China’s juice market has entered a booming stage
To develop the domestic market of fruit and vegetable juice drinks is the major task of food industry during the tenth Five Year Plan period. It is also the key field which will be subsidized by the government in its agricultural industrialization. In provinces producing large quantities of fruits, support policies have been made. As people’s concept of consumption changes, their living conditions improve and the care for the younger generation is emphasized, China’s juice market has finished its initiation and come to a period of accelerated development. As China is the world’s largest and fastest-growing consumption market, the juice market boasts great potential.
The change of consumption concept will encourage the development of the juice market. With China’s rapidly growing economy and the improvement in the living standards, people’s concept of consumption changes. Such is the case with juice drinks. It has become a new favorite drink in that it is healthy and embodies elements of fashion. A survey indicates that more than 70% people drink juice to quench their thirst; 22% drink on banquets or parties and 23% drink while they are traveling. Over 45% people who have received higher education and those engaged in the finance and insurance industry drink juices from time to time.
The increase in people’s incomes will also bring about an elevation of the consumption standards, which will boost the consumption of juices. International experience in this regard shows that when the per capita GDP of a country reaches 1000 US dollars, its consumption patterns are going to change. Therefore, we can safely decide that since China’s economy has arrived at a new phase since in 2003 and that its per capita GDP is 1090 US dollars, people will not be content with simply having enough to eat and wear. They begin to evaluate the nutritive and health value of what they eat. In terms of drinks, natural juice drinks are competitive than carbonated beverage, tea and mineral water. Therefore, it is very likely that juices will become the mainstream drinks in the near future.
According to a survey of residents aged from 15 to 59 in twelve cities, 1500 RMB of the monthly income is a critical point. Above this point, it goes that when the income increases, the number of people who consume juice drink rises. In the next five years, about 20% of the whole population’s income will reach 1500 RMB. But the current production of juice drinks cannot meet the needs. The market for juice drinks, therefore, has broad prospect for growth.
The juice market for children in the city is growing even faster. According to a survey of children’s market of juices in nine big cities done by eight organizations, 76.3% of children aged from 6 to 15 drink juice, with a total consumption fee of 8.41RMB per month. Extrapolating from this, we can predict that the expenditure of the whole year would be 3.3 billion RMB. It would be a considerable amount of money when the markets in large and medium cities all over the country are taken into consideration.
According to the statistics from VDF, the average consumption of juice by a Germen every year is 40 kilos, and the world’s average level is 10kilos. However, the average consumption of juice by a Chinese every year is only 1 kilo, which is one tenth of the average level of the world, and one fortieth of that of developed countries. Suppose that 20% of the Chinese population consume an average amount of 10kilos of juice every year, then the demand would be as high as 2.6 million tons. Since China’s current output of juice is only 1 million tons, there is huge room for further growth.
Analysis of consumers of juice drinks
As the survey of juice consumption in ten cities shows, taste, brand, price and manufactured date are the four most important factors that decide people’s buying of juice drink or not. Other factors such as the nutritive value, accessibility and advertisement of juice also have influence on their choices. This shows their blindness in purchasing which can be explained by the following two aspects:
First, they lay too much emphasis on the taste of juice while losing sight of its nutritive value. Surveys of juice markets in foreign countries suggest that the most important reason for the rapid development of juice market is its comparatively high nutritive value. However, the survey of domestic juice market reveals the immaturity of consumers in that they overlook the nutrients in juice.
Second, while they generally attach great importance to the brands of juice drinks and the advertising, consumers show little concern about public praise (recommendation from friends). In most cases, public praise has great influence to exert on purchasing, especially on the purchase of foods. However, this is not the case with juice drinks, which shows that consumers constantly make random choices.
Consumption preferences and behaviors
In terms of taste, people become more and more particular with juice as they value it more than ever. Apart from traditional juice drinks, customers begin to turn their eyes to green natural drinks which embody the characteristics of both fruits and vegetables. Good and natural taste, high nutritive and health value have become the main attributes that customers look for in juices.
In terms of varieties, there are two kinds of juices: pure juices (100% juice) and juice drink (juice content ranging from 10% to 100%). At present, the 65% of market share is pure juice in developed countries, while in China, 80% people prefer juice drinks to pure juice. This is because pure juice tastes sour and is more expensive than juice drinks.
In terms of consumption habit, most people buy juice drinks randomly and in small amounts. More than 75% of people consume it shortly after they buy it. Regular buyers and bulk buyers take a small percentage. Leisure consumption characterizes the new trend of juice purchasing.
