Abstract
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive
environment
Product coverage
Baby food; Bakery products; Canned/preserved food; Chilled processed food;
Confectionery; Dairy products; Dried processed food; Frozen processed food;
Ice cream; Impulse snack products; Meal replacement products; Meal solutions;
Noodles; Nutrition/staples; Oils and fats; Pasta; Ready meals; Sauces;
dressings and condiments; Snack bars; Soup; Spreads; Sweet and savoury snacks
Executive summary
Packaged food benefits from strong economic development
Packaged food performed well in 2007, backed by strong economic development in
China. During the review period China' s economy continued to strengthen. The
reported GDP is expected to reach a new height at the end of 2007. Benefiting
from the economic environment, both rural and urban demand for packaged food
increased, largely because consumers spent more on packaged products rather
than loosely packed food.
Rising cost of production pressuring unit price
The trading price of crude oil increased throughout 2007, putting great
pressure on the cost of production. The increasing price of raw materials for
packaged food was inevitable. During 2007 instant noodles, frozen processed
red meat and dairy products saw the greatest increase in unit price.
Manufacturers are facing great pressure to raise prices. However, the
competitive market environment has made players reluctant to increase prices
sharply as this would be likely to hinder overall market sales.
Booming stock market strengthens domestic players
Encouraged by the central government, China' s stock market flourished in 2007.
Domestic listed companies like Inner Mongolia Yili Industrial Group Co Ltd,
Shineway Group, Beijing San Yuan Foods Co Ltd and Bright Foods (Group) Co Ltd
all benefited. The booming stock market is making domestic companies become
more competitive against international brands like Kraft and Nestlé The
central government has also encouraged other state-owned enterprises to go
public. For example, Wonder Sun Dairy Co Ltd expects to become listed at the
end of 2007.
Modern distribution channels enhance market growth
The development of modern distribution channels is contributing to overall
market growth. Leading retail chains like Carrefour, Wal-Mart, and CR Vangard
are penetrating more inland China cities. The fast expansion of chained
retailers is bringing more packaged food products to less developed cities in
China, further driving market growth.
Growth momentum expected to slow down
Although the strong economy and demand for packaged food drove market growth
in the review period, future expansion is expected to slow down. This is
because in large cities like Shanghai and Beijing, packaged food has already
achieved very high levels of penetration. Small cities and rural areas will be
the real growth engine over the forecast period. However, economic and
disposable income growth in these regions is expected to be slower than in the
large cities, hence, the forecast demand is growing at decreasing rate
comparing to reviewing period.
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