The Chinese food and grocery market was valued at US$971bn in 2011 with a CAGR forecast of 10.9% to 2015 in IGD’s report. This shift is “no surprise at all” given the country’s sizeable consumer population, fast middle-class growth and urbanisation, Penny Zhang, regional marketing manager for Asia Pacific at Chr Hansen said.
China’s new global positioning will prompt “more innovation-led competition instead of just price wars” as brands work to react quickly and correctly to market demands, Zhang told FoodNavigator-Asia.
Leo Wang, business analyst at China Market Research (CMR) agreed that it will “lead to more research from international brands on how to develop more and more products that cater to Chinese consumer tastes.”
‘Tuning in’ to consumer needs, trends and demands is one key message championed by the majority of analysts, should manufacturers want to succeed and gain traction in the market.
Zhang said that Chr Hansen has identified food safety, natural healthy foods and 'value for money' as key consumer trends in China.
Wang said ‘premium’ products are widely considered to be both healthier and safer and thus tap into a widespread market trend. CMR has made it clear that international brands are better placed to succeed in the premium space and that this should be a key strategy for manufacturers.
Cécile Riverain, international research manager at IGD, added that high end products are also associated with social status in China, and as lifestyle shifts occur, there are more consumers looking to assert this credibility through premium purchases.
Convenience is another area manufacturers should be focused on, Wang said, and this includes product sizing and packaging.
Breaking down the giant
China’s food and grocery market can be split into fresh foods (including vegetables, fruit, meat and seafood) and packaged foods (covering chilled meat products, baked goods and beverages amongst others). Euromonitor predicts the largest growth opportunities in the packaged sector.
Vegetables represent the largest chunk of fresh foods, with around 296,000 tonnes sold in 2011 at a retail value of US$10.3bn, according to Euromonitor.
Wang added that seafood is a sizeable market sector, and one that appears to have growth opportunity with a year on year (YoY) growth forecast at about 4.5% until 2016 by Euromonitor.
In the packaged foods sector, drinking milk is pegged as the largest by Euromonitor, with a retail value of US$221.bn in 2011, set to grow to US$33.2bn by 2015.
Baked goods takes second place but is set to be ousted by chilled processed meats in 2015.
Euromonitor predicts that milk formula will see the largest YoY growth, with an estimated 19.3% YoY for 2012-13. In 2011 this segment drew in a retail worth of US$8.9bn; a figure set to nearly double by 2015.
Geographically, Greater China is extremely diverse, comprised of 33 provinces and Wang said that Eastern China (Shangdong, Jiangsu, Shanghai, Zheijiang and Fujian) is the largest chunk of the country’s food and grocery market.
China is the most populous country in the globe with more than 1.35 billion (1,351,896,731) citizens, GeoHive data indicates.
Wang said that the country’s population has experienced a historical shift, with its urban population now larger than its rural citizen count and, “China’s urban population already over twice the size of the total population of the US, at about 690 million.”
Riverain said that by 2025 almost the entire population of the US, nearly 300 million people, will be added to China’s urban areas alone.
It is this level of urbanisation – the increase in population and development of urban spaces despite the country's one-child policy– that has, without doubt, driven the growth of China’s food and grocery market, Wang noted.