This year’s Spring Festival retail sales experienced huge growth as last year’s sales were severely dented by the national COVID lockdown. According to MOFCOM, this year’s retail sales reached 821 billion yuan ($126.6 billion) during the Spring Festival week, a massive 28.7% increase compared with 2020. Online retail sales exceeded 120 billion yuan ($18.5 billion) in the first six days of this holiday – not including pre-holiday spending.
年货 (Nian Huo) doesn’t have a direct English translation, but means special purchases made for Spring Festival – perhaps ‘festive goods’. Purchasing Nian Huo is a longstanding Spring Festival tradition that has grown into a huge commercial opportunity as China’s economy has developed and consumers look to treat themselves and others for China’s most important festival.
Nian Huo purchases are very much Food & Drink focused. Given the massive opportunity, it’s hugely important that Food & Drink brands are prepared for this key shopping season. This blog will look at both traditional and imported Nian Huo, and explore the new trends that happened as China welcomed in the Year of the Ox.
Traditional Nian Huo
Traditional Nian Huo vary from province to province and most people will make sure to buy some local specialities to great returning homesick relatives. However, there are some products that are popular nationwide, especially snack food and drinks for the whole family to enjoy while watching TV and playing games. 66% of consumers will buy roasted seeds and nuts, 56% fruits and vegetables and 49% alcoholic and non-alcoholic beverage as part of their seasonal shopping.
In recent times, companies have brought out seasonal snack boxes to cater for the snaking season. Nuts, cookies, deserts, braised food and chocolate are the top 5 most popular products for these snack boxes. It is of course popular for brands to create special designs to recognise the Spring Festival feel good factor.
Gift giving is naturally a major part of Spring Festival and while the older generation will provide 红包(Hong Bao), AKA red envelopes filled with cash, to the younger generation, many of the younger generation have also taken to buying gifts for their older relatives. This could include the regional speciality food from where they live, or recently, items like housework robots that make elderly people’s lives easier have proven popular.
Imported products as Nian Huo
Although local cuisine forms the core of Nian Huo, many imported items have also become part of the modern shopping basket, especially for gift giving purposes.
Wine: drinking alcoholic beverages is a popular way for the Chinese people to express their joy and happiness throughout Spring Festival, especially for gatherings of friends and family where alcohol is seen as an essential part of the celebration. According to a report by Alibaba, the sales of imported wine increased by tenfold from Feb 4th to Feb 15th 2021 compared to 2020, and more than half of these customers come from tier 3 and below cities.
Chocolate: Chocolate is another popular imported Nian Huo that experienced a significant sales increase during the 2021 Spring Festival after a subdued 2020 due to the lockdown. According to iMedia Research, chocolate is especially popular among young consumers with more than 40% of the post-90s generation seeing chocolate as an essential Nian Huo. This year’s sales were helped by Valentine’s Day falling during the Spring Festival holiday. Of course, it’s not just adults eating chocolate as all forms of confectionery are popular festive gifts for children.
New Trends for the Year of the Ox
This year’s Spring Festival was the second unique year in a row. In 2020 most people were forced to stay indoors last year, which led to a steep drop in economic activity. But in 2021 millions were asked to curb travel plans and not return to their hometowns, which led to another bad year for the travel industry, but also bumper retail sales.
The lack of travelling led to a huge increase in e-commerce orders as people stocked up at home and sent gifts to the relatives they were unable to visit in person. JD Big Data Research Institute claimed that the online orders not sent to a customer’s usual residence increased by over 50% in some parts of the country.
The request to celebrate without travelling also led to a surge in economic activity in cities usually abandoned by millions heading home to see relatives. This meant that box office sales reached 7.8 billion yuan ($1.2 billion), take-out meal sales were up 164% on last year, and venues such as shopping malls and restaurants that would usually be closed were packed.
Seasonal Promotional Campaigns
Taobao and JD – two Chinese online shopping platforms – both heavily promoted Nian Huo products during their Spring Festival promotions. This year’s pre-New Year shopping festival began on Jan 17th and ended on Jan 25th for Taobao and ended on Feb 5th for JD. Various brands offered discounts on Nian Huo products, with each day focusing on a different product category, such as food, gifts, cosmetics, sports etc. Furthermore, package delivery did not stop during this Spring Festival, and the total orders for the top four delivery companies was 8 times more than that in the previous year.
Live-streamers also did not take a break this year, which contributed to the record retail sales of Nian Huo. CBNData reported that during Taobao shopping festival 2021, instant food, wine, tea, snacks and instant coffee were the top products promoted by live-streamers.
Conclusion
Spring Festival has become a peak time for Food & Drinks brands to sell their product in China. While traditional Nian Huo still dominate consumer spending, some imported products have become new traditions on the Nian Huo shopping list.
Some of this year’s trends caused by the lack of travel may not be repeated in coming years, but the overall trend of increased festive spending and looking online to KOLs and e-commerce shopping festivals look set to continue.
Working with local partners to produce a successful Spring Festival campaign takes months of planning and NPD must be carefully designed to stay true to a brand’s essence while recognising the festive season. However, as this is the time of year where people are specifically looking for quality Food & Drink products to treat themselves and those around them, the rewards can be great for brands who get it right.