---
title: "Post-Pandemic Era: Manufacturers Should Accelerate the Creation of Four Types of Consumption Scenarios"
description: "Channels most affected by the pandemic are rebounding the strongest and offer the greatest growth potential. After three years of the pandemic, both macro-economic aggregates and micro-industrial structures have undergone dramatic changes, and FMCG channel dynamics are now influenced by non-market factors."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2023-01-20"
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# Post-Pandemic Era: Manufacturers Should Accelerate the Creation of Four Types of Consumption Scenarios

> Channels most affected by the pandemic are rebounding the strongest and offer the greatest growth potential. After three years of the pandemic, both macro-economic aggregates and micro-industrial structures have undergone dramatic changes, and FMCG channel dynamics are now influenced by non-market factors.

**Introduction**: The more a channel is affected by the pandemic, the stronger its rebound and the greater its growth potential.

Over the past three years of the pandemic, not only has the macro-economic aggregate experienced drastic fluctuations, but the micro-industrial structure has also undergone earth-shaking changes. In addition to the significant impact of the pandemic, the domestic and international economic and policy environments have also profoundly influenced changes in the industrial structure. For FMCG, channel changes have been affected by non-market factors. At the same time, it seems that everyone has become accustomed to the current channel state, and with the sudden relaxation of restrictions, they feel a lack of direction, especially for distributors and brand execution teams. Here is a simple logic: for channels, existence is reasonable. The more a channel is affected by the pandemic, the stronger its rebound and the greater its growth potential. The essence of a channel is the efficient reach of products to consumers in consumption scenarios. Let's analyze this one by one.

**First and foremost is the dining consumption scenario.**

Let's look at two sets of macro data: One set comes from the "Analysis of Catering Market Data After the Pandemic in 2022" released by Chenzhi Catering Big Data Research Center: As of the first half of 2022, the total number of catering outlets nationwide was 7.905 million, a year-on-year decrease of 14.8% from the first half of 2021; 2.448 million restaurants closed nationwide, with a closure rate of 23.6%; 1.477 million new restaurants opened, with an opening rate of 14.2%; total catering revenue was 2.0 trillion yuan, a year-on-year decrease of 7.7%. In the first half of 2022, the per capita consumption in China's catering market was 38.9 yuan, up 3.7% from 2021, and is expected to continue growing. Another set of data from the National Bureau of Statistics shows that in the first half of 2022, per capita consumer expenditure of national residents was 11,756 yuan, a nominal year-on-year increase of 2.5%. These two sets of data reveal three pieces of information: 1. The number of domestic catering outlets has, under the influence of the pandemic, equaled or surpassed the number of traditional channels (convenience stores, supermarkets, grocery stores, etc.), which is about 8 million. 2. The catering industry has been greatly affected by the pandemic over the past three years, but this impact is not due to reduced demand; rather, it is constrained by non-market factors. Otherwise, so many people would not continue to open restaurants despite such challenges. 3. The pandemic has had almost no impact on the domestic population, and basic dining needs have changed little. With per capita consumer expenditure rising, the growth potential for the catering industry is enormous.

Now, let's look at the micro level: observations from a visit to Zhengzhou market around New Year's Day: 1. Young people returned first, and the speed of children's return was faster than expected. The elderly and middle-aged were indeed fewer, and the consumer profile was relatively simple. 2. Queuing was common at mid-to-low price dining establishments; some stores required queues of over an hour during the New Year holiday, while high-price dining had fewer customers. 3. Overall, essential, high-frequency, low-price mass dining recovered first, and this is also one of the best-selling scenarios for beer and beverages. 4. Passenger flow is one thing, but the pace of resumption of work and production also varied. It was evident that some restaurants were underprepared; due to COVID infections, some had less than 60% of staff on duty. The restaurants themselves had not anticipated the explosive rebound after the relaxation, and industry confidence has surged, with more people expected to enter this track.

Summary: It is still too early to describe the catering channel as having bottomed out, but overall, the catering industry is recovering the fastest, and the Spring Festival will bring another wave of stimulus to accelerate recovery. Therefore, the opportunity for the catering channel has arrived. Those who act first will benefit most. FMCG manufacturers should start planning their catering outlet network construction; the earlier, the greater the advantage!

**Pay attention to tourism-related consumption scenarios.**

Before the pandemic, tourist attractions, especially 5A-level scenic spots, served as brand windows. Some first-tier brands even established brand experience stores there. Hotels and B&Bs have always been the most important special channels for beverage companies, offering both prestige (brand building) and profit (high volume of complimentary water in rooms). Transportation hubs, service areas, and other channels that were previously highly regarded seem to have been forgotten under the pandemic's influence.

Let's look at tourism data from the New Year holiday: According to the Data Center of the Ministry of Culture and Tourism, during the New Year holiday, domestic tourism trips reached 52.7134 million, a year-on-year increase of 0.44%, recovering to 42.8% of the same period in 2019 (comparable basis); domestic tourism revenue reached 26.517 billion yuan, a year-on-year increase of 4%, recovering to 35.1% of the same period in 2019. The overall cultural and tourism holiday market was safe, stable, and orderly. Fliggy data shows that cross-province and cross-city travel orders accounted for nearly 80% of total orders during the New Year holiday, reaching a one-year peak. Ctrip's 2023 New Year holiday summary report shows that compared to less than 40% of users traveling cross-province in 2022, nearly 60% of users chose cross-province travel this New Year holiday, and cross-border flight bookings increased by 145% year-on-year. Tongcheng data shows that hotel orders from other cities rose from 51.3% in the same period last year to 67.6%, and cross-city car rental orders increased from 10.8% to 22.7%. Qunar.com predicts that the 2023 New Year holiday marked the first peak of long-distance travel after the pandemic recovery.

