China's bakery and snacks sector predict e-commerce sales boost for Lunar New Year
The Chinese Luna New Year falls on February 16, 2018.
Many large international and Chinese candy and snack firms - like Hershey, Mars, Nestlé-owned Hsu Fu Chi and Ma Dajie Food - have seen sales decline in brick-and-mortar retail for several years now and have turned their focus onto online platforms as the “key channel” for seasonal growth, said China Candy.
According to Nielsen data, sales of fast-moving consumers goods (FMCG) grew by 13% during the Chinese New Year in 2017 compared to the same period the previous year, while the category’s online sales grew by 45% versus brick and mortar at 6%.
E-commerce latecomer still winner
A spokesperson at Hsu Fu Chi said the company was a latecomer to the e-commerce channel, yet it has been growing quickly.
“Since 2013, we have grown from a single online retail to multi-channels, including online flagship stores and online supermarkets, with sales increasing at 170% year-over-year,” the spokesperson said.
Hsu Fu Chi is a popular snack brand for Lunar New Year, producing signature sandwich cookies, chocolate candies and traditional Chinese cereal bars called sachima (沙琪玛).
“E-commerce will become an important tool for us to innovate and interact with our consumers, as it is becoming our main sales channel,” said the company's spokesperson.
“We expect our online sales during the New Year to increase by 240% this year, compared to 2017.”
However, China Candy noted many manufacturers are shifting away from e-commerce when targeting second- and third-tier Chinese cities as consumers in first-tier cities are the main drivers of online shopping.
Fried nuts are ‘unignorable’
The trade body noted nut snacks are becoming an increasingly popular gifting option during the spring festival, and the holiday season often accounts for 30% to 40% of the annual sales of nut companies.
The sub-segment's performance has been outstanding over the past few years, accounting for 32.35% of the overall Chinese snacks market in 2014, according to China Candy's market data.
In 2015, retail value of the nut category reached $19bn, growing by 7.8% compared to the previous year.
“Fried nut snacks have become an ‘unignorable’ segment,” said China Candy.
The country’s online nuts space is currently dominated by three brands: Three Squirrels (三只松鼠), Be & Cherry (百草味), and LPPZ (良品铺子) – all of which produce pecans, cashews and macadamia nuts. Additionally, some have extended their product line to biscuits and mahua (麻花) to further capitalize on online sales.
Mahua - or fried dough twists - are fast becoming a “star item”, said China Candy, noting that Three Squirrels received an average of 75,000 online orders for mahua every month last year, while LPPZ received 35,000.
By 2016, the Chinese mahua market was worth $948m.
