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  1. Analysis
February 7, 2019

Why China’s elderly is a lucrative market segment

just-food's China columnist Peter Peverelli outlines why food manufacturers operating in the country need to consider its modern, older consumer.

just-food’s China columnist Peter Peverelli outlines why food manufacturers operating in the country need to consider its modern, older consumer.

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Old people have always been held in high regard in China.

A special age was 60. The Chinese zodiac consists of 12 heavenly stems and five earthly branches, together forming a 60-year cycle.

Once you had lived an entire cycle, you were an experienced person, to be treated with respect. The best cuts of meat were given to the elderly during a family dinner. There was also a downside. Old people were supposed to stay home as much as possible, because they were considered too weak to walk for more than ten to 20 minutes, let alone to travel. Pampered by their loved ones, with the best of intentions, Chinese elderly aged more rapidly than was necessary.

This tradition continued into modern times. After the founding of the People’s Republic of China, a pension system was installed, in which men would retire at 60 and women at 55. This is still intact, although in some professions, people can work a few years longer. The rationing of basic foods like cereals or milk, a system that was in operation until the early 1980s, included special care for the elderly in a household.

Things began to change when the influence of Western consumerism started to stimulate individualism among Chinese youth. The ability (and, among some, the desire) to profile yourself with your unique set of characteristics was introduced into China by the advent of social media.

The food industry was one of the first to pick up this trend. A number of dairy brands started to advertise for products like single-portion milk beverages and yogurt. The vibrant image was reinforced by using young famous singers in advertising campaigns. Soft drinks followed suit, with TV ads showing dancing and singing youngsters.

Surprisingly, these ads also started to sing to Chinese pensioners. Due to a strict family planning policy introduced in 1979, in which each couple was only allowed to have one child, the Chinese population was ageing rapidly. At the end of 2017, the official Chinese population count was approximately 1.39bn. The age bracket of 60 years and higher was 17.3% – or 240.9m people. That ratio has been rising consistently from 13.7% in 2011.

In spite of the focus on young consumers in many sectors of the Chinese food industry, the State was still taking care of its elderly as it was obliged to do according to cultural tradition. Pensions increased following the increase in wages in China. Moreover, Chinese are thrifty. Most pensioners have bank deposits that in China still generate interest.

The Chinese elderly now constitute a considerable market. Unlike the traditional Chinese elderly, the modern pensioners want to get as much out of life as their (grand)children. They want to dance, travel, dress well and eat even better. And they want food and drinks that are specially formulated for them.

Chinese consumers spend a relatively high part of their disposable income on food. In 2017 it was 29%. Overall per capita consumer spending in China in 2017 was CNY18,322 (US$2,716). When we take 29% of that and multiply it with the country’s elderly population, we get a market value of close to CNY1.3trn.

The Chinese government is supporting the development of food for senior citizens. A proposal for a National Standard for the formulation of food for the elderly was issued by the State National Health Commission (China’s former Ministry of Public Health) in September 2018. It contains information like the daily recommended intake of vitamins, minerals and other nutrients for the highest age bracket.

However, even before these government actions, many food companies have started developing special food products for the elderly. The first were milk and milk powder specially formulated for seniors. Milk powder for middle-aged and old people by dairy giant Yili is reinforced with vitamins A, D, E, B2, B6 and C and the minerals phosphorous, magnesium, calcium, iron, and zinc.

SeaMild, China’s first domestic breakfast cereal, also comes in a special formulation for the elderly, with added vitamins A and D and calcium.

Other manufacturers are advertising certain foods as especially suitable for senior citizens. A search with ‘elderly’ in the online shop Tmall results in a considerable number of bakery products that claim to be suitable for the older consumer. Many of these are sugar-free. This is based on the belief that elderly should eat less sugar.

Sugar is still an important food ingredient in China. Most Chinese still believe those who have to work five days a week need sufficient energy and sugar is a good source of quick energy. Most milk powder produced in China is sweetened, while milk powder for the elderly is typically not.

However, there is an even larger market in which the elderly are the top consumer segment: health foods and supplements. This is rooted in the Chinese tradition. Traditional Chinese medicine refers to many medicines as ‘supplementing’ the diseased body. The modern age has changed the intended function of supplements from keeping the body healthy to making it fit to continue leading an active life after retirement.

A handful of capsules, Omega-3 to slow down ageing, gingko to enhance your cognitive faculty and calcium for stronger bones is becoming a common part of the breakfast ritual of the modern Chinese pensioner. According to e-marketplace 21Food, the turnover of the Chinese health food market (incl. supplements based on Chinese and Western medicine) was CNY237.6bn in 2017 and is expected to exceed CNY20trn by 2023.

What does this mean for international food suppliers? First of all, rid yourself of the idea that teenagers and young white-collar workers are the most vibrant consumer segments in China.

Pensioners are a large energetic segment as well and equally affluent. While all Chinese want their food and drinks to be healthy, the elderly are more focused on healthy food, where healthy is not only expressed in using healthy ingredients, but also adding stuff they believe they need to supplement: vitamins and minerals, but also various alkaloids that keep the arteries clean, or the muscles supple. 

Related Companies

Free Whitepaper
img

What is the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry?

While wanting to protect the country from being overwhelmed by Omicron, China’s adherence to a Zero-COVID policy is resulting in a significant economic downturn. COVID outbreaks in Shanghai, Beijing and many other Chinese cities will impact 2022’s economic growth as consumers and businesses experience rolling lockdowns, leading to a slowdown in domestic and international supply chains. China’s Zero-COVID policy is having a demonstrable impact on consumer-facing industries. Access GlobalData’s new whitepaper, China in 2022: the impact of China’s Zero-COVID lockdowns on economic activity, consumer goods and the foodservice industry, to examine the current situation in Shanghai and other cities in China, to better understand the worst-affected industry sectors, foodservice in particular, and to explore potential growth opportunities as China recovers. The white paper covers:
  • Which multinational companies have been affected?
  • What is the effect of lockdowns on foodservice?
  • What is the effect of lockdowns on Chinese ports?
  • Spotlight on Shanghai: what is the situation there?
  • How have Chinese consumers reacted?
  • How might the Chinese government react?
  • What are the potential growth opportunities?
by GlobalData
Enter your details here to receive your free Whitepaper.

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