---
title: "Is Pickled Mustard and Instant Noodles a Sign of Consumption Downgrade? 13 Charts Reveal Another Truth"
description: "Whether consumption is upgrading or downgrading depends on the data you use. This article argues that the recent rise of low-end products like pickled mustard, soy sauce, and instant noodles, as well as the success of Pinduoduo, are not evidence of a consumption downgrade but rather reflect structural changes and the upgrading of specific consumer segments."
author: "商业咖啡"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-11-17"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/is-pickled-mustard-and-instant-noodles-a-sign-of-consumption-downgrade-1-b413b73d/"
markdown: "https://xinjignxiao.com/en/articles/is-pickled-mustard-and-instant-noodles-a-sign-of-consumption-downgrade-1-b413b73d.md"
original_source: "https://mp.weixin.qq.com/s/jKh5M0zPFt1kXEm9unTh-A"
translation: "https://xinjignxiao.com/zh/articles/%E6%B7%B1%E5%BA%A6-%E6%A6%A8%E8%8F%9C%E5%92%8C%E6%96%B9%E4%BE%BF%E9%9D%A2%E5%B0%B1%E6%98%AF%E6%B6%88%E8%B4%B9%E9%99%8D%E7%BA%A7-13%E5%BC%A0%E5%9B%BE%E5%B1%95%E7%A4%BA%E5%8F%A6%E4%B8%80%E4%B8%AA%E7%9C%9F%E7%9B%B8-b413b73d.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/is-pickled-mustard-and-instant-noodles-a-sign-of-consumption-downgrade-1-b413b73d/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Is Pickled Mustard and Instant Noodles a Sign of Consumption Downgrade? 13 Charts Reveal Another Truth

> Whether consumption is upgrading or downgrading depends on the data you use. This article argues that the recent rise of low-end products like pickled mustard, soy sauce, and instant noodles, as well as the success of Pinduoduo, are not evidence of a consumption downgrade but rather reflect structural changes and the upgrading of specific consumer segments.

