A new food industry segment in China, called ‘Soon-to-expire food industry’ is expected to grow rapidly at an annual rate of 6% (CAGR) from Rmb 31.8 billion (US$5 billion) in 2021 to Rmb 40.1 billion (US$6.3 billion) in 2025, according to a recent report by iiMedia Research Consulting.
This new industry is created out of rising food security concerns in a country with a massive population of more than 1.4 billion people. Soon-to-expire food industry, as the name sounds, refers to food products that can still be consumed, however the expiry date is near, as such they are sold at massive discounts, which in recent years have attracted the attention of younger savvy consumers.
China has one of the most innovative market when it comes to food products where consumers can purchase goods from offline supermarkets and convenience stores, to online business platforms. This high level of innovation has also led to the creation of new niche markets, one of which is for ‘soon-to-expire’ food items. Some imported food products like snacks and chocolates are rather pricey and beyond the affordability of many low to middle income Chinese consumers, as such many opt to purchase them when they are closer to the expiry dates as they can be bought in large quantities and at a huge discount.
According to the iiMedia report, consumers in the middle-income bracket are the most common consumer of soon-to-expire products, and the most commonly bought items include snacks, bread, pastries and dairy products. In addition, more than 50% of these consumers will repurchase the products every month, while nearly 80% are willing to recommend the products to others.
In 2021, China saw a surge in companies entering the soon-to-expire food market and new business registrations rapidly increased from 12 in 2020 to 68 in 2021. Stores like HotMaxx, Hema Fresh and HitGoo exclusively sell soon-to-expire foods, and overall, the prices of their products are considerably lower than the average market prices. To many customers who are also social media users, “soon-to-expire food products are still good for consumption with all its taste and health benefits intact” and by buying them, consumers will play an additional role of conserving the environment.
The pandemic has also led to consumers shopping more online, accounting for 30% of sales, which indirectly also creates an opportunity for soon-to-expire foods to enter the market. According to the report, on Taobao, which is China’s largest e-commerce platform, merchants are selling soon-to-expire crisps, instant noodles and confectionery at less than half the standard retail prices.
This new industry can also help combat the country’s ever-increasing food wastage crisis. According to a 2015 report by Chinese Academy of Sciences, more than 35 million tonnes of food, or 6% of China’ total food production, is wasted annually, with around half derived from retail or the end of the food supply chain.
The Chinese government aims to overcome this food waste crisis as the country’s population is huge amidst food supply uncertainties in the future due to climate change and other external factors. Restaurants in China were ordered to offer takeaway boxes for leftovers and serve smaller portions to encourage sustainable consumption. In addition, a law was passed in April 2021 which banned ‘Food Competition/Eating Shows’ on social media platforms to discourage food wastage.
Government ongoing campaigns and laws indirectly promote Chinese consumers to become more environmentally conscious, which in turn promote the growth of ‘soon-to-expire food industry’. Chinese consumers see the benefit of supporting the sustainability goal while at the same time benefit from lower prices of such products.
