Mintel’s Chinese Consumer 2023 report reveals domestic travel tops this year’s spending

Mintel, the experts in what consumers want and why, just launched its Chinese Consumer 2023 report, an annual summary of China’s economic development, changes in population structure and consumer lifestyle and attitude trends. The research reveals that Chinese consumers need time to heal emotionally, reconnect with the outside world and rebuild their confidence. Their life goals for 2023 indicate that, after falling lower on the list during the COVID-19 pandemic, domestic travel is back in the top spot (20%) with consumers likely to make ‘revenge spending’ travel plans. Following this, earning money (16%) and saving money (6%) are also high consumers’ goals list. Consumers’ desires to heal the body and mind, improve their quality of life through travel and achieve financial stability through cautious spending present unique growth opportunities for brands in 2023 and beyond.

Mintel estimates total consumer expenditure reached RMB44,182 billion in 2022, decreasing by 2.4% from 2021. In 2022, as a result of the pandemic, consumers spent a slightly higher proportion on basic living expenses than in 2021. Spending across the top four consumer sectors (personal finance and housing, in-home food, clothing and accessories and transport), in total expenditure, rose from 58% to 60%.

Most discretionary spending and contact-based sectors fell in 2022, including holidays, leisure and entertainment, clothing and accessories, beauty and personal care, alcoholic drinks (out-of-home) and foodservice. Meanwhile, ‘coronaphobia’ continued to drive spending in the hygiene and wellness-related sectors, resulting in growth in the OTC and pharmaceuticals, in-home food, alcoholic drinks (in-home) and household care sectors in 2022.

Blair Zhang, Senior Consumer Research Analyst at Mintel, said, “Our research reveals that Chinese Consumers are looking for emotional healing, confidence building and connection with the outside world, creating opportunities for brands to communicate a sense of caring in order to drive engagement. Assigning ‘healing’ values to products and services and instilling confidence in marketing communications can help brands bond with consumers. We recommend that brands targeting mass consumers highlight the multi-functional attributes and endurance of their products. They need to strictly manage their supply chain and costs to provide high-quality products and services at reasonable prices.

“In the long run, Mintel research shows that consumption will be the mainstay of China’s economic development. The long-term increase in consumer spending will be supported by the stable growth of major economic indicators, such as disposable income growth and improvements in employment. In addition to growth in ‘must-have’ sectors (eg personal and household care, in-home food and drinks, OTC and pharmaceuticals, health, home and leisure spending will also gain more attention. Consumers are looking forward to embracing a more relaxed lifestyle to slowly heal from the tension caused by the COVID-19 pandemic.”Blair continued.

Mintel’s China Consumer 2023 report covers Chinese consumer spending in 14 major consumer product categories and analyzes the future development opportunities of each category, including five major industries.

Dairy was the winning sector in 2022, with a large market size and steady growth driven by consumers’ continuous demand for fortified nutrition. Chilled plain milk and cheese were the two fastest-growing sub-segments.

Total in-home food spending is forecast to follow the growth trajectory from before the pandemic and grow steadily to reach RMB 10,346 billion by 2027 – representing a CAGR of 5.0% between 2022 and 2027. Long-term growth will be largely influenced by government measures to stabilise food prices and consumers’ ongoing pursuit of quality in-home products with better-for-you features.

Given the mature market education, Mintel observes that the application of probiotics is increasing in different categories, and consumer interest in probiotics can go beyond dairy. According to Mintel research on snacking trends in China, there is an increasing percentage of ‘probiotic’ claims in new snack launches: 48% of respondents indicate they are willing to pay more for nuts and seeds snacks that include certain nutrients such as vitamins and probiotics. Probiotic-added baked goods are also of interest, with 54% of surveyed consumers willing to pay more for packaged bakery products with additional probiotic features, ranking first among all listed premium attributes.

After a decline in 2022, the beauty and personal care sector is expected to recover in 2023 thanks to gradual rebounding consumer confidence and consumers’ pursuit of holistic wellbeing. However, ever-higher requirements have been put forward for BPC products as consumers become increasingly sophisticated and seek evidence to justify the price.

As consumers pay more attention to their overall health, they accumulate knowledge about beauty and personal care. Today, consumers are becoming more aware of skin types, scalp sensitivity and oral issues, to name a few. As a result, choosing the most suitable products has become one of the most important criteria for consumers when shopping for all beauty and personal products.

Chinese Consumers’ pursuit of scientific beauty is reflected in their interest in research backgrounds and technologies. Mintel research reveals that a combination of ‘developed by famous R&D teams’, ‘with biotechnology background’ and ‘supported by laboratory research data’ product messaging could recruit nearly 90% of function-seeking female beauty consumers.

The foodservice spending sector declined -8.0% in 2022 due to disrupted dining-in consumption amid the resurgence of COVID-19 outbreaks. It’s estimated to rebound in 2023, comparable to the pre-pandemic level. The pandemic accelerated brands’ digital service practices, and the thriving ‘Guochao’ trend prompted a deeper exploration of niche Chinese flavours and seasonal ingredients. Now, with the return of in-store traffic, foodservice outlets need to provide multi-functional spaces tapping into the flexible lifestyle of specific targeting groups.

Consumers’ health consciousness and the motivation to improve holistic wellbeing increased during the pandemic period. For example, Mintel research reveals that the majority of consumers find it necessary for tea houses to provide nutritional information for each ingredient added to the beverages, and 75% tend to choose tea drinks with nourishing health benefits.

Echoing Mintel Trend ‘Total Wellbeing’, the gravitational pull of better-for-you choices will propel brands to demonstrate more transparency in health information and more nutritionally fortified solutions, even in categories that are usually considered indulgent consumption.

As private car ownership continues to grow, spending on transport, including overall car repair and maintenance expenses, is expected to increase steadily after a rapid rebound in 2023.

In fact, Chinese consumers’ interest in self-driving tours has increased significantly. Mintel research reveals that a third of car owners have had long, self-driving trips of more than four hours. Products and services around self-drive tours and entertainment activities have great potential for transport-related brands to win mass attention.

As travel ranges extend to surrounding destinations, brands can install and promote charging piles in areas popular with car owners for self-driving trips. This will meet the long-distance driving needs of NEV owners and improve a brand’s replenishment energy systems, as well as strengthens their competitiveness.

Finally, the leisure and entertainment sector experienced a contraction in 2022 and is forecast to bounce back in 2023 thanks to the lifting of COVID-related restrictions and ‘revenge spending’. However, large-scale spending increases are still unlikely, as saving is more of a priority given the various uncertainties consumers are facing. As a result, market players in this sector – both online and offline – need to precisely target the moment when consumers need instant relaxation or indulgence with small-ticket spending. Mintel research shows that ‘entertain for good’ and ‘connecting with nature’ are key areas to invest in during the product/service optimisation process.

Finally, some Chinese consumers are expanding their interest areas to include urban eco-spaces like green shopping malls, home gardens, and learning about plants and flowers. This behaviour shift aligns with Mintel’s 2030 Global Consumer Trend ‘Surroundings’ stating that the ‘rewilding’ of both rural and urban spaces will continue to expand in the next decade.