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Sector Trend Analysis – Sweet spreads in China

February 2019

Executive summary

Honey is the largest growing category among the sweet spreads sector which includes chocolate spreads, jams and preserves, and nut and seed based spreads – representing US$847.3 million in retail value sales in 2017. Over the last five years, artificial honey products have been introduced as a cheaper alternative creating competition between well-established, higher quality brands. Yet, stricter regulations were enforced to address safety concerns with the introduction of imported, lower quality honey brands. This changed consumer confidence and once again, domestic brand reputation became the key element of importance to consumers when selecting pure honey products over cheaper, lower quality alternatives.

Jams made from berries are the most popular type of preserves in China. In 2017, strawberry, blueberry and orange jams were the top three flavors experiencing the largest retail value sales. However, new less sugary flavours are becoming more popular such as the new white peach flavour introduced in 2016, which seems to portray a more healthier image over traditional jam products.

Internet retailing is a growing distribution channel for sales of sweet spread products. Companies are marketing spreads as snacks, as well as condiments, while targeting children and females. As well, Grab-to-Go or small pack sized products are becoming a popular development trend to attract young consumers to buy sweet spread products.

Although retail value sales of sweet spreads have continued to grow over the years, only 578 new products have been launched between 2013 and 2017. This product launch count has declined by a Compound Annual Growth Rate (CAGR) of negative 16.3%.

Market sizes

Sweet spreads in China are becoming more saturated when considered as a complement for bread with breakfast. More flavors are being introduced with a healthier image, with increased promotion in using spreads while preparing recipes or sauces for dinner, along with extending its application to be consumed during all times throughout the day and wherever either within the home or office. For example, honey can be added to warm water and mixed as a tonic or peanut butter can be used to mix with noodles and cold dishes for all meals throughout the day.

Honey, with its healthy connotation is the largest growing category with a five-year historical Compound Annual Growth Rate (CAGR) of 6.8% (2013-2017) – accounting for retail value sales of US$1.1 billion by 2022 due to its multiple usages. All other categories such as chocolate spreads, jams and preserves, and nut and seed based spreads are equally growing throughout China at an overall CAGR of 6.0%, with total sweet spread sales of US$1.3 billion in 2017. According to Global Trade Tracker, Canada is the seventh largest market in which China imports from for their jams and fruit jellies, including nut pastes (Harmonized System (HS) code 2007) and natural honey products (HS code 040900) in 2017, with a combined value of US$4.2 million.

Market sizes of sweet spreads in China, historical and forecast retail value sales in current prices, US$ millions
Category 2013 2017 2018 2022 CAGR* % 2013-2017 CAGR* % 2018-2022
Honey 651.4 847.3 893.0 1,097.7 6.8 5.3
Chocolate spreads 10.5 12.8 13.4 15.7 5.1 4.0
Jams and preserves 247.1 295.0 306.1 355.5 4.5 3.8
Nut and seed based spreads 105.9 126.3 131.8 156.8 4.5 4.4
Total sweet spreads 1,014.9 1,281.4 1,344.3 1,625.7 6.0 4.9

Source: Euromonitor International, 2018

*CAGR: Compound Annual Growth Rate

The top five companies throughout China for the sweet spread category are the Bright Food (Group) Co. Ltd. (honey), Kewpie Corporation (jams and preserves), Beijing Baihua Bee Product Co. Ltd. (honey), Hormel Foods Corporation (nut and seed based spreads), and the Wang's Bee Garden Co. Ltd. (honey). The Guan Sheng Yuan brand historically led sales in the honey category between 2013 to 2018. It is hard to differentiate honey product quality since its appearance and taste is consistently the same. Thus cheaper, artificial products of uneven quality were becoming widespread during the last five years. However, safety issues with honey products were brought to consumers' attention a few years ago, where stricter regulations were introduced to help eliminate low quality and artificial honey and regain consumer confidence in purchasing honey products from well-established and trusted companies. Brand reputation is the key element when selecting honey products in China. The Bright Food Group company that produces the honey brand, Guan Sheng Yuan, continues to take advantage of their brand equity, having maintained a good reputation for their quality food products for over one hundred years.

The "-Skippy-" brands produced by the Hormel Foods Corporation have dominated within the chocolate spreads category over the last five years, along with becoming the most popular choice within the nut and seed based spreads category since 2014. The brand "-Yinger-", produced by Shandong Yinger Food Company Limited is a close competitor in the nut and seed based spreads category. Lastly, within the jams and preserves category, the "-Kewpie-" brand have the highest market shares in China, claiming an average of 18.8% from 2013 to 2018.

