Source: Economic Daily - China Economic Net Authors: Wang Cheng, Han Xiao, Xiang Jiali

Opportunity outweighs challenge. Currently, the domestic epidemic prevention and control situation is continuously improving, and the resumption of work and production of foreign trade enterprises is progressing in an orderly manner. However, the accelerated global spread of the pandemic has had a huge impact on the global economy and trade. To help export enterprises actively explore the domestic market and respond to the State Administration for Market Regulation's "Three Guarantees" action (guaranteeing prices, quality, and supply), the San Tong Promotion Alliance, together with China Economic Net, held a seminar themed "Promoting Export Food Enterprises to Explore the Domestic Market." He Jihong, President of the China National Association of Food and Grocery Industry, attended the seminar via the "China Economic Cloud" platform. In her view, the pandemic has brought many changes to consumers' living conditions, and changes in living needs directly lead to changes in food demand. In addition to ensuring basic food needs, consumers have increased attention and demand for high-nutrition, healthy products. He Jihong believes that after the pandemic, the overall trend of consumption upgrading will definitely accelerate. Consumers' health awareness will become a booster for the market. For food companies, it is essential to fully recognize the importance of "health labels" and increase the promotion of healthy products and high-tech new products. In terms of distribution models, food companies should actively respond to new market changes, explore the application of new models, new business formats, and new scenarios, accelerate and expand the integration of online and offline channels, and ensure smooth market channels. In He Jihong's view, China's food industry is still undergoing continuous transformation and upgrading, and is thriving. If companies can respond quickly and effectively to the crisis, and plan long-term strategic layouts early based on a full understanding of the profound changes brought by the pandemic, they will surely turn crises into opportunities, promote production despite difficulties, successfully navigate the cycle, and contribute to the sustained improvement of China's economy.

-01- Outstanding changes in the food market during the pandemic The pandemic has brought many changes to consumers' living conditions, and changes in living needs directly lead to changes in food demand. These changes will continue to affect consumer choices. Consumer mentality influences consumer behavior, and new consumer behavior will form new consumption habits.

1. New choices in living needs have led to strong consumer demand for high-nutrition, healthy products During the pandemic, medical evidence has shown that physical fitness is an important factor in overcoming the novel coronavirus. People with weak constitutions and those with chronic diseases or underlying conditions are more susceptible to infection and recover more slowly. This has brought Chinese people's attention to their own health to a new height. In addition to strengthening exercise to improve physical fitness, people also hope to supplement nutrition and improve their immunity through healthy food. Therefore, in addition to ensuring basic food needs, consumers have increased attention and demand for high-nutrition, healthy products. In particular, there is a strong preference for high-end products such as functional foods, natural organic foods, high-protein dairy products, and active probiotics. Currently, new nutritional products on the market, namely plant-based products, are growing in market size. Plant-based dairy and plant-based food products not only reduce fat intake but also provide high-quality plant protein. Therefore, plant-based products have gained consumer attention as nutritionally fortified products.

2. High attention to products that boost immunity During the pandemic, consumers' awareness of immunity enhancement has increased. Before a specific drug or vaccine for the novel coronavirus is developed, one's own immunity is the most effective means of protection. Food is an important carrier for meeting consumers' nutritional and health needs. Products that help improve immunity will become a new growth point for the special food industry and will also bring a stable and long-term consumer base. Data shows that more than 52% of consumers pay attention to products that can enhance their immunity. For consumers, food supplements are milder and easier to obtain. Foods that enhance immunity will receive more attention. In addition, there is an urgent demand for foods high in calcium, vitamins, and energy-boosting properties. During the pandemic, dairy products and some high-vitamin C products have gained consumer attention. In the snack food sector, high-fiber foods that help improve intestinal function, and nut products rich in protein and unsaturated fatty acids that can improve brain immunity and enhance resistance, have seen increasing demand. In addition, products combining vitamin families with immune effects with beverages, dairy, powders, and other forms are more favored by consumers.

3. Convenience foods, convenient packaged foods, large-packaged foods, and packaged foods with long shelf life are in high demand Consumers staying at home must solve the problem of eating. How to prepare three meals a day quickly and conveniently has become a common need. Therefore, during the pandemic, sales of instant foods, convenience foods, and self-heating foods increased significantly. According to statistics, since January 2020, on the Tmall platform, total sales of instant noodles increased by 57% year-on-year, dumplings and wontons increased by 78%, self-heating hotpot increased by 144%, meat products increased by 264%, and tangyuan (glutinous rice balls) increased by 60%. Vegetables, convenient frozen foods, and rice, flour, and cooking oil all increased by more than 100% year-on-year. Instant noodles, instant rice noodles, self-heating foods, semi-finished dishes, and upgraded instant noodle products are gaining increasing popularity. For consumers, price is no longer the primary indicator of choice; convenience foods must not only be easy to prepare but also have outstanding taste and nutrition. Semi-finished instant noodles and self-heating pot products, which add vegetables, meat, and other ingredients on the basis of convenience, are visible and are excellent choices for staying at home, better satisfying consumers' cravings for delicious food. During the pandemic, in addition to packaged foods like instant convenience foods, canned foods also entered households in large quantities, becoming an important food for new consumption. For years, canned foods have been long-term foods, rich in variety, taste, and categories, and have been popular products in both domestic and international markets. China's canned food industry is a typical export-oriented industry, maintaining a relatively fast development speed. It was one of the first Chinese foods to enter the international market, and its product quality has been aligned with international standards early on. In recent years, the canned food industry has developed rapidly, benefiting from continuous improvements in production technology and expanding demand markets, and it is performing well in the international market. During the pandemic, many food companies and canned food producers actively donated canned products, which also played an important role in the fight against the epidemic in Wuhan. With the continuous enrichment of canned food flavors and more convenient packaging, canned foods can meet the needs of various scenarios, and their outstanding functions such as nutrition and safety have made them new products in consumption upgrading.

