Ddma china-market-research-seafood-case-study-april-2015-slide share

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DDMA China Market Research – China Imported Food Market

All research conducted by DDMA China Market Research as part of the DDMA Changing Chinese Consumer Series 2015 – www.ddm-asia.com
How Country of Origin Influences the Price that
Chinese Consumers are Willing to Pay for
Imported Food Brands and Produce
DDMA China Market Research Case Study: Imported Food China
Release Date: April 17th, 2015
A case study from the Chinese Seafood Market

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Core Hypothesis
The more positive the perceptions Chinese
consumers have of a specific country the
higher the purchase intent and willingness
to pay higher prices for food produce and
food brands from that country

A sample of Chinese Consumers were
presented with an identical seafood product
offering from the following countries:
1. Argentina
2. Australia
3. Canada
4. China
5. Japan
6. New Zealand
7. Norway
8. Russia
9. United Kingdom
10. USA – Alaska
This test measured the difference between
countries in:
1. Expected Price
2. Purchase Intention
3. Real Purchase Price (RPP) = The price that
consumers that will definitely buy the
product are willing to pay

Methodology and Test Design – 3 key steps in testing
Affluent Chinese Consumers were exposed to a new product concept for deep sea prawns from Norway
1. A sample of 512 high income Chinese consumers were exposed to a new product concept for
Norwegian Deep Sea Prawns. Data collection was both quantitative and qualitative.
2. After exposure and evaluation, the Norwegian concept was modified so that it was the exact
same offer but sourced from nine other different countries. Each of the modified concepts was
then tested again with the same consumers.
3. The only change across all ten concepts tested was the country of origin.
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New Zealand
Russia
United Kingdom
USA – Alaska
Core Concept – Norwegian Deep Sea Prawns &
Other Nine Countries Tested
Argentina
Australia
Canada
China
Japan

100% Imported Deep Sea Prawns
Average Price Chinese Consumers Will Expect to Pay
Per 500g Pack:
US$ 19.02
All Available Deep Sea Prawns – Domestic &
Imported
Per 500g Pack:
US$ 18.28
China Capture/Sourced or Branded Deep Sea
Prawns:
Per 500g Pack:
US$ 11.62
Differences in Expected Price – Category Level
Chinese consumers expect to pay 64% more for imported deep sea prawns over equivalent domestic
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Chinese Consumers
Expect to Pay
US$ 7.40 or 64% more
for 500g of Imported
Deep Sea Prawns Over
Domestically
Captured, Sourced
or Chinese Branded
Deep Sea Prawns

Country of Origin Influence on Expected and Real Purchase Price – 1
Alaskan and New Zealand origin attained the highest Real Purchase Prices (RPP)
7
4%
27%
18%
2%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
Expected Price: US$ 21. 94
Price Premium over average imported:
Price Premium over Chinese offering:
US$ 10.31 or 89% more
% that will definitely purchase at price point
51%
will definitely
purchase
at this
price
1. Alaska • Real Purchase Price of US$ 21.79 per 500g SKU
• Can attain a price premium of US$ 2.16 or 9% higher than the average price of imports
• Consumers will pay a 95% price premium over the equivalent Chinese offering
• 51% of consumers will definitely purchase at expected price point
Real Purchase Price (RPP): US$ 21. 79
RPP Premium over average imported:
US$ 2.02 or 9% more
US$ 10.63 or 95% more
5%
28%
13%
2%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
Expected Price: US$ 20.16
US$ 1.14 or 6% more
49%
will definitely
purchase
at this
price
2. New Zealand • Real Purchase Price of US$ 21.04 per 500g SKU
• Can attain a price premium of US$ 1.27 or 6% higher than the average price of imports
• Consumers will pay an 88% price premium over the equivalent Chinese offering
Real Purchase Price (RPP): US$ 21.04
US$ 1.27 or 6% more
Base: All Respondents. N=512. Data Collection. Shanghai Only. Q1 2015. Expected Price = Price expect to pay. Real Purchase Price = The price that those that will definitely purchase will pay.

Deep Sea Prawns from Norway had the highest proportion of consumers that would definitely buy
8
4%
38%
16%
2%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
US$ 1.66 or 8% more
60%
will definitely
purchase
at this
price
3. Norway • Real Purchase Price of US$ 20.47 per 500g SKU
• Can attain a price premium of US$ .70 or 3% more than the average price of imports
US$ .7 or 3% more
3%
20%
9%
1%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
US$ .57 or 3% more
33%
will definitely
purchase
at this
price
4. United Kingdom • Real Purchase Price of US$ 20.24 per 500g SKU
• Can attain a price premium of US$ .47 or 2% higher than the average price of imports
US$ .47 or 2% more

Australian origin was the fifth highest in terms of real purchase price
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4%
32%
13%
1%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
US$ 1.25 or 6% more
51%
will definitely
purchase
at this
price
5. Australia • Real Purchase Price of US$ 20.07 per 500g SKU
• Can attain a price premium of US$ .30 or 1% more than the average price of imports
US$ .3 or 1% more
5%
30%
13%
0%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
Negative US$ .19 or 1% less
49%
will definitely
purchase
at this
price
6. Canada • Real Purchase Price of US$ 19.16 per 500g SKU
• Negative price premium of US$ .61 or 3% less than the average price of imports
Negative US$ .61 or 3% less

Fukushima lingers for Japan, Japanese origin had a higher RPP than expected price
10
4%
21%
4% 1%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
Negative US$ 2.74 or 17% less
30%
will definitely
purchase
at this
price
7. Japan • Real Purchase Price of US$ 18.12 per 500g SKU
• Negative price premium of US$ 1.65 or 9% less than the average price of imports
7%
13%
5%
1%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
26%
will definitely
purchase
at this
price
8. Argentina • Real Purchase Price of US$ 17.28 per 500g SKU

