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W H A T D O 1 . 4 B I L L I O N P E O P L E E A T ?

C H I N A ’ S C U R R E N T A N D F U T U R E F O O D T R E N D S

C H I F A N L E M A

吃饭了吗?

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P U R P O S E

• Provide insights to aid with China market penetration

• Highlight opportunities for sharing business best practices

• Generate interest to explore China further

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A G E N D A

• Diversity & Scale

• Cultural Contradictions & Evolving Taste - Case 1: Starbucks

• Digital - Case 2: Dianping

• Health & Safety - Case 3: Hunter Gatherer

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D I V E R S I T Y & S C A L E

S O M E C H I N A S T A T I S T I C S

• Population: 1.38 billion people or about 18.4% of world’s total population -most populous country in the world

• Forth’s largest landmass by country ahead behind the US and ahead of Brazil

• Shanghai Official Population is 24.5 Million, Unofficial 35 Million, Vienna is 1.8 Million, similar city size would be Yantai 1.8 Million

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M E A T C O N S U M P T I O N S T A T I S T I C S - B E E F

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M E A T C O N S U M P T I O N S T A T I S T I C S - C H I C K E N

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M E A T C O N S U M P T I O N S T A T I S T I C S - P O R K

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I N C R E A S I N G M E A T C O N S U M P T I O N

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4 M O S T C O M M O N T Y P E S O F M A I N L A N D C H I N E S E C U I S I N E

1. Name: Shandong cuisine (Mandarin, Northern)

Place: Shandong, Hebei, Henan, Beijing and Tianjin

2. Name: Huaiyang cuisine (Shanghai)

Place: Jiangsu, Zhejiang, Anhui and Shanghai

3. Name: Cantonese cuisine (Canton)

Place: Guangdong, Guangxi, Fujian, Hong Kong and Macao

4. Name: Sichuan & Hunan cuisine

Place: Sichuan, Chongqing, Hunan11

S H A N D O N G ( M A N D A R I N / N O R T H E R N ) C U I S I N E• Features: From refined Imperial cuisine to the hearty day to day meals of

the North, Shandong cuisine consists seafood, dumplings/noodles, unleavened breads, stews. Garlic, green onions, and a dark fermented soy paste are important flavoring elements. Food tends to be salty.

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H U A I Y A N G C U I S I N E

• Features: The cuisine tends to be sweet, many dishes use dark soy sauce and sugar and uses vinegar. Pork, fresh water fish and other aquatic creatures serve as the base to most dishes. The way that ingredient is cut is pivotal to its cooking and taste. Generally, the cuisine is more meticulous and light.

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C A N T O N E S E C U I S I N E

• Features: Cantonese cuisine incorporates almost all edible meats/seafood. Chinese saying goes Cantonese will eat anything with four legs except the dining table. Considered to be the most refined and delicate of Chinese cuisine. A high importance is placed on natural and seasonal flavors.

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S I C H U A N & H U N A N C U I S I N E

• Features: The cuisine is famed for bold @ spicy flavors, resulting from liberal use of garlic and chili peppers, as well as the unique flavor of the Sichuan peppercorn used in Sichuan cooking. Peanuts, sesame paste and ginger, various pickles and spicy fermented bean paste are also prominent ingredients.

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A L C O H O L - 白酒 B A I J I U ( W H I T E W I N E )

• Baijiu: The World’s Most-Consumed Liquor You’ve (Probably) Never Heard Of

• 5.5 billion liters consumed in 2016 (25 billion liters of wine consumed worldwide, 3.2 USA, 2.8 France, 2 Germany, 1.8 China, 0.25 Austria)

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C U L T U R A L C O N T R A D I C T I O N S & E V O L V I N G T A S T E

S P E E D O F C H A N G E - L E A D S T O C O N T R A D I C T I O N S

• One of the world’s oldest, largest, living civilizations is also changing the fastest in known civilization

• 700 million Chinese have been lifted above the poverty line since 1980, accounting for three-quarters of global poverty reduction during that period according to the World Bank. Unprecedented in human history

• Entrepreneurship - There is a massive shift to support, easy to start up businesses, receive grants and tax breaks.

• Rapid Development of Taste

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O L D H A B I T S

• Cold foods - A fast majority of Chinese believe that consuming cold foods and especially cold beverages is not good for your health. This is especially true for women, they believe that cold foods such as ice cream, ice cold water, etc.. can lead to arthritis, abdominal pain, and general illness.

• Raw foods - Both from a psychological and hygiene perspective, most Chinese believe eating raw food can lead to illness. Raw salads tend to be avoided, as well as unpeeled fruit. Many Chinese will even peel grapes, avoid undercooked/runny eggs, raw fish.

• Meat Consumption － Was infrequent, used as a flavor base, has increased rapidly with development. Many Chinese still do not like or eat beef.

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C A S E S T U D Y 1 : S T A R B U C K S* F R O M F O R B E S . C O M “ 5 T H I N G S S T A R B U C K S D I D T O G E T C H I N A R I G H T ”

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C A S E S T U D Y : S T A R B U C K S

• 1999 - How can a coffee company penetrate a nation of tea drinkers?

