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Mintel’s annual Chinese Consumer 2021 Report summarizes the key shifts in consumer spending, trends in consumer lifestyles and attitudes,  impact on markets over the last year, and provides implications and recommendations for companies and brands over the next 12 months*. 

According to the latest Mintel research,  Chinese consumers are redefining what they find most valuable  in life in the post-COVID-19 period. In the wake of the pandemic, consumers have a stronger sense of wellbeing, ethics, and personal protection. Nearly two in five (36%) claimed work-life balance was a key feature of an ideal job in 2020, rising to 42% in 2021 after the COVID-19 outbreak. They also have a greater sense of responsibility and want their daily work to contribute to society; the pre-to-post-pandemic change is from 21% to 32%. In particular, the majority (63%) of consumers, mainly Generation Z (i.e. 18-24-year-olds), are becoming aware of promoting positive causes and supporting social and environmental protection.

At the same time, in an era where everything is becoming smart, the protection of personal data is a new area of concern in all aspects of urban life, which will also affect the food, clothing, living environment and social security of consumers in their daily lives. 44% of consumers now claim they are concerned about intrusion of their privacy, which was only 23% in March 2020.

Laurel Gu, category director at Mintel China, said:

“High consumer confidence and solid economic growth, along with consumers’ desire for healthier lifestyles and long-term future security, will combine to drive steady growth in overall consumer spending in the coming years. Consumers are increasingly driven by emotional factors when making purchase decisions, and they will prefer brands that align with their own ethical values, for example respecting consumers’ cultural identity and individuality and fulfilling corporate social responsibility.

Consumer spending will return to pre-pandemic levels in 2021

Mintel estimates that total consumer spending will reach RMB 41.589 trillion in 2020, down 5.7% from 2019, due to the pandemic. The decline is more pronounced for certain categories including travel and vacation (-61.4%), leisure and entertainment (-37%), food and beverage services (-13.6%), and alcohol consumed away from home (-14.9%), due to a reduction in out-of-home activities (especially during the lockdown) and lower prioritization of non-essential spending .

However, the pandemic also led to increased consumption and consumption upgrades in some categories. For example, alcoholic beverages consumed at home (15.9%), household food (13.1%), medical and healthcare products (9.3%), beauty and personal care products (8.1%), and personal finance and housing (5.3%) saw higher growth rates in 2020.

Mintel forecasts that total consumer spending will return to pre-pandemic levels in 2021, reaching RMB 45.647 trillion, up 9.5% from 2020. Thereafter, consumer spending is expected to continue to grow at a CAGR of 7.1% from 2021-2025 to reach RMB 60.004 trillion in 2025 (with a stable population growth rate and per capita monthly spending of approximately RMB 3,450). The year-over-year growth rate will slow down as the market further matures.

Future consumer spending will go towards travel, personal finance, housing and household food

In the long term, Mintel forecasts that travel and vacation spending will return as one of the top five consumer spending categories by 2025. At the same time, a large portion of consumers’ disposable income will flow to personal finance and housing for future security and a better living environment. In addition, the household food category will continue to hold a strong position, driven by healthy eating trends, and will create challenges for the restaurant industry.

Among the smaller categories, medical and healthcare products, as well as beauty and personal care products are areas to watch and will continue to win consumer spending share over the next five years.

“As society and the economy continue to evolve –  including pandemic outbreaks, technological advances, and new policies –  consumers are changing who they value products and services. Over the next five years, Mintel observes three key factors that will further influence consumers’ purchasing decisions.

“First, as Chinese consumers adjust to ‘living with uncertainty’ in the post-pandemic era, they will prefer products and brands that are open and transparent, in terms of functionality and communication, to gain a sense of security and control. Tey will also be more likely to choose ethical brands that help society and the environment. This will bring them additional emotional satisfaction beyond the basic need to use products and services. Last but not least, both local and international brands will need to keep in mind that respecting Chinese culture and traditions will have a greater impact on consumer choices. This relates to marketing communication strategy and other intricacies like product concept design.” Laurel continued. 