Summary: The movement of people drives consumption and increases economic vitality. For FMCG manufacturers, the most urgent task is to lay out channels closely related to population mobility. For example, since travel requires accommodation, accelerate the layout of hotel and B&B channels; since people need to visit attractions, lay out scenic spot channels; since self-driving requires rest stops, start laying out highway service area channels; also consider internet-famous spots, tourist pedestrian streets, etc. Wherever people move, products should appear with a strong presence.

Essentially, these channels were the forte of experienced FMCG operators three years ago. Due to the pandemic, attention has waned. The most important thing is speed. These offline channels are constrained by space (in-store business area) and time (seasonality of tourism peaks). Early layout brings early benefits; if you're late, you might not even get a sip of soup.

**Pay attention to leisure and entertainment consumption scenarios.**

First, let's briefly explain what leisure and entertainment industries mainly include: 1. Song and dance halls, performance halls, discos, KTVs, nightclubs, and other song-and-dance leisure venues; 2. Bars, restaurants, cafes, music teahouses, and other leisure dining venues with entertainment functions; 3. Game arcades, amusement halls, and other leisure entertainment venues; 4. Swimming pools, billiard halls, golf courses, bowling alleys, roller skating rinks, saunas, health massage, and other sports and fitness venues; 5. Theaters, concert halls, cinemas, auditoriums, and other performance and screening venues; 6. Businesses that provide services for people's leisure and entertainment activities can also be called the leisure and entertainment industry; 7. Mass media such as movies, music, television, and radio can also be listed under the leisure and entertainment industry.

Then let's look at two data points: First, the search volume for the keyword "New Year's Eve" on Dianping increased by 171% week-on-week, and the search heat for immersive leisure and entertainment projects such as KTV, hot springs, live houses, and house parties increased by more than 50%. Meituan data shows that young people aged 20-30 have become the new main force in bath consumption. With the enhancement of young people's health awareness, bath centers are becoming more popular and casual, and bathing and soaking in hot springs are gradually becoming a new lifestyle for urbanites. Second, as of 19:00 on January 2, the box office for this year's New Year holiday (December 31, 2022 - January 2, 2023) exceeded 500 million yuan, with over 12 million people going to cinemas.

Summary: The pandemic has troubled gatherings of friends and family for three years. Now that restrictions have been lifted, bars, sports games, movies, and singing together will become important social venues. In fact, these places have seen several-fold increases in customer traffic. Where people gather, consumption occurs. At this time, the core task for FMCG manufacturers is to display matching products in these scenarios in the shortest possible time with a strong presence.

**Consumption upgrade & downgrade scenarios.**

Many FMCG professionals have noticed a phenomenon: high-end products maintain firm prices, and sales even increase (similar to Maotai and other high-end brands), while low-end products operate with low gross margins for a long time, and sales are not significantly affected (basic needs exist, money must be spent, such as affordable rice, flour, oil, and grain). The most affected are products in the middle price range, which are also the main force of the domestic consumer goods market. The decline in sales volume and revenue of middle-priced products has led to the concept of consumption downgrade. So, is consumption downgrading, unchanged, or upgrading? Let's look at a set of data:

1. Increase in disposable income: According to official data, in the first half of last year, the per capita disposable income of national residents was 17,642 yuan, a nominal year-on-year increase of 12.6%, and after deducting price factors, a real increase of 12.0%, a relatively high growth rate. That is, per capita income increased at a rate of 12% in the first half of the year.

2. Increase in deposits: According to the financial statistics report for the first three quarters of 2022 released by the People's Bank of China website, RMB deposits increased by 22.77 trillion yuan in the first three quarters. Among them, household deposits increased by 13.21 trillion yuan. After calculation, this is 4.72 trillion yuan more than the same period in 2021.

3. Slight increase in commodity prices: According to the National Bureau of Statistics, in 2021, the average national consumer price index only rose by 0.4% year-on-year.

From the above data, the growth of residents' income and savings is much higher than the growth of prices. Residents have begun to save precautionarily, hold a reserved attitude towards consumption, and will not spend as lavishly as before. The money is still there, and consumption capacity has not decreased. Consumers are just more sensible when purchasing goods and choosing channels. They are not compromising on brand and product choices but are more cautious in weighing options and actively seeking discounts and promotions. Consumers will also try to spend less money to buy more products. For brands that can make consumers willingly spend money, there is no consumption downgrade. If they cannot achieve this, consumption downgrade is inevitable.

Summary: We can simply divide consumers into three types: affluent, middle-class, and general. For FMCG, the pandemic is likely to affect only the middle-class type. The wealth shrinkage of the affluent will not affect FMCG consumption, and the general type is mostly not the main consumer force for FMCG companies. Therefore, brand owners should urgently create consumption upgrade scenarios for the affluent, including product upgrades, service upgrades, and consumer experience upgrades. They should also pay attention to consumption downgrade scenarios for the middle-class, creating extreme cost-effectiveness and enhancing product competitiveness through total cost leadership. As for the general type, ensure normal supply chain operations and calculate the financial accounts well.

**Extended Reading:**

Hai You: Special author of New Distribution, senior researcher, offline channel marketing practitioner, and designer of enterprise channel coverage models. He has provided channel consulting for more than ten first-tier brands and has gained a good reputation.


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