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Taiwan Food and Drink Report 2010
Business Monitor International, Jan 2010, Pages: 57
Taiwan Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Taiwan's food and drink industry.
2009 has been a difficult year for the Taiwanese food and beverage industry. A trade-dependent economy, it has been hit hard by the global economic crisis and in 2009 the authors expect real GDP growth of -4.5%. This has inevitably had a knock-on effect on local consumer confidence and in turn domestic spending behaviour. Although industry growth has by no means been spectacular in recent years, due to the country’s small size and maturity, sales increases were at least steady.
However, 2009 interrupted this sequence with per capita food consumption dropping by 0.7%, alcoholic drink sales falling by 0.8%, soft drink sales declining by 1.7% and mass grocery retail sales falling by 2.9%. Concerns over employment led consumers to cut back on many non-essential purchases and while most subsectors of the local market are well-established enough to ensure that consumer behaviour did not completely retrench, the trend towards premiumisation was certainly put on hold.
Not a recession-related phenomenon, but an ongoing concern, is the level of investment being directed towards mainland China. With its vast population and stronger growth potential, China has long captured the lion’s share of regional investment and this has included investments by Taiwanese companies. This trend has continued unabated with Want Want Holdings pursuing a secondary listing on its domestic stock exchange in order to raise funds for Chinese expansion and Uni-President confirming four shortterm and potentially two longer-term mainland industry investments.
Commitment to the mainland has not historically greatly troubled Taiwanese food producers, with the domestic industry having enjoyed healthy growth rates in recent years. However, of more concern will be the departure of existing food companies, a move that suggests that high domestic consumption levels can no longer offset the lack of growth prospects. Canada’s McCain Foods is the latest such firm to choose to no longer have a self-owned manufacturing presence in Taiwan.
The challenges food and beverage producers face in Taiwan are encapsulated by the country’s continued slide down the Asia Pacific Food & Drink Business Environment Ratings. Having traditionally placed in the top half of the 14-strong table thanks to its existing high consumption levels and economic stability, Taiwan has slid to ninth place; a result of its growing food import dependency, intense market competition and weak consumption growth prospects.
This summary might suggest that the latest Taiwan Food & Drink Report for 2010 is bleak reading. However, we would note that the local market remains dynamic in places, particularly in those sectors where competition is fierce and in which premiumisation is relentlessly pursued by leading players. The soft drinks and mass grocery retail industries are two such examples, with the authors forecasting five-year sales growth of an impressive 24.7% and 21.7% in each industry respectively to 2014.
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