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C A S E S T U D Y : S T A R B U C K S

• Starbucks doesn’t sell coffee, but sells the “third space,” created the demand for a place for people to meet and drink beverages

• You can find a major Starbucks in every major street corner on 1st and 2nd Tier cities in China

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C A S E S T U D Y : S T A R B U C K S

• No advertising or promotions, focused on high visibility high traffic locations that emphasized the brand image

• Took advantage of the tea drinking culture, to create various tea based drinks, localized food, gifts and menu items

• Provided customers with an exceptional experience. The chic interior design and upbeat music were not only differentiators from the competition, but also had a strong appeal to younger generations. Drinking Starbucks has become a symbol of modern lifestyle in China

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C A S E S T U D Y : S T A R B U C K S

• Long term commitment, pour significant resources to recruiting and training employees

• Maintained Premium Brand and Price

• China is not one homogeneous market. There are many Chinas. The culture from northern China is very different from that of the east. Consumer spending power inland is not on par with that in coastal cities. To address this complexity of the Chinese market, Starbucks partnered with 3 regional partners as part of its expansion plans.

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C A S E S T U D Y : S T A R B U C K S N U M B E R O F S T O R E S F R O M 2 0 0 5 - 2 0 1 6

W W W . S T A T I S T A . C O M

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D I G I T A L F O O D T R E N D S

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T H E R I S E O F D I G I T A L

• Mobile penetration - Of the 1.4 billion people there are 1.28 billion mobile registered mobile subscriptions as of 2016. Over 90% mobile penetration. Over 50% are smartphones or over 600 million smartphone users.

• No 1 most used APP is WeChat: Instant messaging, social, payments, location based services

• No of active users: 360 million monthly active users (Facebook 231 million for USA and 1.74 billion worldwide)

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C A S E S T U D Y : D I A N P I N G . C O M

• Valued at over 4 Billion USD

• Food & Restaurant Review

• Similar to Yelp! but more…

• 100 Million Monthly Active Users

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C A S E S T U D Y : D I A N P I N G . C O M

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C A S E S T U D Y : D I A N P I N G . C O M

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C A S E S T U D Y : D I A N P I N G . C O M

• LBS food and nearby restaurant delivery

• Payments/Reservations

• Created new economy of food service

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H E A L T H & S A F E T Y

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F A M O U S S C A N D A L S

• 2008 Chinese milk scandal - milk and infant formula along with other food materials

• China reported an estimated 300,000 victims in total

• Six infants died from kidney stones and other kidney damage with an estimated 54,000 babies being hospitalized

• The chemical gives the appearance of higher protein content when added to milk, leading to protein deficiency in the formula.

• Sanlu—market leader in the budget segment—government inspections revealed the problem existed to a lesser degree in products from 21 other companies.

• At least 11 countries stopped all imports of Chinese dairy products.

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F A M O U S S C A N D A L S

• A number of criminal prosecutions were conducted. 2 people were executed, one given a suspended death penalty, 3 people receiving life imprisonment, two receiving 15-year jail terms,[6] and seven local government officials, as well as the Director of the Administration of Quality Supervision, Inspection and Quarantine being fired or forced to resign.

• The W.H.O. referred to the incident as one of the largest food safety events it has had to deal with in recent years, and that the crisis of confidence among Chinese consumers would be hard to overcome.

• In 2012, Jiang Weisuo, a 44-year-old general manager of a dairy products plant in Shanxi province, was rumoured to have been murdered in Xi'an city. It was Weisuo who had first alerted authorities to the scandal. According to the Xian Evening News, Jiang died in hospital on 12 November from knife wounds inflicted by his wife, Yang Ping

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O T H E R F A M O U S S C A N D A L S

B A D H A M B E R G E R S 2 0 1 4

• Shanghai Husi Food Co. Ltd. supplied products containing expired meat to McDonald's, KFC, Pizza Hut, Starbucks, and Burger King. The products were sold in numerous countries including Japan.

• McDonald's Corp and KFC's parent Yum! Brands, Inc. apologized to Chinese customers after the scandal was exposed. Shanghai Husi Food Co Ltd based in China was a subsidiary of U.S.-based OSI Group LLC.

• The company was forced in July 2014 to shut down after local television station Dragon TV ran footage of the company's factory workers picking meat such as hamburger patties from off the factory floor and throwing them directly into meat mixers. Also bare hands handled poultry and beef on the assembly line. The footage also showed sewage and trash spread all over the floor of the plant. In addition, the expired meat, which workers described as "stinky," was concealed mostly by mixing it with non-expired meat.

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O T H E R F A M O U S S C A N D A L S

• Gutter Oil

• Pigs in the River

• Frozen Rat Meat

C L E A R S I G N A L F R O M T H E G O V E R N M E N T A N D F R O M T H E P E O P L E

On July 10, 2007, Zheng Xiaoyu, the former head of State Food And Drug Administration, was executed by lethal injection for taking bribes from various firms in exchange for state licenses related to product safety

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C A S E S T U D Y : H U N T E R G A T H E R E R

C A S E S T U D Y : H U N T E R G A T H E R E R

• started by 2 young Chinese returnees, family is one of China’s largest organic soy sauce producers

• Focus on seed-to-table

• Taking an “honest” approach: OUR FARMING TECHNIQUES: Growing all-natural food is a complex and exacting science. Sustainable agriculture involves many factors—from soil type and water quality to pollination methods and pest control—that we meticulously monitor from seed to table. Our all-natural farming techniques include, but are not limited to, crop rotations, natural pest control, pollination with Dutch bees, and microbial compost. Our farms are currently undergoing organic certification, a process that requires the farms be in operation for at least 3 to 5 years to ensure that the soil is completely free of synthetic chemicals.

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C O N C L U S I O N

• China is enormous and diverse, despite old ways, China is changing fast

• Growth = Opportunity, Food Safety continues to be an opportunity

• Starbucks: Localization, Understanding Market Needs, Maintaining Brand

• Dianping: Digital mobile can create new markets and models for food

• Hunter Gatherer: New trends, cutting edge to cater to changing tastes

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T H A N K Y O U