-02- Responses and thoughts of food companies to new demand changes after the pandemic First, increasing R&D efforts and quickly launching more and better high-nutrition healthy products is the foundation and development direction for companies to respond. After the pandemic, consumption upgrading will definitely accelerate, as the awakening of health awareness will become a booster for the market. Some market analysts predict that 2020 will be an important year for the development of nutritional supplements and functional foods worldwide. According to statistics, the market size of plant-based products and plant protein is expanding year by year, and it is expected that the compound growth rate will exceed 10% in the next two years. Food manufacturers must seize this opportunity. In the era of consumption upgrading, consumers' understanding of nutrition and health is deepening, and their attitudes towards diet and nutritional supplements, as well as consumption habits, are changing. Only by fully understanding market development trends and grasping consumers' new consumption needs can companies develop personalized high-quality products to meet future food market demand.

Second, food companies should actively explore the application of new models, new business formats, and new scenarios in response to market demand changes, accelerate and expand the integration of online and offline channels, and ensure smooth market channels. Undoubtedly, the pandemic has impacted the offline distribution channels of the food industry, with store closures and logistics restrictions, causing some offline distributors to face operational difficulties. However, we have found that online sales and sales in large and small supermarkets have been smooth. According to data from the National Bureau of Statistics, in the first quarter of this year, online retail sales of physical goods reached 1,853.6 billion yuan, a year-on-year increase of 5.9%, of which food increased by 32.7%. This shows that the pandemic's impact on consumption habits is profoundly affecting retail consumption and related industries, and it also means that "cloud" living will be retained as a habit, with the two major scenarios of eating and using accelerating the shift online. In an analysis by Alibaba, Hema has built a one-hour living circle with online and offline interaction. Many industries related to people's lives have seen counter-trend growth on Taobao, especially the food industry (vegetables, convenient frozen foods, and grain, oil, and flour increased by more than 100% year-on-year, reaching 180%, 136%, 171%, and 127%, respectively). In Hema's sales statistics, the top 10 categories are all food. JD.com also saw significant growth in food sales in the first quarter, with a year-on-year increase of 50%. In the future, new consumption models and methods such as contactless delivery, unmanned retail, and live-stream retail will develop rapidly, effectively reducing the impact of the pandemic, providing a breakthrough for people's consumption, releasing consumption demand in a timely manner, and helping the consumer market recover. New consumption models are also integrating into people's "home life" in the new era, improving existing traditional business models, adding technological genes, and promoting the upgrading of the consumer market towards technology and online.

Third, food companies should fully recognize the importance of health labels and increase the promotion of healthy products and high-tech new products. During the pandemic, consumers have higher trust in national brands, which is also an opportunity to establish brand image and build brand credibility. Companies can either donate money and goods to fulfill social responsibility, or based on their business, provide sufficient supply guarantees to win consumer trust. Home delivery platforms such as Hema and Miss Fresh have won consumer recognition by ensuring food supply and trying to achieve delivery during the pandemic. Consumers' trust in brands during the pandemic will continue after the pandemic. Research data shows that 37% of consumers said they would support brands that showed warm-hearted actions during the pandemic after it ends. At the same time, with the rise in online shopping, food companies should also fully recognize the importance of health labels, increase the promotion of healthy products and high-tech new products, and let consumers understand and support the health label information on packaging. It is believed that this will be a major aspect for consumers to understand. (For example, some products may include the amount of exercise needed to burn calories, or how often they should be consumed as part of a balanced diet, etc., to facilitate scientific purchasing and consumption.) After the pandemic, it is even more necessary to strengthen communication between brands and consumers, further consolidate the good brand image established during the pandemic, strengthen brand advantages, and enhance brand consumption reputation.

-03- Conclusion While responding to the current crisis, we must recognize that this pandemic may have a more profound impact on China's food industry, such as the accelerated replacement of traditional channels, modern channels like supermarkets, and e-commerce channels, which deserves in-depth thinking and early planning by companies to turn the crisis into a turning point for building long-term competitiveness. Challenges and opportunities coexist. This pandemic has brought many challenges to the food industry, and there are more and more in-depth thoughts about the future development of the industry. China's food industry is still undergoing continuous transformation and upgrading, and is thriving. We are full of confidence in this. We believe that as long as companies can respond quickly and effectively to the crisis, and plan long-term strategic layouts early based on a full understanding of the profound changes brought by the pandemic, they will surely turn crises into opportunities, promote production despite difficulties, successfully navigate the cycle, and contribute to the sustained improvement of China's economy.

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