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Responding to Consumers - Shan Hai Jin Packaged Beverage Insight

群邑智库 · 公众号 · · 2021-04-28 18:00

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Under the COVID-19, industries and markets have been impacted to varying degrees. GroupM Shan Hai Jin study has obtained firsthand data of the transition of consumers’ media and consumption behavior through its continuous tracking of the China market. GroupM Knowledge presents insights on consumer behaviors and suggestions on communication strategies by analyzing representative industries such as automobile, luxury, and FMCG. This issue of Media Express will reveal the development of packaged beverage industry.

Key takeaways are as below：

Differentiated demands for packaged beverage lead the industry heading towards Healthy, Innovative and Diversified: Healthy beverage is the ongoing trend and catches even more attention because of the pandemic. Low-sugar, low-fat and fizzy taste have gone viral in the packaged beverage industry as brands harness the “trick” of reducing sugar instead of sweetness and giving a sense of refreshment instead of burden to meet consumers’ demands. Meanwhile, brands also release their new sub-brands or extend their product portfolios, helping themselves to benefit from the tendency of consumption diversification.

Packaged beverage brands are responding to changing consumption scenarios flexibly: Overall, the penetration rate of packaged beverage didn’t show much YoY change. The number of consumption scenarios of RTD tea and bottled water remained but the scenarios were shifting indoors. For instance, social-distancing and concern on sanitation resulted in the percentage of drinking bottled water in the office doubled. Hence bottled water brands promoted their large-size products and wholesale packages. As for juice, consumers’ consumption frequency, spending and average transaction value all increased, indicating consumption upgrading on juice. Also, juice is a choice for refreshment and nutrition, and gets enjoyed together with meals/snacks, therefore, gatherings are main consumption scenarios. High quality juice – NFC juice/HPP juice – also provided wholesale package then.

Target audience of packaged beverage have their respective characteristics:

Tier 1&2 post-80s/90s love to please themselves, care about quality, are more willing to spend and more reliant on the Internet to help them make purchase decisions. They also have multi-screen behaviors frequently.
Tier 3&4 post-80s/90s love to try new products and their purchase decisions are more likely to be influenced by stars and idols on social media.
Tier 1&2 post-60s/70s care more about health and tend to choose high-end healthy and organic products.
Tier 3&4 post-60s/70s rely on offline stores and prefer domestic brands.

Consumers of tea beverage prepared on site are keen on the beverage category, and have specific preference on subcategories: Tea beverage prepared on site becomes an important branch of beverage, and consumers could enjoy them in the office, at gatherings, or when shopping in the malls. Its penetration rate is approx. one-third of packaged beverage. Consumers of tea beverage prepared on site have a higher propensity on purchasing packaged beverage, especially RTD tea, coffee and milk-based beverage. Moreover, brands of tea beverage prepared on site are exploring beverage market through bottled sparkling water, tea bags and souvenirs (such as the brand’s plastic bottles).

Beverage is an inelastic demand as food, and the growth rate of its retail sales volume ranked TOP1 in 2020.

In 2020, Consumption scenarios and consumer demands evolved as macro environment changed: Amid the pandemic, consumers had no choice but stayed at home and they reduced eating outs. In the post-pandemic era, while people returned to work and production resumed, consumers went out of home and restaurants reopened one after another. However, restriction on consumption scenarios still exist (e.g. wearing masks at public venues) and consumers are paying more attention to health factors.

Differentiated demands for packaged beverage lead the industry heading towards Healthy, Innovative and Diversified

Healthy beverage is the ongoing trend and catches even more attention because of the pandemic. Also, in the past 40 years, China’s food and beverage market has evolved from industry side-driven to consumption side-driven. Low-sugar, low-fat and fizzy taste have gone viral in the packaged beverage industry as brands harness the “trick” of reducing sugar instead of sweetness and giving a sense of refreshment instead of burden to consumers.

Packaged beverage brands also release their new sub-brands or extend their product portfolios, enabling themselves to benefit from the tendency of consumption diversification.