Household food: Future growth and innovation in health, convenience and sensory experience

“Total consumer spending in this category is estimated to be RMB 7.330 trillion in 2020, up 13.1% from 2019. Consumers’ continued focus on healthy eating will help them maintain their home cooking habits in the wake of the pandemic, as most consumers who do not spend or spend less on food services believe that cooking at home contributes to a healthy diet, which is contributing to the growth in demand for beneficial health products.

“As a result, the home food category will maintain its growth trajectory beyond 2020, but its growth rate will slow to 8.5% in 2021 due to the recovery of the foodservice industry. Total consumer spending on household food is expected to grow at a CAGR of 7.3% from 2021-2025, similar to the CAGR from 2015-2019 (7.1%), reaching RMB 10.541 trillion by the end of 2025, according to Mintel forecasts.”

Beauty and personal care: More non-essential categories will emerge

“Over the next five years, consumers will take their beauty processes more seriously as beauty becomes more closely linked to health and lifestyle. Most personal care products are seen as a necessary part of daily hygiene, ensuring consistent use, while at the same time, personal care products continue to upgrade formulations and innovate around form/texture and fragrance to enhance the consumer experience. 

“Meanwhile, more non-essential categories (such as fragrances) will reap more consumer attention in the coming years as they are positioned to provide more emotional benefits and help consumers express themselves. Mintel forecasts that total consumer spending on beauty and personal care will grow at a CAGR of 8.6% over the next five years, reaching RMB 1.202 trillion in 2025.”

Recreation: Products and activities that bring fun and rewards are the next breakthrough

“Online entertainment consumer spending is likely to continue to increase thanks to the expansion of paying users and consumer upgrade users in many emerging segments, but offline segments (such as cinemas, KTV and bath/spa) are expected to recover slowly. Mintel research shows that consumers are highly wary of the risk of exposure to viruses and are cautious about resuming outdoor activities over the past year. As a result, overall leisure and entertainment spending is expected to recover relatively slowly compared to many other sectors, returning to pre-pandemic levels by the end of 2022, and is expected to reach RMB 2.819 trillion in 2025. 

“Leisure and recreation spending slips 37% in 2020 due to a significant reduction in outdoor activities. A large amount of leisure time flows to relatively more cost-efficient family and online entertainment activities, dominated by short videos, live e-commerce and games that help people relieve stress. In addition to health, the pandemic has also brought attention to the development of knowledge skills for themselves and their children. The next popular leisure consumption segment will revolve around products and activities that are both fun and rewarding.”

Non-alcoholic beverages: Cross-border beverages for multiple consumption purposes

“Non-alcoholic beverage consumer spending growth slows to 2.5% in 2020, largely attributed to reduced out-of-home consumption in the early days of the outbreak. Bottled water and plant protein beverages emerged as winners in the segment, attributed to mood-enhancing bubbly treats and healthy ingredients that satisfy consumers’ health cravings. However, as bubbly textured beverages become more popular, further differentiated products will need to be created and healthy ingredients may be the way to go for innovation and premiumization.”

Technology and communications: 5G services are growing rapidly

“In addition to smartphones, COVID-19 has spurred consumer demand for computers, tablets and broadband services as people begin to adapt to online learning. Online entertainment spending is likely to continue to grow in the coming years as many technology sectors continue to grow and the future of technology looks promising; electric cars with built-in tablets, gaming devices, wearable technology, smart home integration, new forms of online retail and smartphones equipped with 5G technology are expected to drive a rapid rebound (in related tech spending). The next 10 years will be a decade of growth for 5G services, with increasing consumer acceptance of 5G network services.

*Mintel’s The Chinese Consumer 2021 Report covers consumer spending in 15 major consumer product categories and analyzes future growth opportunities in each category, including five major industries.

**3,000 Internet users aged 20-49, 2020

 

To interview the category director of Mintel China, please contact the Mintel Office at press@mintel.com

Click here to download a free copy of the Mintel 2021 China Consumer Overview.