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Current Position:Home » News » General News » Topic

Rural China cannot be ignored: Nielsen

Zoom in font  Zoom out font Published: 2012-05-22  Origin: foodnavigator-asia  Authour: Kacey Culliney
Core Tip: China’s US$500bn rural consumer market holds huge growth opportunities for the fast-moving-consumer-goods (FMCG) segment, with juices and teas set to soar, according to Nielsen.
While China predominantly urban (51%) with mushrooming cities, a new Nielsen study on urbanisation across Greater China has suggested that the country’s 650m rural consumers hold opportunities for brand owners and “can’t be ignored”.

Food and beverage companies are
 “missing out” on opportunities within this demographic as most focus on urban China, the study said, but a “continued and keen focus on rural villages is vitally important for sustainable growth strategies.”

Dale Preston, senior VP for Analytics and Consulting for Nielsen Greater China, said brand owners must shift away from the tactic of waiting for rural consumers to ‘come to them’ via urbanisation.

Speaking at Nielsen’s Greater China Consumer 360 Conference, Preston said that focused attention on the buying behaviour of rural residents is critical.

The study showed that rural shoppers make 20% less shopping trips than urban residents but spend one-third more on each trip. This demographic spends an average of 418RMB each month, compared to the average urban spend of 1,199RMB – a figure Nielsen said highlights the growth opportunities.

Attracting the rural consumer

Rural consumers follow urban purchasing trends closely, the Nielsen study showed, but they remain very different in spending patterns.

Jasmine teas and juices are set to see the greatest growth, among other personal care goods, according to the study.

“Product assortment and good quality are important purchase drivers for the rural consumer, even more so than price and promotions,”
 Nielsen said, although managing price remains critical when tapping into lower-tier consumer demographics.

“In the past, companies have focused on low price and often low quality offerings to penetrate villages but with village consumers becoming more affluent and aspiring to a higher quality of life, they seek products with key features and benefits similar to the ones they see in urban centres,”
 it detailed.

Migrant rural money

In particular, rural migrants should be a priority focus for food and beverage firms, Preston said, as they are
 “often experiencing brands and products for the first time and thus, are forming brand connections that may last a lifetime.”

According to Nielsen data, around 20% of villagers are migrants with almost half (45%) blue collar workers, a third students and one-fifth (21%) semi-skilled blue collar workers.

There is increased government investment in the rural demographic, Preston said, thus lifestyles are improving and there is a rising income base.

“What consumers want to do now is experience brands for the very first time. They are going into urban areas to shop, many of them once a month, and experiencing all the new products they can buy – they have this real desire to improve their lives,”
 he said.

These rural consumers have the want to buy and the ability to purchase more premium products and brands to improve their lifestyles, he said.
 
 
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