**Whether consumption is upgrading or downgrading depends on the data you use.**
**By Business Coffee (ID: businesscoffee)**
Over the past period, influenced by changes in domestic and international market environments, the voice of consumption downgrade has grown louder. Core arguments include but are not limited to: 1) the growth rate of total retail sales of consumer goods continues to decline; 2) the stock prices of listed companies representing low-end consumption, such as pickled mustard and soy sauce, have risen against the trend, and instant noodle sales have rebounded; 3) the rise of Pinduoduo.
To analyze whether China is truly experiencing a consumption downgrade along these lines, several questions need to be answered:
1) Can the total retail sales of consumer goods and its growth rate reflect the real consumption situation in China?
2) How to define consumption downgrade?
3) Are the rise and rebound of pickled mustard, soy sauce, and instant noodles due to an increase in demand caused by consumption downgrade?
4) Is the rise of Pinduoduo a comprehensive consumption downgrade or a re-exploration of structured consumption demand?
**Can the total retail sales of consumer goods and its growth rate**
**reflect the real consumption situation in China?**
**1. Total retail sales of consumer goods cannot cover the full picture of consumption**
According to the definition given on the official website of the National Bureau of Statistics, total retail sales of consumer goods refers to the amount of physical goods sold by enterprises (units) through transactions to individuals and social groups for non-production and non-business use, as well as the income from providing catering services. Moreover, total retail sales of consumer goods include online retail sales of physical goods but do not include online retail sales of non-physical goods. In other words, this indicator mainly counts retail sales of goods, but apart from catering services, service consumption is not included in the caliber of total retail sales of consumer goods.
And according to the explanation of Xu Xianchun, former deputy director of the National Bureau of Statistics: "There are obvious differences in connotation between total retail sales of consumer goods and resident consumption."
**The differences are mainly manifested in the following four aspects:**
First, total retail sales of consumer goods include not only retail sales to rural and urban resident households but also retail sales to enterprises, institutions, and administrative units, the latter of which does not belong to resident consumption;
Second, total retail sales of consumer goods include building materials sold to urban and rural residents for house construction. Residents' housing construction expenditure belongs to investment, and the building materials purchased by residents for housing construction are part of residents' housing construction investment, thus not belonging to resident consumption;
Third, total retail sales of consumer goods do not include services such as education, medical care, housing, culture, art, and entertainment, while resident consumption includes consumption of these services;
Fourth, total retail sales of consumer goods do not include self-produced and self-used products by residents, such as agricultural and livestock products produced and used by farmers themselves, while resident consumption includes consumption of these products.
**2. Resident consumption expenditure and final consumption expenditure**
Therefore, while paying attention to the social retail data, we also need to pay attention to the two indicators of resident consumption expenditure and final consumption expenditure's pull on GDP. Their statistical caliber is broader, especially including service consumption, which can more truly reflect the entire consumer market.
△ Comparison of social retail growth rate and consumption's pull on GDP growth rate
Source: China Securities Construction Investment
It can be seen that from the broader statistical caliber indicators, consumption in the first half of this year has been in a stable and improving process, somewhat diverging from the social retail data. And considering that the proportion of service consumption will increasingly grow, social retail may no longer fully reflect the true level of national consumption.
△ Structure of per capita consumption expenditure of residents
Traditional consumption of food and clothing continues to decline, housing is basically stable, while the proportion of service consumption such as communication, transportation, education, culture and entertainment, and medical care in total consumption is gradually rising. Sales data of service goods on JD.com also confirms this trend.
△ Sales of service goods on JD.com
**How to define consumption downgrade?**
The word "downgrade" is often used in domestic administrative systems, mostly as a punishment means, that is, lowering the level. For the consumption field, how to reflect the lowering of level? Personally, it may include several phenomena: per capita consumption expenditure from high to low, consumption demands from emphasizing "quality" to emphasizing "quantity and price", from gradually emphasizing "spiritual consumption" to returning to only material consumption, and even survival material consumption.
The author has collected some data that to a certain extent shows the current situation of the domestic consumption industry, including the rise of average order value in some fields, the rise of high-end markets in some industries, and the increase in imported consumption demand. Of course, some may question the authenticity and comprehensiveness of these data, but at least they can show that consumption downgrade across the entire market does not exist.
△ Change in average order value of food delivery / Source: Analysys
The following chart shows that on the JD platform, sales growth of high-end digital and electrical products is actually better than that of mid-to-low-end products.
 _△ Price range changes of JD smart digital and home appliances_
The following chart reflects the trend in the high-end tourism market in recent years.
△ Number of visitors to Antarctica / Data source: iResearch
The following chart shows the per capita consumption (yuan) of consumers in different cities in China on Tmall Global, reflecting the growing and normalized demand for imported goods.
△ Data source: Ali Research Institute
**The consumption significance of pickled mustard**
Are the rise and rebound of pickled mustard, soy sauce, and instant noodles due to an increase in demand caused by consumption downgrade?
First, let's set aside the secondary market's pursuit of listed companies such as Fuling Zhacai, and focus solely on the industry's changing trends.
△ Trends in the pickled mustard industry
The pickled mustard industry has maintained stable growth over the past 15 years, with a growth rate of 3-5%. As a leading enterprise, Fuling Zhacai has maintained a good trend of both volume and price rising. In 10 years, it has raised prices 9 times, production capacity increased from 65,200 tons in 2008 to 130,500 tons in 2017, and revenue increased from 422 million yuan to 1.52 billion yuan. Therefore, the double rise in performance and stock price of Fuling Zhacai this year is the result of years of business accumulation, not the dividend of consumption downgrade. At the same time, it also reflects from the side that for such low-priced products, consumers have relatively low price sensitivity and will pay more attention to quality and brand.
The instant noodle industry rebounded after hitting bottom in 2016, but the driving force behind this rebound is structural adjustment and continuous R&D of new categories. We can see that the average order value of instant noodles has maintained a growth trend in the past five years, and major manufacturers are also continuously developing high-end products to increase consumption. Therefore, the current recovery of the instant noodle industry is not a portrayal of consumption downgrade, but an iteration made by a mature industry to conform to the current consumption trend.
△ Instant noodle market situation
Brands are continuously enriching high-end product lines
△ Data source: CICC
Is the rise of Pinduoduo a comprehensive consumption downgrade or an exploration of structured consumption demand?
Pinduoduo has attracted market attention and controversy from its establishment to its listing. Its low-price sales of "fake and inferior" products have been criticized, but according to its prospectus data, the number of active users in the second quarter of this year was 344 million, surpassing JD.com's active users, successfully entering the first tier of domestic e-commerce.
Relevant research institutions conducted statistical analysis on Pinduoduo's users, and the data shows that its users are mainly low- and middle-income people, with nearly 50% of users having a monthly income within 3,000 yuan. From a geographical distribution perspective, Pinduoduo's customer proportions in first-tier, second-tier, third-tier, and fourth-tier and below cities are 7%, 28%, 23%, and 42%, respectively, while JD.com's indicators are 16%, 34%, 20%, and 30%. In comparison, Pinduoduo's market is clearly sinking.
△ Pinduoduo customer income / Data source: Aurora Big Data
Although the average annual expenditure of Pinduoduo's active buyers is growing rapidly, the absolute amount is still relatively low. In the first quarter of 2018, the annual expenditure of active buyers was only 674 yuan, while Alibaba's was 8,732 yuan in the same period, 13 times that of Pinduoduo.
Therefore, Pinduoduo's core users are not young people or middle-class people living in first- and second-tier cities, but some residents of third- and fourth-tier cities and rural consumers. They are still price-sensitive. Pinduoduo uses group buying mode to achieve low prices, satisfying and releasing their needs. Although they have been exposed to the internet and e-commerce late, they have a larger population base, which is why Pinduoduo can have such a huge number of users and achieve explosive growth. In essence, Pinduoduo's success is not a consumption downgrade, but a consumption upgrade, an upgrade for low- and middle-income or rural groups.
We must acknowledge the rationality of Pinduoduo, just as we need to face the diversity of China's social structure. The differences and grading of consumption levels are determined by multiple factors such as China's geographical environment and population distribution. We cannot use the consumption views and habits of middle- and high-income people to measure the whole country, because the differences between different groups are huge, as shown in the chart below—the per capita disposable income of high-income people in China is 10 times that of low-income people.
In summary, consumption downgrade does not exist in some regions, nor will it extend to the entire market. It is more due to the uneven pace and stage of regional development, resulting in inconsistent outcomes. From a long-term and whole-market perspective, the consumption upgrade trend will continue.
-END-


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671