Consumer insights : consumption habits in China

Rapidly shrinking in recent years Chinese economy allows more people to achieve middle class level of income. As a result, it gradually changes consumption habits of Chinese consumers, who become more aware of food quality standards. In recent years, consumption habits in China shifted towards meat and sea food.

How food consumption habits and income are correlated?

However, Economic Research Service in its report “Demand for food quantity and quality in China” observes that food consumption and household income in the country grow at difference pace. While the whole economy grows at a rate of over 9% per year, food consumption does not increase that much on annual basis. This means that as household income grows, households do not consume more, but they rather consumer higher quality food. There are various theories on relationship between food consumption and income, which can be simply generalized. Low income households spend more than 50% of their income on food. When income starts to rise, this share gradually increases along with income until certain income level.

Higher income level households in China prefer beef to pork

In recent years, more people in China prefer to eat out as a result of rising incomes. They also switch in their meal preference. For example, it was discovered that pork is seen as inferior good by Chinese consumers: as their income rises, they switch from pork to beef, chicken and sea food. However, consumption of eggs remains constant regardless the level of income. Consumption habits in China depend strongly on level of income, which can explain the difference between region and cities.

Food crisis fears

By October 2012, it became clear, that China consumed twice as much meat as the United States. It raises global concerns regarding food crisis, which may happen in the country, if meat consumption will not fall in the future. The concerns are tied to the fact that China has a limited availability of water, crops and land, which are highly important for livestock. It means than in the future, the country will not be able to provide itself with meat; as a result, the need to import large volumes of meat may arise. Similar to beef, fruit consumption also increases as household income rises.

Chocolate market has been growing fast regardless that fact that the majority of Chinese do not like sweeties

In has been argued that the Chinese do not like to eat too much of candy and chocolate things. Traditional Chinese cakes are not sweet enough, and many supermarkets have a great variety of dark rather than milk chocolate, which is less sweet. However, the Chinese argue that they like sweet stuff, but not that much sweet as American chocolate and bakery. This raises a contradiction between Chinese traditional preference and statistics on chocolate production, which has been growing 20% annually during past years. Moreover, it was revealed that foreign brands, in particular European and American, such as Nestlé and Hershey are preferred to Chinese chocolate.

As it was mention before, consumption patterns have been gradually changing in China due to its rapid growth and development. Rising level of income leads increasing consumption of beef and falling consumption of pork. Moreover, fruits and candy products rare in high demand among middle-class Chinese households. Such consumption habits imply that as income rises, share spend on food gradually falls.

For more information:

http://www.ibisworld.com/industry/china/chocolate-candy-production.html

http://www.daff.gov.au/__data/assets/pdf_file/0006/2259123/food-consumption-trends-in-china-v2.pdf