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China Food and Drink Report Q4 2011
Business Monitor International, Sep 2011, Pages: 115
Business Monitor International's China 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 China's food and drink industry.
We maintain our view of a slowdown in domestic demand in China over the latter half of 2011. Inflationary pressures are proving stickier than we previously expected, prompting local consumers to keep their purse strings tighter over the coming quarters. Our Country Risk team is expecting price declines in the Chinese property market over the medium term, which would provide another negative impetus to consumer spending. Despite our relatively subdued outlook in China's near-term domestic demand, we stress that the country's domestic demand prospects still compare very favourably to its regional peers, underlining the strong rewards on offer. Over the next decade, we expect FDI in the Chinese consumer-facing sectors to be more forthcoming as investors look to establish a foothold. Big names such as Pernod Ricard, Walmart and The Coca-Cola Company are all keen on expanding their presence in China, imbuing greater dynamism into the country's consumer-facing sectors.
Headline Industry Data
- 2011 Food consumption = +13.2%; CAGR forecast to 2015 = +14.7%
- 2011 Alcoholic drinks value sales = +9.6%; CAGR forecast to 2015 = +8.9%
- 2011 Soft drinks value sales = +15.0%; CAGR forecast to 2015 = +15.1%
- 2011 Mass grocery retail sales = +11.3%; CAGR forecast to 2015 = +11.0%
Key Company Trends
China Garnering Strong Attraction From Multinationals: Swiss food giant Nestlé has launched a US$1.7bn offer for a 60% stake in Chinese snack and candy producer Hsu Fu Chi. By acquiring Hsu Fu Chi, Nestlé would be able to develop a stronger presence in the Chinese confectionery market, where it could subsequently launch an expansion push into the other Asian markets. Should Nestlé launch an offer for Hsu Fu Chi, the acquisition may receive regulatory scrutiny from the Chinese authorities given the massive size of the deal. Also looking to capitalise on the Chinese consumer growth story, Yum! Brands, a major multinational fast food chain, is planning to acquire all outstanding shares in the Chinese hotpot restaurant operator Little Sheep to further expand its Chinese presence.
Banking On Dynamic Value Sales Growth In Chinese Alcohol: Trans-Asian brewer Asia Pacific Breweries (APB) plans to offload its stakes in Chinese brewers Jiangsu DaFuHao Breweries and Shanghai Asia Pacific Brewery to China Resources Snow Breweries for SGD162mn (US$133mn) as it looks to put itself in the best possible position to benefit from a rapidly accelerating premiumisation momentum in the country. Meanwhile, Belgium-based brewer Anheuser-Busch InBev (AB InBev) has plans to broaden the distribution of beer brand Stella Artois in China as it looks to grow its presence in one of the most dynamic growth opportunities worldwide. By concentrating the distribution of Stella Artois in the urban cities of Beijing, Shanghai and Guangzhou, AB InBev is going for the top-end of the market, where very dynamic momentum in middle-class evolution is quickly fuelling consumers' appetite for higher-value products and super-premium brands.
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