China’s middle-class consumers are fanning a new craze as they adapt to tougher economic times: a rush to buy soon-to-expire food and drink at deep discounts.
According to public records, 119 businesses specializing in items approaching their expiry dates have been registered within the past 12 months, compared with 92 over the previous decade.
Such stores sell goods ranging from 100g tins of Nestlé coffee for Rmb3 ($0.45) to 330ml bottles of mineral water costing Rmb5 each.
Hotmaxx, a leading company in the discount sector, has expanded its headcount by a factor of 20 to more than 500 employees since the Covid-19 pandemic erupted in January 2020.
“A surprisingly large number of white-collar workers count on near-expiry food to make ends meet,” said Zhang Yi, chief researcher at iiMedia, a Guangzhou-based consultancy.
According to an iiMedia survey conducted late last year of more than 1,600 buyers of food and drink about to expire, two-thirds of respondents made more than Rmb4,000 per month — which the consultancy considers the dividing line between middle and low-income status .
This year, Jane Lu, a Shanghai-based insurance broker, began spending Rmb600 a month on near-expiration imported drinks that would have cost more than Rmb1,000 in regular stores.
Lu, 32, said she decided to do so after Covid-19 lockdowns and real estate turmoil weighing on the country’s economy made her monthly income stream less stable. “No matter how much I make, I cut corners where I can,” she said.
China’s economy grew just 0.4 percent year on year in the second quarter — far slower than expected and the worst quarter since it shrank 6.8 per cent in the first quarter of 2020.
Snacks with long shelf lives, such as potato chips and beef jerky, are especially sought after, according to the iiMedia survey. Other popular items include dairy products and instant meals that are close to their expiration dates.
“Consumers are looking to buy near-expiry food because the products are still of good quality but cheaper,” said Shaun Rein, managing director of China March Research, a Shanghai-based consultancy. “Right now, people are looking to save as much renminbi as they can.”
China Market Research expects industry sales to grow from Rmb25bn in 2019 to Rmb36bn this year.
Another factor behind the soon-to-expire food boom is high inventories among factories and distributors hit by China’s strict Covid-19 lockdowns.
David Wang, owner of a discount food store in Beijing, said that in April he bought 5,000 cakes with a shelf life of less than a week from a global fast-food chain for Rmb20 each — half the regular wholesale price — after the capital banned indoor dining to stem an Omicron outbreak.
Wang priced the snacks at Rmb30 each and sold out within three days. “Profit margins were very lucrative,” he said.
But Wang added that it has been harder to repeat the success of his cake deal after Beijing’s outbreak stabilized and restrictions were relaxed. “It is difficult to make this business sustainable,” he said.
“The biggest problem for merchants is where they will be able to source enough of these products,” said Rein. “They have minutes, not days, to secure [supplies].”
A Hotmaxx executive, who asked not to be identified because they were not authorized to speak with foreign media, said the company was confident despite those challenges. Hotmaxx, which has about 500 outlets, plans to open an additional 4,500 stores by 2025.
“We have disrupted the traditional pricing system,” the executive said. “A lot of brands want to work with us.”
The person added that supply challenges were manageable, especially as buyers of near-expiry goods are not choosy about the brands available. “If we don’t have Coke,” he said, “we will give you Pepsi.”
Additional reporting by Nian Liu and Emma Zhou in Beijing