Top 3 company and market shares for sweet spread products in China, historical retail value sales in current prices, % breakdown
Company name Brand name 2013 2014 2015 2016 2017 2018[e]
Honey
Bright Food (Group) Co. Ltd. Guan Sheng Yuan 9.5 10.4 10.4 10.4 10.0 9.0
Beijing Baihua Bee Product Co. Ltd. Bai Hua 4.3 4.2 4.7 5.1 5.4 5.7
Wang's Bee Garden Co. Ltd. Wang's 4.2 3.8 3.8 3.9 3.9 3.9
Chocolate spreads
Hormel Foods Corporation Skippy 24.8 24.7 24.6 24.5 24.5 24.4
Ferrero and related parties Nutella 8.3 8.6 9.2 9.8 10.3 10.6
Nutrexpa SL Cola Cao
Jams and preserves
Kewpie Corporation Kewpie 17.6 18.2 18.7 19.1 19.5 19.7
McCormick & Co. Inc. McCormick 4.4 4.4 4.5 4.5 4.6 4.6
Hebei Jin Ming Hou Food Co. Jin Ming Hou 3.1 3.1 3.2 3.2 3.2 3.1
Nut and seed based spreads
Hormel Foods Corporation Skippy 23.7 27.0 28.1 29.2 30.3 31.2
Shandong Yinger Food Co. Ltd. Yinger 27.7 25.7 25.5 25.3 25.1 24.7
Shanghai San Tian Foods Co. Ltd. San Tian 4.9 4.9 4.8 4.7 4.6 4.5

Source: Euromonitor International, 2018

*E: Estimate

Analysis by flavour and consumer trends

Jams made from berries are the most popular type of preserves in China. In 2017, strawberry, blueberry and orange jams were the top three flavours with the largest retail value sales. New flavours that were introduced in 2016 included white peach jam and passion fruit jam, which usually convey a healthier image compared to traditional jams, by being less sweet. The peach flavour is expected to move from the fifth largest sales value to the fourth most popular flavour between 2017 and 2018.

Honey is the fastest-growing category among spreads, recording 6.8% retail value growth in 2017. It is considered a healthy substitute for sugar, which can be used as a spread on bread, or can be added to fruit juice, yogurt and warm water. Sweet-flavoured bread is becoming more available to consumers throughout China, which may cause some spreads to be purchased less often. Continued popularity for certain spread brands may also become less desirable amongst consumers as consumer health awareness increases, along with the need to promote food products that contain less sugar.

Ranking for top 7 most popular flavours for sweet spread jams in China, historical ranking based on retail value sales in current US$ prices
Category 2013 2014 2015 2016 2017 2018
Strawberry 1 1 1 1 1 1
Blueberry 5 5 2 2 2 2
Orange 3 3 3 3 3 3
Peach 7 7 5 5 5 4
Apple 2 2 6 6 6 5
Mixed fruits 4 4 4 4 4 6
Hawthorn 6 6 7 7 7 7
Source: Euromonitor International, 2018

Distribution channels

Hypermarkets and supermarkets are the main channels for sweet spreads. Honey is also sold in a few health food stores when used as a natural healthcare and beauty product, as honey is known to enhance the skin and can regulate gastrointestinal functions. Internet retailing is also a popular channel to purchase spreads due to its convenience and changing consumer consumption habits. Manufacturers such as JD.com and Tmall.com are examples of online retailers who have helped to quickly increase the internet retailing channel. This trend should increase sales for imported brands.

Grab-to-go or small pack sizes and less heavy jars are common trends that companies are looking to offer. Companies are trying to attract younger consumers to consider spreads as part of snacks instead of solely as condiments.

The average unit price for spreads has increased by 4% in 2017 within most categories due to increases in inflation and pricing strategies. However, with honey, the average unit price increased mainly as a result of growing demand which could not be met as a result of negative weather conditions, along with stricter regulations limiting the number of cheaper and artificial alternatives available on the market.

