Healthy Eating in Lower Tier Cities - China - November 2020

OVERVIEW
What you need to know
Covered in this report
Report scope
Objective and research methodology
Quantitative research
Figure 1: The sample structure for each city is as follows:
Qualitative research
Figure 2: Interviewed cities in the qualitative research
Figure 3: Profiles of respondents to the qualitative research
EXECUTIVE SUMMARY
Lower tier cities are less proactive in health management
Figure 4: Factors important to achieving a healthy lifestyle – select factors, by city tier, July 2019
Technology could be a way to nudge them into healthier behaviours
Figure 5: Attitudes towards health tech – “It's necessary to arrange diet and exercise according to daily monitoring of physical conditions (eg the amount of exercise, sleep quality)”, by city tier, July 2020
Lower tier cities more concerned about compromising on taste in a healthy diet
Simple, direct messages and powerful visual clues are key 
Personal branding rather than quality of information establishes credibility
Figure 6: Attitudes towards social commerce channels – select statements, by city tier, October 2018
Figure 7: Health information sources – select sources, April 2020
Aftersales service is an important reassurance when expanding channels to market
Figure 8: Grocery shopping channels – select grocery categories, select channels, by city tier, September 2019
What we think
INTRODUCTION TO LOWER TIER CITIES IN CHINA
Population and spending power
Spending by Tier 3 and lower cities increases and takes a larger share
Figure 9: City populations and sales, by city tier, end of 2018
Per capita disposable income and spending power grows
Figure 10: Per capita salary vs per capita retail sales, by city tier, 2018
Spending confidence since the COVID-19 outbreak
Figure 11: GDP sector compositions, by city tier, 2018
Figure 12: Changes in financial status, percentage of respondents claiming they are ‘better off’, by city tier, Apr-Jul 2020
Figure 13: Confidence in improving future finances, very confident/somewhat confident, by city tier, Apr-Jul 2020
Demographic profile/analysis
Gaps between city tiers narrowing in both economic and educational respects
Figure 14: Educational level of surveyed respondents, by city tier, 2017- June 2020
Figure 15: Car ownership and gym membership, by city tier, 2017- June 2020
IMPACT OF COVID-19 ON FOOD AND DRINK SPENDING
Evident increase in in-home food spending across all tiers
Figure 16: Changes in spending – “Food (in home)”, “Spent more”, by city tier, February-November
Fresh fruit and meal solutions saw the biggest volume update
Figure 17: Changes to consumption of select food and drink categories after COVID-19 – “Bought more”, by city tier, Apr 26-May 2
Dairy products lead trading up
Figure 18: Changes in food and drink categories after COVID-19, % spent more, by city tier, May 27-Jun 3
Figure 19: Changes in consumption frequency of packaged bakery foods – select sub-categories, by city tier, January 2020
THE CONSUMER: ATTITUDES TOWARDS HEALTH
Quantitative data suggests no difference in defining what is needed to achieve good health
Figure 20: Factors important to achieving a healthy lifestyle – by city tier, July 2019
However qualitative research reveals lower tier city consumers still spontaneously associate health with a lack of illness
Reconciling quantitative and qualitative findings
Barriers to achieving a healthy lifestyle differ
Figure 21: Factors important to achieving a healthy lifestyle – select factors with biggest difference, by city tier, July 2019
Strong interest in knowing more about health drives adoption of technologies
Figure 22: Attitudes towards health tech – “It's necessary to arrange diet and exercise according to daily monitoring of physical conditions (eg the amount of exercise, sleep quality)”, by city tier, July 2020
What it means for brands
Creating a community to help consumers focus on holistic health
Figure 23: Keep forum “Showcase your nutritious breakfast”
Using wearable technology to identify health issues and provide management plans
Figure 24: Screenshots of different services provided by the Boohee app
ATTITUDES TOWARDS HEALTHY EATING
Other than meat consumption, consumers show broadly similar understanding of a healthy diet
Figure 25: Features of a healthy diet, by city tier, August 2020
Figure 26: Features of a healthy diet – “Controlling consumption of meat”, by city tier, August 2020
Lower tier city consumers are more likely to associate a healthy diet with compromising on taste
Figure 27: Cooking methods used – “Meat (excluding seafood and freshwater food)”, by city tier, September 2020
Availability may be an issue restricting healthy eating
What it means for brands
Create minus-claims without compromising on taste
Use “healthy” ingredients to offset indulgent products
Figure 28: Infographic on Chocday quinoa dark chocolate
Leverage developments in new retail to increase availability
ATTRACTIVE PRODUCT FEATURES
What difference does quantitative data suggest
Simple clues are more likely to appeal to residents of lower tier cities
Figure 29: Attractive features of a light meal – select features, by city tier, November 2018
Figure 30: Superior aspects of chilled drinks – select aspects, by city tier, December 2019
Premiumise with formal proof of sourcing
Figure 31: Interest in premium features of food and drink products, August 2020
Figure 32: Interest in premium features of food and drinks product – “Organic certification”, by city tier, August 2020
Why the difference as suggested by qualitative research
Provide clear labelling to help consumers interpret complicated nutritional data
Clean sourcing and freshness are key determinants of healthy ingredients
Using innovative ways to prove quality of product
What it means for brands
Simplified message and visual guidance are more persuasive
Figure 33: Kellogg’s cereal infographic
Figure 34: Classy Kiss Bifidobacterium C-I Flavored Yogurt, China, 2020
Figure 35: Yogurt product consumed by female, 29, Shanxi Xianyang
Transparent tracing systems can help brands prove their authenticity
Figure 36: Screenshot of infant milk formula traceability WeChat mini program
Offer visual clues to prove quality of product
Figure 37: Hormel beef jerky product description page
Figure 38: Wonderful Pistachios product packaging
TRUST IN AUTHORITY
Generally higher trust than those in Tier 1 cities
Figure 39: Attitudes towards social commerce channels – select statements, by city tier, October 2018
Figure 40: Health information sources – select sources, by city tier,  April 2020
Trust is dependent on the information source rather than the quality of information
Government-backed or public figures with positive images are strong reassurance
What it means for brands
Establish authoritative personal brand of the founder
Figure 41: Cai Lan Hua Hua Shi Jie infographic
Figure 42: Huang Xiao Chu official Tmall store cover photo
Team up with specialized authority figures to establish trust
Figure 43: Infographic highlighting Dingxiang Doctor collaboration
CHANNEL PREFERENCES
Even though online penetration is high, offline still plays an important role in lower tier
Figure 44: Grocery shopping channels – select grocery categories, select channels, by city tier, September 2019
Choices limited by different levels of retail development
Figure 45: Premium food and drink purchase channels – select channels, by city tier, February 2019
Trust in quality and value-added services drive offline shopping
What it means for brands
Aftersales service guarantee is an important quality assurance
Figure 46: Consumer feedback on Chicecream apology package
APPENDIX - ABBREVIATIONS
Abbreviations