Amid difficulties, convenient cuisine rides digital economy toward profit

Ready-to-cook dinners are gaining popularity among China's younger consumers as "stay-at-home economy" has not only changed people's consumption and living habits but propelled food and catering merchants to accelerate their push into the lucrative precooked cuisine segment amid the COVID-19 pandemic.

Last year, online marketplaces of Chinese e-commerce giant JD saw 156 percent year-on-year rise in transaction volume of ready-to-cook dinners. The number of precooked food brands grew by 1.5 times over 2019, according to a report released by the JD Research Institute for Consumption and Industrial Development and its supermarket arm JD Super.

Among different age groups, Generation Z consumers－people born between the mid-1990s and the early 2010s－recorded the highest growth rate in transaction volume of ready-to-cook dishes, reaching 137 percent year-on-year in 2021.

People aged 36 to 45 accounted for 36 percent of precooked food consumers last year, surpassing other age groups, the report said.

The silver-haired, or those aged 65 and above, are also buying ready-to-cook dinners increasingly. Their purchases last year rose 190 percent compared with that in 2019.

Semi-cooked food from time-honored catering brands such as Guangzhou Restaurant, Zhiweiguan and Ziguangyuan has also been favored by consumers during JD's Spring Festival promotion gala in the last two years.

The pre-made food market has spawned more varieties and forms to meet consumer demand. These include precooked food gift packages. The transaction volume of precooked food gift boxes grew by 232 percent year-on-year in 2021.

People from first- and second-tier cities in China more easily accept pre-made cuisine than those from lower-tier cities. Turnover of pre-made dishes from first- and second-tier cities accounted for 60 percent of total transactions for such dishes nationwide last year, JD said in its report.

Sales revenue of those dishes in Gansu and Zhejiang provinces skyrocketed by 592 percent and 587 percent year-on-year, respectively, in 2021.

Healthy instant baby food is also increasingly preferred by mothers. JD data showed the transaction volume of instant baby food bought by female consumers increased by 78 percent year-on-year in 2021.

iiMedia Research data showed the market size of China's pre-made cuisine last year reached 345.9 billion yuan ($52 billion). It is projected to rise at a compound annual growth rate of 20 percent to 516.5 billion yuan by 2023.

Consumers can buy various types of semi-cooked dishes via online grocery apps such as Freshippo, the fresh food chain under Alibaba Group, Taobao and JD.

Chai Zhenzhen, an analyst from the JD Research Institute said most of the semi-cooked dishes require cold chain transportation and low-temperature storage, so enterprises should ramp up efforts to build a complete and efficient supply chain to ensure the freshness, quality and delivery efficiency of the dishes.

For their part, catering merchants should continue to increase investments in research and development to roll out ready-to-cook dishes with various flavors, so as to meet the wide-ranging demands of consumers from different age groups, Chai said.

An increasing number of catering enterprises have switched to online channels as many restaurants have been affected by the COVID-19 pandemic.

A report from iiMedia Research showed about 95 percent of caterers surveyed showed a significant decline in revenue during the pandemic, and more than 90 percent of caterers showed willingness to cooperate with third-party food delivery platforms.

Chen Liteng, senior analyst at the Internet Economy Institute, a domestic consultancy, said with the rapid development of the mobile internet, services offered by online grocery stores and on-demand delivery platforms have gradually improved.

"Our living habits have also changed. Ordering precooked dinner via online food delivery platforms could save a lot of time and energy, and the dishes are more wide-ranging, which have gained the attention of young consumers," Chen said, adding the online orders have seen robust growth in recent months, as people spend more time at home amid the resurgence of domestic COVID-19 cases.

Thanks to the rapid development of the digital economy, people can purchase precooked cuisine from online shopping platforms while remaining at home, said Yang Xu, an analyst at consultancy Analysys, adding that the emergence of noncontact delivery has also efficiently addressed concerns about human-to-human contact amid the pandemic.