What UBS Evidence Lab data, consumer & expert interviews reveal about Gen Z

Our recent China 360 Virtual Tour shed light into the mindset of China’s Gen Z. Born in 1995-2009 (i.e., 11-25 years old today) this cohort numbers over 240m, c.17% of the population. In this report, we leverage face-to-face and online discussion groups with Gen Z consumers living in big and small cities across China, industry interviews and UBS Evidence Lab datasets for deeper insights into Gen Z’s habits and behaviours in some of their priority spending areas, from health and beauty to fitness and food. As the engine behind the rapid rise of homegrown brands, we also examine market share trends and Gen Z’s future brand aspirations across several key categories.

Health & wellness: a growing priority but happiness matters, too

Fitness and healthcare are clear priorities for Gen Z with 26% of this cohort intending to spend more on exercise in the wake of COVID-19, up 5ppts since pre-pandemic, and 24% planning to spend more on healthcare, a jump of 9ppts, UBS Evidence Lab data shows. Gen Z has already overtaken the post-90s cohort as the second-biggest buyer of health supplements and the buying of dietary supplements often is rising at a 61% CAGR. This cohort's focus on fitness is helping drive growth in new style gym chains and fitness apps. Healthy food and beauty (F&B) concepts appeal, especially in big cities, fuelling success for various brands; meal replacements are also fast gaining popularity. In 2020, nearly 20% of F&B deals in the primary market were for protein substitutes and meal replacements. However, despite rising health awareness, Gen Z is unwilling to compromise on pleasure: they are significant bubble tea consumers and a full 90% of Gen Z we spoke to have no plan to cut back on hotpot.

Beauty: buying local brands today, but keen to trade up in future

Cosmetics and skincare are also top priorities. Gen Z spends 1.3-2.0x the average of all consumers in these categories, per Kantar data. Compared to older cohorts, they are more likely to try new brands, more easily swayed by friends and social media and more likely to buy online; but, they have similarly strong aspirations to trade up. Despite their age, Gen Z is also already a driver of demand for medical cosmetics: 18% of Gen Z females have had at least one procedure and 28% plan to within 2-3 years with a preference for non-invasive treatments. They are also the biggest online spenders on male beauty, a segment seeing strong deal activity.

Who's winning amid the rise of homegrown brands?

Experts and Gen Z consumers we spoke to mainly attribute the rise of local brands to quality and design rather than national pride alone. In makeup, 618 festival results show Gen Z's desire for new brands, but trading-up also looks set to be a key trend in this segment. National pride and Gen Z's openness bring opportunities to local brands, but quality is key to making them stay.

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