Market research uncovers Chinese consumer apple preferencesExport & Market Access
With market access to China inching closer for mainland Australian apples, APAL undertook market research to better understand the mindset of the Chinese consumer. This article is adapted from a presentation delivered by APAL CEO, Phil Turnbull, at the APAL Industry Forum, June 2019.
Much-publicised stories of soaring Australian citrus exports have tantalised mainland apple growers waiting for access to be granted to the Chinese market. With a population of nearly 1.4 billion people, and a rapidly expanding middle class, it is almost certainly the largest premium fruit market in the world, and one with a growing taste for new apple varieties.
Programs like Future Orchards® and widespread adoption of new techniques and varieties has delivered significant productivity gains, but without the same focus on developing new markets, there’s a risk of inadvertently contributing to flat and declining pricing.
One growth strategy is to reignite export. India, Thailand and Taiwan are attracting Australian growers’ attention, but the sheer scale of China makes it a prize too big to ignore.
If we are confident that inter-governmental negotiations will ultimately secure access to China, growers need to start preparing now. Building knowledge of the markets and relationships with the right retailers is important. If we wait until access is granted to start these tasks, it may be three or four years before a single apple is shipped.
Modern China’s emerging and powerful generation
To hit the ground running, APAL commissioned market research firm, Crowd DNA to establish insights into the mindset of Chinese consumer.
In-focus are the relatively young (25 – 35 year-olds), upwardly-mobile, urban individuals, who are already regular buyers of imported fruit and in charge of purchasing their own fresh produce. This powerful generation of buyers was the first to be born into a Modern China. Like our own millennials, they have been raised as digital natives, where social media and word-of-mouth recommendations from their network have the greatest influence on their buying decisions.
With the economy tripling in size between 2000 and 2010, this generation grew up in one-child families, knowing only increasing prosperity. Empowered by rising disposable incomes, they expect more in terms of product quality and customer service and have an insatiable desire for anything new and unique.
Food as status
Instead of brand-name ‘bling’, the modern Chinese consumer is looking for a more cultured, sophisticated show of success. Travel and food are popular options with young Chinese prepared to travel far and wide to ‘discover’ something that no one else knows about, or if travel is not an option, then they are prepared to pay a premium to access the exotic from home. Bargain prices are no longer the driver of customer satisfaction and consumers are swayed by better quality and a sense of the new and unique.
“Nowadays our children have tried almost everything. They’re only interested in food with new tastes and ways of consuming it. We live an abundant material life today.
“Our parents’ generation would shop in the farmers markets because it’s cheaper, but the younger generation don’t share their values, there’s no such thing as ‘un-affordability’ – if we want something then we pay for it, flavour comes before price.”
Fruit is a popular category in China, and while consumption still lags behind global consumption on a per person basis, the accelerating standard of living suggests there is enormous potential for this to grow.
Traditionally, apples, bananas, grapes and melons have been Chinese staples, but exotic products such as custard apples, berries, avocados, stone fruits, and mangoes, as well as mind-bending ‘novelty fruit’ – square watermelons, thumb-sized miniature watermelons and white strawberries, have all piqued Chinese consumer interest. Kiwis, coconuts, stone fruit and berries have been standout performers, making the transition from exotic-treat, to regularly-purchased item, evidenced by foreign growers, like berry producer Driscolls, setting up domestic production.
Crisp, red and most of all, juicy!
Like Aussie consumers, the Chinese regard apples as perfect for snacking, baking, or breakfast foods, but they are historically eaten peeled due to concerns over pesticide usage, making it more difficult to eat as an ‘on-the-go’ snack.
Today, most Chinese will wash their apples very thoroughly, often scrubbing them with a specialist fruit wash and avoiding cutting them until they’re just about to eat them, to avoid flesh browning, which they see as a lack of freshness.
Individuals had their own taste preferences, although there was a clear trend in the market research group towards symmetrical ‘Goldilocks’ apples – not too big, not too small, with even, block-colour redness, seen as indicating a level of sweetness and juiciness, a criteria by which Chinese consumers are particularly impressed, boding well for pears!
And what about the domestic apple market?
There is a strong heritage of apple growing in China and production volumes are enormous. But with large-scale apple growing introduced over 70 years ago, most commercial orchards are now ageing and the yield is sub-optimal. Add to this China’s very low labour costs, and it’s likely that Aussie apples will struggle to compete as a commodity in this market, so the focus must be on a premium, branded export offering.
A misalignment between consumption patterns, which favour the premium end of the market, and large volumes of domestically produced, commodity-grade fruits, may favour international suppliers, at least in the short term.
Add to this China’s very low labour costs, and it’s likely that Aussie apples will struggle to compete as a commodity in this market, so the focus must be on a premium, branded export offering.
Production techniques play an important role in perceived quality. A growing process that is highly controlled and technologically-advanced provided market research participants with much greater confidence in product superiority, taste and consistent quality. Low-tech, more natural approaches, were seen as indicating a regressive, low-quality product.
The Chinese preoccupation with food safety is the result of a number of high-profile food and product safety scandals which have led to a lack of trust in many Chinese-made produced products.
The success of companies like Blackmores, Bellamy’s Organic and Swisse demonstrate a strong and growing preference for ‘clean and safe’ foreign products, which are now as much about lifestyle and health, as they are luxury brands. In terms of fruit, the overseas provenance of imported produce is enough to signify higher standards of quality, although specific locations, i.e. Australia versus France or Japan, don’t drive additional quality associations.
Like the citrus industry, access to China could prove transformative for the Australian apple industry, but growers need to start preparing now.
Those producers who are export-ready; have their work plans in order, have established relationships with premium retailers, and are able to meet the demand for differentiated, high-quality fruit, will command premium pricing.
- Affluent Chinese consumers are prepared to pay a premium price for quality and freshness, delivered by standardised, high-tech production methods.
- The new generation of Chinese consumer is seeking new, exotic taste experiences and assurances of quality.
- Chinese buyers are highly-engaged quality-and-experience seekers, and food is a highly visible way to show status.
- With China’s very low supply-chain costs, it’s likely that Aussie apples will struggle to compete as a commodity in this market, so the focus must be on a premium, branded export offering.
- New varieties/brands that have process discipline, novel, exotic brand appeal and ‘seal of quality’ to guarantee the flavour, freshness and quality, will command premium pricing.
- A new provenance story is appealing to the younger Chinese generation – and imported status denotes a level of food safety that isn’t necessarily present in domestic fruit.
- Apples are staple ‘anytime’ food and the perfect piece of fruit will be un-waxed, block red apple, which is not too big or small, crunchy and very juicy.