With the intensive policy boost and consumers’ natural demand for dining out after the first wave of the COVID-19 lockdown in early 2020, China’s local foodservice market recovered fast later in the first post-COVID-19 year. In the second post-COVID-19 year, sporadic outbreaks caused periodic operational suspensions throughout the country’s foodservice market. That, combined with the slowdown in China’s macro-economic growth and changes in consumer dining habits spurred on by the lockdowns, resulted in significant shifts in consumer behaviors. Total market spend dropped by 2% compared to the first post-COVID 19 year. However, beverage consumption grew 4% thanks to the increase in both eater checks and cross-channel traffic, especially within leisure-oriented channels like entertainment.

Among major beverage categories, carbonated soft drinks (CSD) and water grew faster than the others, which was driven by senior consumers and higher income groups. Gen Z led the growth of non-alcoholic drinks, while female consumers led the growth in alcoholic drinks.

The most growth in beverage servings was seen in entertainment, vendor/drink station, and coffee/bakery channels. Competition in drink station and coffee/bakery became more intense in 2020 and 2021, where intensive promotions provided consumers with smarter and better choices, which led to more purchases.

Amid the growth of big beverage categories such as CSD, niche categories saw an uptick in sales as well. For example, vegetable protein drinks recorded good ‘item per eater’ growth among three of the channels: coffee/dessert shop, drink station, and FSR.

Since the beginning of the pandemic, “self-indulgence” beverage options have posted higher incidence growth over their “healthy choice” alternatives. For example, water products recorded an increase, while it was flavored water that led growth; and in tea-flavored drinks, the classic fruit flavors led incidence growth among a rich selection of other flavors, including alcoholic, savory, and spicy.

To better understand and position differentiated product strategies in China, it is important to know how the beverage and food categories mix in different channels. For example, food with drinks traffic posted an increase while dry tickets dropped nearly 10%. It seems the key to success is knowing what type of drinks pair best with a specific type of food.

As the industry evolves in a post-pandemic world, and local restriction policies reshape China’s food and beverage market, consider the impact this is having on consumers’ dining out behaviors. Looking at beverage categories, features, flavors, and pack types is a great example of how the industry can offer new and exciting options for customers.

*First post-COVID-19 year: 202005~202104; second post-COVID-19 year: 202105~202204

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