The demand for condiments and sauces is rapidly and constantly growing in China. The market is versatile and international brands provide both, western and Chinese products.
Key players of the condiment and sauce market in China:
- Lee Kum Kee
The sauces and condiments market is largely dominated by Soy Sauce which represents more than 60% of all the condiments being sold in China. Although the market is slowly diversifying itself, it is still far behind countries such as Japan for instance in terms of condiments variety. However, considering the sheer size of the market, and the fact that condiments consumption is growing, China is a market you don’t want to skip.
What are the most consumed condiments in China?
- Soy sauces
- Monosodium glutamate (also known as MSG)
- Cooking wine
If soy sauce is the king of condiments, we are definitely seeing a shift in habit consumption that will results in growth for other Chinese table staples. This shift explains itself by the exportation of locals cuisine promoted by locals governments, growth in domestique travel as well as migrant workers.
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Over the years Chinese people’s condiments consumption has steadily increased. From 2010 to 2017, the market more than double from being worth 150.6 Billion (RMB) to 332.2Billion (RMB).
Sauces and condiments can be grouped into the following categories :
- Table sauces: such as Mayonnaise, Soy sauces, Vinegar, Ketchup, Mustard, Salad dressing, Chilli sauces, Soybean paste, etc…
- Cooking ingredients: Herbs, Spices, Pepper, Salt, Sugar, Monosodium glutamate, Soy sauces, Ginger, Onions, etc…
In the past years, spicy flavored sauces have become more and more popular among Chinese consumers. As for 1st rank cities families including babies or little children, they usually prefer sweet soybean pastes and Tahini to spicy sauces. The most popular foreign condiments are Ketchup, Salad dressings, and black pepper.
When compared to Korea or Japan, China is still very “traditional” with its condiments consumption where “foreign” products represent only 3% of the market. However, when walking into a supermarket, you’ll almost always be able to find tomato sauce/ Ketchup at the very least.
Catering industry driving sales of condiments in China
During the China Catering Industry Summit 2018, in Beijing, a report, entitled ‘China’s Catering Industry Development Report 2018’, was released by the China Cuisine Association (CCA). Data from this report shows that the catering industry in China accounted for 10.8 percent of total retail sales in terms of consumer goods in 2017 and was responsible for 11.3 percent of the consumer market’s growth.
For this reason, China has become the world’s second-largest catering market after recording revenue figures of 3.96 trillion RMB (the US $616 billion) in 2017. Second, only to the US, the Chinese market is nearly 700 times the size of 40 years ago when China adopted its ‘reform and opening-up policy.
Dining out is one of the main reason for the growth of the sauce and condiments market. Indeed, more than 50% of condiments in China are consumed at restaurant.
What do Chinese Consumers consider when buying condiments & sauces?
- +80% of consumers say that Taste is their #1 criteria when purchasing condiments.
- Reputation & Brand name is the second most important criteria especially true when purchasing Online.
- Freshness is another factor that matters quite a bit to Chinese consumers.
- Ease of storage
- Price: surprisingly price, is not that high on the list. In the last few years, premium products have also seen their sales grow. It can be explained by more power purchase as well as a bigger focus on health and taste.
- Packaging design
Online Force: Entry door for foreign condiments brands?
The normalization of eCommerce and online grocery shopping has definitely helped with opening up and diversifying the Chinese condiments market offering more visibility to foreign brands & products.
With the development of online-to-offline commerce (or O2O), a business strategy that encourages potential online customers to make purchases in physical stores, ‘online meal ordering’ has become the third option for consumers after cooking at home and dining out.
As a result, revenue in the online takeaway market exceeded 300 billion RMB (around the US $47 billion) in 2017, which is 13.6 times higher than the 20.37 billion RMB (around the US $3 billion) recorded in 2011.
Chinese food and condiments as the columns
CCA(China Cuisine Association) President Jiang Junxian noted that the growth of China’s catering industry has been maintained within a reasonable range, predicting revenue of over 5 trillion RMB in 2020.
According to the report, the dining environment was selected by 19.2% of the consumers as the most important factor that influenced their choices of restaurants. A total of 17.8% of them considered taste as the most important. Chinese cuisines took 57% of the catering market, possessing a dominant position. In addition to the dominant Chinese cuisines, condiments were another major contributor to catering industry growth in 2017, accounting for 16% of the sector. The proportion was even 18% in major cities
A sweet moment for soy sauce
The global soy sauces market is expected to post a CAGR of close to 7% during the period 2019-2023, according to the latest market research report by Technavio.
