This Access Asia report covers the fresh and canned fruit market in China. The fruit market is the largest sector of the retail food market in China, yet barely affected by the development of new retail formats. Fruit and vegetable sales tend to be dominated by wet markets where local farmers supply produce direct from the field to the consumer.
Executive Summary:
The fruit market is the largest sector of the retail food market in China, yet is one of the last to be affected by the development of new retail formats in China. Fruit sales still tend to be dominated by the free wet markets, most of which take place in open-air market places or streets, where local farmers supply produce direct from the field to the end consumer.
The retail fruit markets are not only selling to private individuals though, and often supply to institutions and companies such as restaurants. This means that the retail market for fruits and vegetables is often indistinguishable from the wholesale trade, especially when some fruit wholesalers also sell retail. This report does not attempt to distinguish between wholesale and retail sales, as this would be an exhaustive process to research, and would make little sense in terms of how the market is structured.
What is clear is that the wet market system, relying s it does on local producers selling to local consumers, is a very fragmented one. There is little in the way of national- or even regional-level competition in this market, and no real significant market leaders, save a few privately-run wholesale and wet market companies.
This market therefore has less to do with market and brand shares, but is more about the rapid growth in consumption of fruits and vegetables by Chinese consumers, since the opening-up of the Chinese economy some 25 years ago. Not only are Chinese consumers now able to buy more fresh fruits, but they have a much better variety to choose from.
Improvements in distribution infrastructure is helping to develop more regional trade in fruits, and this is leading to more produce from one region of the country reaching consumers in other parts of the country.
With rising consumers incomes that have resulted from economic growth, more people are able to buy more expensive fruits than before, leading to greater demand for variety and quality of produce. In the short term, this has meant that the products that were in the majority in the past have suffered loss of consumer interest (such as consumers shunning Chinese cabbage in the north of the country), in favour of more "exotic" produce.
With improved incomes and lifestyles, Chinese consumers are showing a greater interest in a more varied diet, and cooking with a wider variety of products. Cookery programmes have proliferated on Chinese TV, just as they have in the West. Similarly, cookery books now fill large sections of Chinese bookshops, all of this reflecting a much improved interest in cooking and cuisine amongst Chinese consumers.
The development of processed and packaged foods has also added to the general growth in people's interest in food, and all of these factors add to the growing demand for more variety and better quality of fruits and vegetables. This sharp growth in consumer demand has meant that farmers are now responding by becoming better organised.
Part of the problem of developing the market in China has been the lack of distribution infrastructure making it difficult for farmers in one locale to reach markets in another. However, technology is playing a role in opening up the market, with many farmers cooperatives now opting to trade their produce over the Internet, in order to find new customers.
Better farming organisation is leading to larger-scale farming, using more automation in production, packaging and transportation, and will ultimately lead to the creation of significant fruit and vegetable supply companies. This process is still in its earliest stages, but is now becoming a significant trend, especially as more growers become actively involved in supplying to the fast-growing supermarket and hypermarket chains that are spreading out from China's largest cities.
China's government has placed special emphasis on developing the country's agriculture during the current Five-year Plan, hoping to redress the economic imbalance that has evolved between urban and rural regions. This means that developing more commercially robust agricultural practices will drive the development of the supply industry, and will lead to increased supply to the market, and better marketing of products.
Once the agricultural industry reaches a more competitive stage of development, we will no doubt see the emergence of leading suppliers of certain products, using sophisticated branding and marketing to promote their goods. With China already having entered the World Trade Organisation (WTO) in 2001, and the export market showing so much promise for Chinese farmers, such positive development is not only very likely, but is now undeniably necessary.
This will have a significant impact on the domestic market, and we will see the market rapidly become much better organised and sophisticated in the coming years, especially as the transport infrastructure improves to a level where inter-regional trade in fruit and vegetables becomes both possible, and economically viable.
View Cart
