F&B opportunities for Australia in China’s smaller cities

July 5, 2018

MELBOURNE – In a keynote address on consumer trends and opportunities in China for premium food and beverage brands, Mark Tanner, Managing Director of Shanghai-based China Skinny, has pointed beyond China’s Tier-1 cities.

Already, he said, there are 114 cities in China with a population greater than Melbourne, a figure set to rise further.

Research from the Boston Consulting Group estimates that between 2016 and 2020, 50 million new Chinese consumers are going to reach the middle to upper classes – and that half of those are going to be from cities that are smaller than Melbourne.

This trend, he said, was creating a significant number of consumers with enough money to spend and make discretionary purchases to buy premium and imported products - something he encouraged food and beverage brands to think about as a part of their business strategy going forward.

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China is now the world’s largest consumer market for food and beverages, with average import growth of 15% during the last five years.

“Most people when they talk about China talk about Shanghai and Beijing, and when they launch a brand, they think about these markets,” he said.

“In many cases it’s the right thing to do because these consumers are wealthier and they are spending more on sophisticated and imported products - but in many other cases they are not.”

Tanner highlighted the importance of taking the distinct characteristics of individual cities and markets in China into account.

Consumer habits and preferences, he said, could change rapidly between each city. “Shenzhen and Guangzhou, for example, are only a 30-minute train ride apart, yet they are completely different cities.

“Guangzhou is an old city, people speak Cantonese there, and tend to live at home with their parents.

“Just down the road in Shenzhen, which was a fishing village 30 years ago, the people have come from all around the country and the common language is Mandarin. Many of them are migrants, so they don’t live at home and they may only see their parents once a year at Chinese New Year.”

Such fundamental differences, he said, require careful nuancing by marketers on, for example, messaging around family bonding (ATI).