Packaged beverage brands are responding to changing consumption scenarios flexibly

Overall, the penetration rate of packaged beverage didn’t show much YoY change. But the rate rose slightly among post-80s/90s consumers. The number of consumption scenarios of RTD tea and bottled water remained stable but the scenarios were shifting indoors. For instance, social-distancing and concern on sanitation resulted in the percentage of drinking bottled water in the office doubled. Hence, bottled water brands promoted their large-size products and wholesale packages.

Consumers’ consumption frequency, spending and average transaction value of juice all increased, indicating consumption upgrading on juice, especially in lower-tier markets. Also, juice is always a choice for refreshment and nutrition, and gets enjoyed together with meals/snacks, therefore, family/friend gatherings are main consumption scenarios. And then, high quality juice - NFC juice and HPP juice - also started to offer bundled package for consumers. Brands even provide localized drinks according to season changes and local drinking habits, such as apple vinegar juice and hot grapefruit juice.

The consumption scenarios of carbonates shrank sharply. Places that used to be main consumption scenarios of carbonates – on outing, at service station, in restaurant and while walking – faced with a YoY decrease of 50%. This happened mainly because the restriction of outdoor activities and consumers’ decreasing demand for healthy beverage. In 2020, represented by Genki Forest, sparkling water brands continuously claimed themselves as “sugar-free sparkling water that won’t put on your weight”, emphasizing their difference with traditional carbonates.

Target audience of packaged beverage have their respective characteristics

Tier 1&2 post-80s/90s love to please themselves, care about quality, are more willing to spend and more reliant on the Internet to help them make purchase decisions. They also have multi-screen behaviors more frequently.
Tier 3&4 post-80s/90s love to try new products and their purchase decisions are more likely to be influenced by stars and idols on social media.
Tier 1&2 post-60s/70s care more about health and tend to choose high-end healthy and organic products.
Tier 3&4 post-60s/70s rely on offline stores and prefer domestic brands.

Note: 4 groups are packaged beverage consumers

Consumers of tea beverage prepared on site are keen on the beverage category, and have specific preference on subcategories

Tea beverage prepared on site becomes an important branch of beverage, and consumers enjoy them in the office, at gathering, or when shopping. Its penetration rate is one-third of packaged beverage or so. Consumers of tea beverage prepared on site have a higher propensity on purchasing packaged beverage, especially RTD tea, coffee and milk-based beverage. Tea, coffee and milk-based beverage are the main sub-categories of tea beverage prepared on sight, and collaboration between brands are also related to these sub-categories, for example: Cha Yan Yue Se X Saturnbird Coffee, Nayuki X Want Want Milk, Heytea X Ovaltine, etc. Moreover, brands of tea beverage prepared on site are exploring beverage market through bottled sparkling water, tea bags and even souvenirs.

Offline Channels are significant for packaged beverage, as they are main channels for making purchases and marketing

High percentage (90%) of consumers make packaged beverage purchase through offline channels. And almost one-third of Tier 1&2 consumers have purchased packaged beverage online. Tier 1&2 post-60s/70s prefer to shop in grocery stores and free markets, while lower-tier markets consumers prefer to shop in supermarkets and convenience stores.

In-store staff’s recommendation and in-store display are the TOP2 influencing channels for packaged beverage purchase decisions, implying that in-store channels are influential to consumers’ choices when they stand in front of shelfs. It is mainly because packaged beverage has relatively low unit price, the cost of choice for consumers is low, and the dominating offline channels make consumers to make decision in a short time as they can just grab and go. Therefore, product packaging, in-store display, recommendations from in-store staffs are likely to have effects on consumers’ choice.

In the future, GroupM Knowledge will present you with Shan Hai Jin categoryinsight reports on luxury, cellphone, fast fashion apparel and so forth. Pleasestay tuned!

Data source: GroupM Shan Hai Jin

Responding to Consumers - Shan Hai Jin Packaged Beverage Insight

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