Mark Tanner, China Skinny founder Photo: RNZ/Sally Round
New Zealand food producers should take heart, a China consumer expert says, because there's still a large niche market there for "clean, green, safe and healthy".
It's the first time in his 11 years in China Mark Tanner has seen such flat consumer sentiment but while people are not going to be splashing out anytime soon, there's still opportunity, he said.
"It's about sorting out your tribe and really targeting in on who they are."
The founder of China Skinny, a Shanghai-based market research company, said confidence had been hit hard by the lacklustre property market and generally people were switching from premium products to more "value-focused" goods.
The craze for fancy milk tea or bubble tea is an example of the shift, Tanner told Country Life.
"People were prepared to pay a premium for drinks they thought were fresher, healthier, no sugar, things like that. But with the drops in sentiment, you're seeing more and more of these formerly premium brands competing on price."
China is New Zealand's largest market, consuming $20.4 billion worth of our goods, mostly dairy, in the year to end of June, and Tanner said the NZ brand, particularly in food and beverage "always scores right up there".
So how can our exporters navigate a more cost-conscious playing field?
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"There's obviously a still large niche in China that's prepared to pay whatever it takes to get the cleanest, greenest, safest, healthiest food and beverage products they can."
Convenience and food safety, apart from price, remain among consumers' main concerns at the checkout these days, he said.
"Convenience is on everyone's lips. In China, if it's not convenient, most consumers are not very interested.
"They want things here and now, and you can order something on your phone, and in many cases, have it delivered within 30 minutes."
He said buying for sustainability reasons is seen as a way to avoid harmful chemicals rather than a global environmental concern.
"People on the surface seem quite focused on saving the world but if you actually look at consumer behaviour, the association with health and safety and cleanliness is why they buy sustainable food and beverage.
"They're not buying it to save the world or to keep New Zealand rivers clean."
Tanner said the pandemic accelerated the desire to eat healthily.
"Health, to use a cliche, became the new wealth, and people prioritize their health in front of everything."
The value of New Zealand's red meat exports to China is at its lowest value in six years, with the move to cheaper meats like pork and chicken and competition from Brazil and Australia, but there is still understanding of the benefits of good quality high protein produce, he said.
"If we can really kind of hammer home that health angle, I think that's our best approach.
"Our biggest threat is the likes of Latin America coming in, undercutting us and consumers not valuing our quality."
Also, it was important for producers and exporters to not view China as one massive, homogenous market, he said.
"China is incredibly varied. Even in a city like Shanghai, you have those that are not price conscious at all."
On top of this, the so-called second and third tier cities were becoming more sophisticated and less competitive.
"Until quite recently, a lot of the consumers (in those cities) were very, very price sensitive, very basic in their needs, and unlikely to buy premium New Zealand products whereas now you're starting to see that these consumers in tier three, four and even five cities are among the most optimistic and you see retail spending is increasing much faster than cities like Shanghai and Beijing."
Consumer awareness of "Brand New Zealand" in China is very high, according to Tanner, reaching even into the remote villages.
"It's quite surface level, but every single person I've met in China knows about it. They all say about the milk, that's a big one and Lord of the Rings, but they do know it, and they do hold it in quite high esteem."