Russian origin can attain a significant RPP premium over Chinese origin
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8%
16%
2% 0%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
26%
will definitely
purchase
at this
price
9. Russia • Real Purchase Price of US$ 15.29 per 500g SKU
22%
16%
0% 0%
Less
than US$ 12
US$
13-20
US$
21-28
US$ 29
plus
Not applicable
38%
will definitely
purchase
at this
price
10. China • Real Purchase Price of US$ 11.16 per 500g SKU
Not applicable

Theoretical value of country of origin franchise – Revenue Generation Potential
Even though third in price premium ranking, Norway has the most valuable “franchise” of all countries
• When the percentage of respondents that will
definitely buy is combined with the average real
purchase price for each country, deep sea
prawns from Norway will generate the most
revenue based on potential retail sales to
consumers.
• The high levels of intention to buy deep sea
prawns if they come from Norway is linked to
the success and popularity of Norwegian salmon
in China. Affluent Chinese consumers are very
familiar with Norwegian seafood.
• In contrast, while deep sea prawns from Alaska
could command a higher real purchase price
than those from Norway, the “franchise” will
need to sell 9% more in terms of volume than
Norway to match the sales revenue that
Norwegian sourced deep sea prawns can
generate.
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100
91
84
84
54
54
45
36
35
33
Norway
Alaska
New Zealand
Australia
United Kingdom
Canada
Japan
Argentina
China
Russia
Weighted Sales Revenue Potential
~ Indexed Ranking ~

Most Appealing Elements of the Deep Sea Prawns Concept
Natural ingredients dominated the appeal index, country of origin was the third most appealing element
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100
59
31
20
17
16
15
15
8
6
5
Natural, no added ingredients
Caught 800 meters deep
Country of Origin
Delivery within ten days from
Country of Origin
Advanced supply chain
Immediately cooked and packed
onboard
From Deep, Cold Ocean
Can check progress of delivery
online
Packed at source
Recommended reciepies
Sustainable fisheries to protect
future stocks
Appealing elements of deep sea prawns concept
~ Weighted Appeal ~• The consumers most likely to purchase the
deep sea prawns product found the no
added ingredients to be the most appealing
product feature, followed by the depth of
catch and then the country of origin.
• Summary of elements that are most
appealing:
• A natural product
• Caught at depth – so, therefore,
unpolluted, unlike the coastal waters
around China
• From a reputable or attractive country of
origin.
Base: All Respondents. N=512. Data Collection. Shanghai Only. Q1 2015.

All research conducted by DDMA China Market Research as part of the DDMA Changing Chinese Consumer Series 2015 – www.ddm-asia.com 14
93% 91%
79%
70%
51%
22% 20%
5%
International
hypermarket
International
supermarket
Online Local
hypermarket
Local
supermarket
Convenience
store
Local wet
market
Local store
If these Deep Sea Prawns were available at the price you have selected, how likely
would you be to buy from the following retail channels ?
• Over 9 out of 10 consumers would buy Deep Sea Prawns from an international hypermarket (93%) or
supermarket (91%)
• A further 8 out of 10 would purchase Deep Sea Prawns online (79%) – online purchasing appealed most to
the youngest age group (25-30) (89%), higher income earners ($32k+) (89%) and smaller households with 1
or 2 people (89%)
• Only 5% would purchase from their local store
Where Chinese Consumers Would Buy Deep Sea Prawns
International Super and Hyper are the preferred retail channels, followed by online supermarkets
supermarkets
Base: All Respondents. N=512. Data Collection. Shanghai Only. Q1 2015.

Conclusions and Introduction to
DDMA China Market Research

Conclusions
Country of origin is a powerful ingredient brand for foreign food companies in China
1. Repeated and persistent food scandals have undermined Chinese consumer confidence in domestic food
producers. This is reflected in the price premium that consumers are willing to pay for imported food produce and
brands over the Chinese equivalents.
2. Related research available from the DDMA China Market Research website demonstrates that affluent consumers
have also become wary of Chinese branded food products that:
• Are made by Chinese companies masquerading as foreign food companies
• Are processed in China
• Are packaged in China
3. Affluent Chinese consumers seek out products that are 100% produced and packaged overseas and are then
imported as a finished product into China. Related research from the DDMA China Market Research website
demonstrates that Chinese consumers will pay a premium for products of this nature.
4. Country of origin has become a key ingredient brand for foreign food companies. Not all countries are equal, this
case study demonstrates that Chinese consumers are willing to pay more for produce from certain countries as
opposed to others.
5. A unified approach by country specific food export boards, food companies, producers and national tourist
associations and bodies could be highly beneficial for all parties. This case study demonstrates that the more
familiar and favorable the perceptions held by Chinese consumers of a specific country are, the higher the price
that Chinese consumers will pay for food produce and brands from that country.
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For Reference - What is an ingredient brand ?
An ingredient brand owns a very specific benefit
in the consumer’s mindset and becomes a
powerful way for a host brand to communicate an
important benefit to consumers at point of sale
and throughout the marketing process.
Some examples of famous ingredient brands
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Introduction to DDMA China Market Research
Founded in 2002, specialized in food and beverage market research in China
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 Founded in 2002
 Independent full service agency
providing qualitative and quantitative
consumer and trade market research
across China
 Headquartered in Shanghai with
coverage across 28 cities in China
 DDMA works with many leading
international and domestic companies
in the food and beverage sector in
China.
 The DDMA China Market Research
Changing China Consumer Series 2015
is designed to introduce key changes in
the consumer and shopping behavior
among wealthier, urban based Chinese
households.

Introduction to Data Driven Marketing Asia
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Some of our clients
Detailed client references available for www.ddm-asia.com

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