From instant noodles to coffee brewing, the transformation of consumption concept has spawned new growth points in China

Shoppers in the world's second-largest economy are getting richer and sophisticated: instant coffee has given way to blended coffee, boutique beer has become increasingly popular, and the halo of mainstream beauty products has been replaced by more expensive products. At the same time, sales of instant noodles are declining.

Both Morgan Stanley (32.9,-0.03,-0.09%) and Mintel Group Ltd., a London-based market research firm, both report that China's discretionary spending is expected to grow.

This is an important change facing China's economy. At a time when traditional factors driving economic growth, such as heavy industry and exports, lose momentum, consumption is filling some gaps. China's gross domestic product (GDP) grew 6.7 per cent in the third quarter compared with the same period last year, with the service sector growing the fastest, reaching 7.6 per cent in the first three quarters. The total volume of retail sales of consumer goods increased by 10.7% in September compared with the same period last year. Citi estimates that consumption accounts for 71 per cent of GDP growth so far this year.

In this country where tea culture prevails, the market share of coffee shops is increasing. Part of the reason is status. In a small city, holding a white paper cup with a Starbucks (53.59, 0.44, 0.83%) icon is seen as a status symbol.

Beer enthusiasts are also looking for drinks of higher quality than mass-produced cheap ale: beer imports, which were close to zero a decade ago, rose to about 84 million litres in August.

China is likely to become the world's largest beauty market this year, with domestic consumers contributing 40 per cent to global growth in cosmetics and personal care products, according to Morgan Stanley. Consumers of beauty products in China are upgrading to high-end brands, and the market share of mainstream brands will continue to decline, losing brands that can bring new experiences through marketing and products to high-end products.

JD.com 's (26.65,0.35,1.33%) index shows that online shopping sales of cosmetics are growing rapidly.

Mintel estimates that even predictions of a devaluation of the renminbi will not stop the spending spree. The company said that urbanites in their 30s and 40s are the trend leaders of the future, and even in times of market turmoil, their consumption patterns "will not be greatly affected."

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