound ingredients making up about 44 percent and Chinese-style ingredients contributing around 38 percent.
Although still in the early stage, some regional small companies could grow into ones with tens of billions of market value in the coming years.
For emerging brands, the road to becoming the next unicorn is a difficult journey.
Expanding product categories is a crucial step for upcoming brands that are quickly using digital channels and social media to cater to niche demands that are otherwise often overlooked, according to a recent joint study by Bain Co and Kantar Worldpanel.
Having evaluated the performance of 46 local emerging brands in the consumer goods sector, it found that only 17 have continued to fare well with more than 10 percent annual increase of retail sales value, while the others have reached a plateau with lower than industry average growth rate or failed to see sales increases.
Competition will be heating up for new brands as multinational companies have also learned to quickly engage with evolving consumer trends and foster niche brands, it suggests.
It is crucial for brands to retain consumers after they capture their first batch of adventurous diners, as new options are eager to take to the stage.
The competitive landscape is much more difficult than three to five years ago. The bar to challenge incumbent players is much higher, as local brands and multinational firms are learning from upcoming brands quickly, said Bruno Lannes, a partner at Bain & Company based in Shanghai.
Emerging brands and established ones alike will be learning from each other, which could eventually gift shoppers with a wide variety of choices.