Distribution channels for sweet spread products in China, historical retail value sales in current prices, % breakdown
Sweet spreads in China by year 2013 2014 2015 2016 2017 2018
Store-based retailing 99.1 98.3 97.7 96.4 95.9 95.1
Modern grocery retailers 75.4 75.9 76.3 76.4 77.1 77.3
Convenience stores 1.5 1.7 1.8 1.9 1.9 2.0
Hypermarkets 20.0 20.5 21.0 21.2 21.6 21.7
Supermarkets 53.9 53.7 53.5 53.3 53.6 53.6
Traditional grocery retailers 23.7 22.4 21.4 20.0 18.8 17.8
Independent small grocers 9.7 9.2 8.9 8.5 8.2 7.9
Other grocery retailers 14.0 13.2 12.5 11.5 10.7 9.9
Non-store retailing (internet retailers) 0.9 1.7 2.3 3.6 4.1 4.9
Source: Euromonitor International, 2018

Product launch analysis

According to Mintel, there were 578 new products launched in China under the "sweet spread" category over the last five years (2013-2017). Amongst the products launched, the number of new products were 248 (42.9%), closely followed by 229 new varieties/range extension/formulation products introduced (39.6%). Meanwhile there were 101 new packaged or re-launched products released over the same period (17.5%). Although retail value sales have increased over this period for sweet spread categories, the number of new products have declined by a CAGR of negative 16.3% (from 161 products in 2013 to 79 products by 2017).

Number of sweet spread product launches in China, historical product item count, January 2013 - December 2017
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2013 2014 2015 2016 2017 Total
Item count 161 115 137 86 79 578

Source: Mintel, 2018

Mintel reports that the top five sweet spread flavour subgroups with the largest number of product launches over the last five years were berry fruit, nut, other fruit, citrus fruit and milk products. Approximately 72% of consumers prefer unflavored or plain sweet spreads, which are mostly honey products. Other popular flavours include peanut butter, strawberry, blueberry, and orange, along with milk spread products.

Number of sweet spread product launches in China, historical product item count by flavour subgroup, January 2013 - December 2017
Description of this image follows.
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Flavour Number of variants
Grapefruit 4
Apple 4
Jujube/red date 5
Fruit 8
Orange 9
Milk 12
Blueberry 16
Strawberry 27
Peanut butter 32
Unflavoured/plain (honey) 418
Total Sample 578

Source: Mintel, 2018

The "no additives/preservatives" claim was used 15.6% of the time, on product packaging labels for sweet spreads. Other common claims include product labelling aimed to attract consumers for consumption of sweet spreads by children between 5 and 12 years of age, along with marketing strategies targeting female consumers and advertising to the younger generation in terms of claims such as convenient packaging and social media. All-natural products and "On-the-Go" claims are also becoming popular trends to target consumers.

Claims for sweet spread product launches in China, product item count, January 2013 - December 2017
Description of this image follows.
Description of above image
Claim Item Count
On-the-Go 8
All natural product 9
Ethical - environmentally friendly product 10
Economy 14
Halal 15
Social media 16
Convenient packaging 17
Female 19
Children (5-12) 39
No additives/preservatives 90

Source: Mintel, 2018

Examples of new products

Tibet White Honey
Company Yang Sheng Yuan Honey
Brand Yang Sheng Yuan
Sub-category Sweet spread / honey / unflavored/plain
Country China
Import status Not imported
Launch type New variety / range extension
Date published February 2015
Price in US dollars 16.73

Description: Yang Sheng Yuan Xi Zang Bai Mi (Tibet White Honey) is sourced from Nyingchi Prefecture in Tibet, China and retails in a 1 kilogram (kg) pack.

Source: Mintel, 2018

Artificial Honey
Company ZPS Jamar Szczepaniak
Brand Jamar
Sub-category Sweet spread / honey / unflavoured/plain
Country China
Product variants Artificial honey
Launch type New product
Date published June 2017
Price in US dollars Not provided

Description: The pasteurized product retails in a 340 gram (g) pack, and was on display at the SIAL China 2017 tradeshow, Shanghai, China.

Source: Mintel, 2018

Strawberry Flavoured Jam with Biscuit Sticks
Company Meiji
Brand Meiji Yan Yan
Sub-category Sweet spreads / caramel and cream spreads
Country China
Import status Not imported
Launch type New variety / range extension
Date published June 2014
Price in US dollars 0.48

Description: Available in a 25g pack with different compartments for the jam and the biscuits. The pack features Hello Kitty cartoon characters.

Source: Mintel, 2018

Strawberry Jam
Company Hangzhou Kewpie Foods
Brand Kewpie
Sub-category Sweet spreads / confiture and fruit spreads
Country China
Import status Not imported
Launch type New packaging
Date published June 2015
Price in US dollars 1.71

Description: This product is free from colorings and preservatives.

Source: Mintel, 2018

For more information

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

For additional intelligence on this and other markets, the complete library of Global Analysis reports can be found on the International agri-food market intelligence page, arranged by region.

For additional information on Food & Hospitality (FHC) China 2018, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and Agri-Food Canada
ben.berry@canada.ca

Resources

Sector Trend Analysis – Sweet spreads in China
Global Analysis Report

Prepared by: Erin-Ann Chauvin, Senior Market Analyst

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