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New Consumption trends in China – 2022 Mid-year report

As we cross the middle of the year China has been through a sea of changes as it grappled with a serious coronavirus outbreak. Several industries are particularly popular in the first six months, let’s take a look!

  • New-style tea beverage + coffee

The new-style tea beverage is a beverage using premium tea concentrations that are extracted by different methods as the raw material and mixed with fresh milk, imported cream, natural whipped cream, or various fresh fruits.

Currently, the new-style tea beverage market has formed three major echelons: the representative of high-end tea brands are still Heytea and Nayuki tea, while the mid-market has gathered brands such as Sexy Tea, Shuyi Tealicious, A Little Tea, etc., and Mi Xue Bing Cheng is still dominating the low-end market in the industry.

(Pictures from the internet: High-end tea brand – Nayuki tea)

Due to the fierce competition of new-style tea beverages, high-end tea beverage brands have each expanded their business and launched coffee beverages, the move sparked a coffee boom.

The rise of the coffee boom has accelerated the expansion of many coffee brands. In the current market, the coffee brand branches are dominated by local China leading brands such as Luckin Coffee and Manner, and other small chain brands include Tini Chellona, SOBUFF, FELICITY ORIGIN and so on.

China’s coffee market is growing rapidly, the market scale is large but the chain rate is low, there is still plenty of room for standardized coffee to improve its penetration rate.

  • Prefabricated dishes

Prefabricated dishes are finished or semi-finished products that use agricultural, livestock, poultry, and aquatic products as the main raw materials and are pre-processed in factories and stored in a frozen, refrigerated, vacuum, or normal temperature. It can be heated up or consumed directly.

(Pictures from the internet: Prefabricated dishes)

In the first half of 2022, due to the epidemic in China, almost all professionals started to work from home and often cooked, and this accelerated the development of pre-made dishes. The development of prefabricated dishes is mainly in first-tier, second-tier cities, and new first-tier cities because consumers there mostly have higher work pressure and frequently work overtime, they would have limited time to cook hence prefabricated dishes would fulfil their needs by being the fastest and easiest way to prepare a meal.

Although the current profitable space is very little, however in the future there should be more capital involved in this emerging industry, hoping to make a fortune from this.

  • Functional skincare products

Functional skincare products are products that focus on problematic skin, that added sufficient active ingredients with certain pharmacological effects, and can effectively treat certain skin diseases.

Functional skincare products are becoming much more popular among young people, hence more and more new China brands, such as Cka beauty, PMPM, Young Doctors, YOUNGMAY, KOSLIV, HEPROA, etc. launched functional skin care products to cater to the market.

(Pictures from the internet: Functional skincare products)

Functional skincare meets the needs of different segmented groups and is gradually forming the user’s mind. This field has high potential in terms of penetration rate and growth trend.

  • Pet supplies

The sophistication of young people today is reflected in all aspects, from eating, clothing, fashion style, and exquisite parenting style, to pets at home. Exquisite pet care is first reflected in the biggest rigid-need category “food”. Nowadays, consumers will care more about the quality of products when purchasing pet food, they would prefer natural and organic ingredients.

Pet food is the most consumed product and once cats and dogs are used to eating one brand or product, they would not eat other products anymore. In recent years, among the top ten cat food brands in China's market share, imported brands take up 15.5% of the market share in 2021, among which ultra-high-end brands are very popular. This indicates that local pet food brands still have the opportunity to achieve domestic substitution.

(Pictures from the internet: Pet supplies)

  • Camping

Under the influence of the epidemic, China has set off a camping boom. Unlike traditional camping in the wild, people now value humanised and sophisticated camping.

Therefore, besides the traditional camping equipment (tents, canopies, sleeping bags, etc.), the commodities that will be used in the camping (drinking appliances, household fabrics, 3C digital peripherals, etc.) are also in great demand. According to Analysys’ report, it is estimated that the scale of China’s camping market will reach 52.8 billion yuan in 2022.

(Pictures from the internet: Refined Camping)

Currently, most of the domestic outdoor equipment is in the process of climbing from low-end OEM to high-end design, and it is very competitive. Now consumers mainly look at the quality and practicability of products. With the rise of domestic substitution, domestic brands with R&D and design capabilities will have greater opportunities.

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