In terms of frequency, frequent consumers only take a small proportion. Only 2.1% of consumers drink juice at least once everyday, while more than 20% of consumers drink once or less each week. This implies that regular drinkers of juice are still small in number, and the market is yet to be nurtured.
Analysis of the characteristics of juice consumers
Women are the major consumers of juice drinks. Surveys suggest that 59.4% consumers are women, most of which are professional women, while only 40.6% are men. From the perspective of product characteristics, juice drinks are more appealing to women, especially preferred by single young women.
Among women consumers, the market penetration rate is 43.8%. In contrast, the market penetration rate among men is 34.7%, which is below the average level. In this sense, women constitute the major consumers of juices.
Young people are another major group of consumers in the juice market. As the age range goes up, the percentage of juice consumers decreases. People aged from 16 to 44 constitute 84.9% of the total number of consumers. Among 15 to 18 years old teenagers, the market penetration rate is 48.9%. In older groups, the rate gradually decreases. The rate is below the average level for people above 35. One thing that should be pointed out: people aging from 15 to 18 do not make money, therefore they are not the largest group of consumers, but the market potential is immeasurable.
Juices also appeal to office workers, especially white collar workers. In terms of professions, the number of white collar worker consumers surpasses that of manual laborers. Compared with construction workers and those in heavy industry, clerks, teachers, doctors and people engaged in finance, insurance, science and technology are more likely to buy juices.
How much further can the juice market develop?
Market opportunities
Presently, China is the world’s largest producer of apples and the third largest producer of oranges and tangerines. It is also one of the world’s leading producers of pairs and peaches. Moreover, the country is blessed with abundant wild fruits. All this has laid a solid foundation for the development of juice industry in China.
Though China has a big population, juice consumption is relatively small. At present, the per capita juice consumption is less than one kilo a year, with a market volume of 1.3 million tons. In the U.S., the per capita juice consumption is 45 kilos; Germany, 46kilos; Japan and Singapore, 16 to 19 kilos. The world average is 7 kilo, which, if applied to China, would make the country’s total consumption reach 9.1million tons. From this, it can be said that there is great potential in the country’s juice market.
With the deepening of reform, China’s economy has made a great leap forward, resulting in the increase of their income and purchasing power. With the improved living standards, their concept of consumption changes as well. Therefore, more and more people choose to drink juice, which contributes to the development of the juice market.
From the analysis, we can predict that the juice industry in China will continue to grow rapidly. As people become more and more concerned about their health, they will come to recognize the value of juices in keeping them healthy. Thus, juices will not only become an important drink for relieving summer heat, but will also a drink for all seasons. To be specific, four kinds of juices will probably lead the trend. The first one is juices that of particular functions. For example, pure juice drinks that are able to lower blood pressure. The second type is natural juices of tropical flavor, such as coconut milk, mango juice, and pineapple juice. The third type is wild fruit juices, which are also called the “third-generation” juices. They are rich in vitamins, amino acid or trace elements, whose nutritive value is several or even dozens of times of the first-generation juice drinks made from fruits such as oranges and apples. The last kind is the fruit and vegetable drinks, which has just gained its popularity in the international market. Vegetables contains enzyme, which takes part in the metabolism of the body. Therefore it is complementary to fruits in terms of nutrients.
Currently, there are about 350 brands of juices in the Chinese market, and the output has increased from 1.2 million tons in 1997 to 1.5 million in 2001, of which 80,000 tons are exported. All through the 1990s, the output grows at a rate of 25%, except in 1998 when it is adversely impacted by the international juice market. In addition to that, the purchasing power of consumers grows rapidly as well. In 2001, the turnover from the sales of juices reaches 8.2 billion RMB, the first time that it surpasses the turnover of carbonic acid and bottled water. A sample survey conducted in Beijing, Shanghai, Guangzhou, Xi’an, Chengdu, Changchun and Wuhan shows that the top four choices are juices, milk drinks, bottled water and carbonic drinks.
It also indicates that in 2001, juice consumption, which grows by 50%, is the one that grows the fastest. During the first quarter of 2002, juice consumption grows by 30%. Since juice is a healthy and fashionable drink, it wins the favor of many people who are more and more receptive to it. As mentioned earlier, more than 70% people drink juice to quench their thirst; 22% drink on a banquet or party and 23% drink while they are traveling. Over 45% people who have received higher education and those engaged in the finance and insurance sector drink juice. Apart from that, the packaging of juice products is more delicately designed. Sterile packaging, in particular, wins wide popularity in the juice market.