Sector Trend Analysis – Sweet spreads in China

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.

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.

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.

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.

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).

Description of above image

	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.

Description of above image

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.

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

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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

Sector Trend Analysis – Sweet spreads in China
Global Analysis Report

Prepared by: Erin-Ann Chauvin, Senior Market Analyst

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