The market for savoury snacks in China has been growing at a strong pace for several years, reaching the equivalent of $19.5 billion in 2019. The pandemic is unlikely to have dented this growth much as consumers have bought more online combined and the fact that most workers were back in their offices by the middle of 2020.
Nuts, seeds and trail mixes are the biggest single segment within the savoury snacks category, worth $4.6 billion in 2019 with 27% growth expected by 2024.
Eating unshelled nuts and seeds has been popular in China for a long time as a way of snacking while conversing with friends, or passing the time on long journeys. But it is rising consumer awareness of the health benefits of these products that has been driving demand in China in recent years and will continue to do so in the future.
Healthy People Eat Nuts
Regular consumption of nuts and seeds is now seen by many Chinese consumers as part of the pursuit of a healthy and trendy lifestyle. China has been long-established as one of the world’s most health conscious markets with numerous consumer surveys showing that the amount of Chinese consumers seeking a healthier lifestyle is consistently several percentage points above Western markets.
Nuts such as walnuts, macadamias and hazelnuts are widely grown and consumed in China. But not only can China not produce the quantity and variety of nuts needed to satiate demand, the quality of domestically produced nuts can be inconsistent. Therefore, imported nuts are popular both for their perceived high quality and because many varieties are simply not able to be produced domestically in the volumes needed to satiate demand.
Almonds and pistachios from the US are some of the most popular nuts consumed in China and are expected to increase rapidly in the short-term as a way of China increasing its agricultural imports from the US as part of the Phase One trade deal between the two countries. However, due to the ill will and uncertainty the trade war has generated, importers are likely to look further afield for these varieties in the future.
Beyond the major, well known types of nuts produced in and imported into China, younger consumers are also very open to various new types of types of imported nuts previously little known in China. This reflects the fact that this generation is generally very interested in new and novel food experiences and are willing to try new foods and flavours to see if they like them.
Packaged/Daily Nuts
Loose nuts bought by weight account for the overwhelming majority of nuts sold in China. However, the share of the markert accounted for by pre-packaged products has risen quickly in recent years from 22% in 2014 to 29% in 2019. This reflects a rise in the premium end of the snacking segment.
Again, it is young consumers driving this trend. The busy, fast-paced lives of overworked urban workers mean that they favour on-the-go consumption and are willing to pay more to get a higher quality product.
The desire to get the right amount of nuts and seeds to contribute to a healthy lifestyle in a convenient format has led to the phenomenon of so-called ‘daily nuts’, which are individually portioned small packets of nuts and seeds in small packets to meet a consumer’s recommended daily allocation.
Three Squirrels
One of the attractions of the snacking market in China to new entrants is that it has very low concentration among the largest companies; the top three companies combined market share is under 20%. Despite this, one company has stood above the competition in recent years.
Three Squirrels is a popular local brand that was founded in 2012 and initially only sold online before branching out into offline channels from 2017 by setting up its own stores and partnering with other retailers, mainly in second and third tier cities. The brand has reached a high level of notoriety for their Singles Day online shopping festival sales figures. In 2019, it took only 19 minutes and 23 seconds to reach CNY100 million ($14.7 million) in sales during Alibaba’s annual e-commerce extravaganza.
The brand’s success has been attributed to a combination of smart marketing, superior knowledge of the local market and investing in excellent customer service.
Marketing – The brand has a unique brand identity that uses the characters of the eponymous three squirrels to appeal to the young female demographic that form the core of its customer base.
Local knowledge – The brand has over 500 SKUs to broaden its appeal and has tailored its flavour profile to be in tune with the Chinese palate.
Customer service – Three Squirrels is known for providing excellent customer service both online and in-store, going the extra mile to make its customers feel like they’re having a unique experience.
Conclusion
Chinese consumers’ appetite for healthy snacks will continue to grow in the coming years. Packaged nuts and seeds are especially well suited to take advantage of this growing trend. The pandemic has encouraged Chinese people to be even more health conscious than before; products that can provide health benefits to consumers and fit in with their fast-paced lives will definitely have a market in China.