A key factor driving the growth of the market is the growing focus on expanding production capabilities. Manufacturers are finding tremendous growth opportunities in all global markets, owing to the rising consumer preference for soy sauce products. The increase in the production capacity ensures that manufacturers are well-positioned to cater to the customers’ growing demands across the markets.
For instance, JONJEE HI-TECH INDUSTRIAL & COMMERCIAL HOLDING, a leading condiment company in China, is expanding its soy sauce production facility in Yangxi, China. The new expansion adds 200,000 tons of soy sauce production to the plant, and by 2020 it is expected to reach full production capacity.
The contribution of dining-out
With the growing demand for business entertaining, many people are going to restaurants, pubs, tea houses, and other eateries for everyday meals and gatherings with friends. This has urged the development of catering services. As the spending power of households of middle-income and above increases, the frequency of eating out also rises
So as Chinese consumers dine out more, Soy sauce’s profits have been growing. For example, the firm Haitian has registered net income growth of more than 20 percent for seven straight quarters and the figure was expected to grow 25 percent in 2018 and 26 percent in 2019. The soy sauce maker’s heady growth isn’t without risks. In its interim report, Haitian noted that its business would suffer if the prices of soybeans and sugar, the main raw materials in the condiment’s production, increase. Higher tariffs levied by China on U.S. soybeans amid escalating trade tensions may boost domestic soy prices
Private label brands are emerging
The emergence of private label brands is one of the positive trends that can influence the growth of the global soy sauces market during the forecast period. The private label products are priced lesser than mainstream brands and this makes private label products a popular option among consumers who are budget conscious. The market share of private label players is increasing in all the segments of packaged foods.
How to stand out from local condiments brands?
Whether we are talking about catering or food products like condiments, doing business in China is always an opportunity. The competition is strong so it is necessary to have a good marketing plan. One of the best strategies is to choose social media as a channel to market your product and your service.
Promotion through social media: Weibo
Weibo is the main Chinese “one-to-many” microblog platform: it is the most used social network for celebrities, companies, and organizations wishing to establish direct communication with final consumers.
Chinese users love to look for information on Weibo, they use it as a real search engine and then follow the innovations that are launched from this platform.
Weibo is often compared to Twitter but is actually different and much richer: with 140 characters in Chinese, you can write more than the Western languages. The features are also different, for example, you can create polls and share multiple photos, videos and files at the same time. Weibo also gives the opportunity to launch ADV campaigns and promote themselves in the post or in dedicated sectoral forums
To effectively promote your brand on Weibo it is necessary to:
- Open an official account to get the “v” of “verified”, which is essential to create trust in users.
- Publishing new content and frequent updates: like Twitter, news circulates very quickly and it’s important to keep up.
- Manage the community and interact with users and with Key Opinion Leaders.
- Do cross-marketing with other platforms such as website and WeChat
Promotion through social media: WeChat
WeChat is one of the most widely used platforms: it is a messaging app that is used exclusively by mobile and that contains within it Social Network, Customer Care, Newsletter, E-commerce with an integrated payment system and highly profiled analytics. In China, where it was born, it has become a real work tool, with 1 billion users and more than 13 million business accounts.
WeChat offers companies the ability to create corporate mini-sites and offer various services. Thanks to official accounts, companies and brands have the opportunity to interact with their followers by providing them with a “one-on-one” service by sending direct messages, news, and promotions.
As for Weibo, even on WeChat, it is important for companies to activate a verified account: only in this way can you make a big deal in an environment that unfortunately still today presents numerous “fake accounts”.
Wechat QR Codes
One of the main functions of this platform, for which it has played a revolutionary role in China, is that it can create and scan QR codes. they are the highest expression of O2O marketing (online-to-offline). So, to promote yourself to the best, you can also add a QR code on the labels, if you offer a product, which allows Chinese consumers to be redirected to WeChat where they can find all the information on what they intend to buy.
In addition, the “Wechat Wallet” feature allows consumers to purchase products online by paying directly through the App. It is already possible to integrate e-commerce services both within WeChat and connected to external platforms.
You can also read our Strategic Guide to Export Food Brands in China
GMA: F&B Digital Marketing Agency
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