China’s large population of roughly 1.4 Billion which is expected to grow to 1.54 billion around 2040 is a consumer market which advances and evolves through urbanization & increasing middle class. China’s grocery market is also adapting to increase competition from retail formats such as hypermarkets, supermarkets and convenience stores. These retail formats already dominate the markets of some larger cities, and their continued expansion from major cities into smaller cities is expected to further drive competition in the grocery retail sector.

More and more Chinese consumers are feeling time scarce and view cooking as a chore, turning to convenient ready meals to free up more time to themselves. Time-poor white-collar Chinese workers are driving demand for Western style ready meals and desserts, though the market is very much in the early stages of development. As one international supermarket operator noted, most sales of his Western-style ready meals and desserts still came from his expat customers but on the increase from time constrain Chinese customers.

Much like coffee in China, multinational chains such as Haagen Daaz have helped to position ice cream as a premium food product in the market – one that is most often consumed outside the house. Purchasing large ice cream tubs for home consumption is still uncommon, though the burgeoning range of ice-creams available at some supermarkets indicates it is on the rise.

Dumplings & wontons remain the most popular frozen ready meal sold in China, followed by fish. Chinese manufacturers have recently started targeting the premium market with pre-packed steaks, often accompanied by sauce and vegetables. Pizza has become the fastest growing category of the prepared meals sector. The time pressured city dweller is favoring chilled & frozen ready meals causing the category to also register healthy growth in both retails value and volume.

Cold chain logistics and distribution in China has also undergone vast improvements in recent years – though some distributors claimed it still posed challenges, particularly for eCommerce. A representative from online sales platform Yihaodian noted that Walmart’s recent investment in the company would enable them to leverage Walmart’s state-of-the art warehousing facilities in China, thereby ensuring much improved cold storage options for their customers.

Brands

Major brands

• Dr Oetker • Gautier • Nicole Coppi • CXC Food • Elle & Vire

Niche brands

• Sara Lee • Lean Cuisine • The Cheesecake factory • Stouffers • Dr Praeger’s

 

Selected product information

Product	Retailer	Manufacturer	Origin	Serving Size	Price (Rmb)
Baked rice with beef and cheese in curry sauce	Carrefour (Easy Store)	CXC Food	China	360g	16.80
Chocolate pudding	Carrefour	Elle & Vire	France	200g	16.80
Strawberry topped cheesecake	Ole	Cheesecake Factory	USA	1.02kg	88.00
Original meat pie	April Gourmet	The Pie Co.	China	200g	29.50
Santa Fe style rice and beans	City Shop	Lean Cuisine	USA	234g	52.00

 

Meat pies – mainly from Chinese manufacturers – are becoming more common in international supermarkets. Frozen steak meals often come with black pepper sauce, mushroom sauce, lemon juice or garlic and soy.

Fruit-based frozen desserts and puddings are very popular, while cheesecakes can now be found at leading international supermarkets. With less sweet cheesecakes popular among Chinese, there are opportunities for manufacturers to localise flavours.

Promotions

There were no promotions for ready meals or desserts observed during the study period.

Trends and opportunities

There is an opportunity to leverage Australia’s strong beef brand in the Chinese market to produce pre-prepared and flavoured frozen steaks (perhaps with black pepper sauce to cater to local tastes), beef pies and other prepared meals containing beef.

Some Chinese buyers showed very strong interest in Australian frozen fish products, particularly value-added options that included sauces. Frozen salmon pasta and cream sauce was another product of interest.

With some convenience stores now stocking frozen packaged spaghetti bolognese, the range of frozen foods available at these stores will continue to grow as busy Chinese consumers increasingly demand quick ready meals. Australian frozen pizza and pasta manufacturers maybe well-placed to grow their China exports through these channels in the years ahead.

Australian manufacturers who can demonstrate high nutritional value in their frozen food products can possibly find further opportunities in high-end supermarkets. An opportunity exists for manufacturers to develop packaging which appeals to consumer desire for healthy & fresh meals and desserts. As an example; based on consumer research Chinese consumers want – no additives or preservatives and more vegetables as the main convenience solution ready meal claim, but taste above all as their purchase factor.

An emerging trend is ready made meals targeting kid, for example food’s cartoon character-shaped buns & breakfast ready meals from US & Mexico.

Driving forces will be increasing disposable incomes, and an occupied lifestyle. Fastest growth will be seen in the chilled/frozen ready meals sub-category as microwave and oven ownership continues to increase across China.

 

This report is a part of Food Innovation Australia Limited’s China Insights series which explores different food products in mainland China.