BREAKFAST CEREALS IN CHINA: A MARKET ANALYSIS

Table of Contents:

CHINA CONTACT I

CONTENTS II

INTRODUCTION 1

• Report Coverage 1
• Executive Summary 1
• Other Access Asia Reports of Possible Interest: 2
• Glossary 3
• Free Monthly Online Newsletters 4

1 BREAKFAST CEREALS MARKET 5

1.1 Overview 5

1.2 China's Total Food Market 6

1.2.1 Total Food Market: Food and Non-food Sales 6

Table 1.1 TOTAL CURRENT VALUE RETAIL SALES BY FOOD AND NON-FOOD IN CHINA, 1996-2002 6

1.2.2 Total Food Market: Food/Non-food Sales Split 7

Table 1.2 PERCENTAGE BREAKDOWN OF SALES BY FOOD AND NON-FOOD IN CHINA 1996-2002 7

1.2.3 Total Food Market: Urban and Rural Split 7

Table 1.3 TOTAL CURRENT VALUE RETAIL SALES BY FOOD AND NON-FOOD IN CHINA, 1996-2002 7

1.2.4 Total Food Market: Total Value Trends 8

Table 1.4 CURRENT VALUE OF FOOD SALES BY MAJOR PRODUCT CATEGORY IN CHINA, 1996-2002 8

1.2.5 Total Food Market: Urban Value Trends 9

Table 1.5 URBAN FOOD SALES VALUE BY MAJOR PRODUCT CATEGORY IN CHINA, 1996-2002 9

1.2.6 Total Food Market: Rural Value Trends 10

Table 1.6 VALUE OF RURAL FOOD SALES BY MAJOR PRODUCT CATEGORY IN CHINA, 1996-2002 10

1.3 China's Breakfast Cereals Market 11

1.3.1 Breakfast Cereals: Sector Values & Volumes 11

Table 1.7 BREAKFAST CEREAL PRODUCTS RETAIL MARKET VALUE & VOLUME SALES BY SECTOR IN CHINA, 1996-2002 11

1.3.2 Breakfast Cereals: Sector Shares 12

Table 1.8 PERCENTAGE BREAKDOWN OF BREAKFAST CEREAL PRODUCTS VALUE & VOLUME RETAIL SALES BY SECTOR IN CHINA, 1996-2002 12

1.3.3 Breakfast Cereals: Growth Rates 13

Table 1.9 % ANNUAL GROWTH FOR BREAKFAST CEREAL PRODUCTS VALUE & VOLUME RETAIL SALES BY SECTOR IN CHINA, 1996-2002 13

1.3.4 Breakfast Cereals: Food Market Significance 13

Table 1.10 BREAKFAST CEREAL PRODUCTS RETAIL MARKET AS A PROPORTION OF TOTAL FOOD RETAIL SALES IN CHINA, 1996-2002 14

1.4 National Market Shares 15

1.4.1 Market Shares: Breakfast Cereal Sector Shares 15

Table 1.11 LEADING COMPANY SHARES OF RETAIL BREAKFAST CEREAL SALES IN CHINA 2002 15

1.5 Prices 16

1.5.1 Prices: Retail Price Indices 16

Table 1.12 RETAIL PRICE INDICES BY BROAD SECTOR IN CHINA, 1996-2002 17

1.5.2 Prices: Average Unit Values 18

Table 1.13 AVERAGE UNIT RETAIL PRICES ON INSTANT NOODLES & CEREAL PRODUCTS BY SECTOR IN CHINA, 1996-2002 18

Table 1.14 GROWTH OF AVERAGE UNIT RETAIL PRICES ON INSTANT NOODLES & CEREAL PRODUCTS BY SECTOR IN CHINA, 1996-2002 18

1.5.3 Prices: Selected Retail Prices 19

Table 1.15 RETAIL PRICES ON SELECTED BREAKFAST CEREAL PRODUCTS IN CHINA 2003 19

1.6 Outlook 20

1.6.1 Outlook: Forecast Trends 20

1.6.2 Outlook: Values 20

Table 1.16 FORECAST VALUE & VOLUME SALES OF INSTANT NOODLES & CEREAL PRODUCTS BY SECTOR, 2003-2007 20

1.6.3 Outlook: Sector Breakdown 21

Table 1.17 FORECAST PERCENTAGE VALUE & VOLUME BREAKDOWN OF INSTANT NOODLES & CEREAL PRODUCTS BY SECTOR, 2003-2007 21

1.6.4 Outlook: Sector Growth 21

Table 1.18 FORECAST ANNUAL VALUE & VOLUME GROWTH OF INSTANT NOODLES & CEREAL PRODUCTS BY SECTOR, 2003-2007 21

1.7 Current Issues 22

1.7.1 Current Issues: Legislation 22

1.7.2 Current Issues: Food Safety 22

1.7.3 Current Issues: Organic Foods 23

2 MARKETING AND DISTRIBUTION 24

2.1 Marketing 24

2.1.1 Marketing: Trends 24

2.1.2 Marketing: Consumer Profile 26

2.2 Distribution 27

2.2.1 Distribution: Wholesale Distribution 27

2.2.2 Distribution: Retail Sales by Outlet 28

Table 2.1 PERCENTAGE BREAKDOWN OF BREAKFAST CEREAL PRODUCT SALES BY OUTLET TYPE 2002 28

3 SWOT ANALYSIS 29

3.1 Strengths 29

3.2 Weaknesses 30

3.3 Opportunities 31

3.4 Threats 32

4 COMPANY PROFILES 33

4.1 Kellogg Company 33

4.1.1 Kellogg's: Company Details 33

4.1.2 Kellogg's: Company Background 33

Table 4.1 KELLOGGS COMPANY: FINANCIAL RESULTS 2001/2002* 34

4.2 Nestle SA 35

4.2.1 Nestle: Company Details 35

4.2.2 Nestle: China Operations 35

Table 4.2 NESTLE: PRINCIPLE OPERATING COMPANIES IN CHINA 2003 36

4.2.3 Nestle: China Dairy Activities 36

4.2.4 Nestle: Financial Results 36

Table 4.3 NESTLE: FINANCIAL RESULTS 2001/2002* 37

4.2.5 Nestle: Future Strategy 37

4.3 The Quaker Oats Company 38

4.3.1 Quaker Oats: Company Details 38

4.3.2 Quaker Oats: Company Background 38

5 CONTACTS 40

5.1 Trade Organisations 40

5.1.1 China National Cereals, Oils & Foodstuffs Import & Export Corporation 40

5.1.2 All-China Federation of Industry & Commerce 40

5.2 Government Departments 41

5.2.1 State Economic and Trade Commission - State Light Industry Bureau 41

5.2.2 Ministry of Agriculture 41

6 RELEVANT EXHIBITIONS & TRADE FAIRS 42

6.1 International Packing, Printing, Food Processing & Packaging & Plastic Machinery Fair (Hangzhou) 42

6.2 Tianjin Exhibition on Food Machinery & Packing 42

6.3 Trade Show of Machinery for Print, Packaging, Plastic Products & Food 42

6.4 Food Ingredients & Food Ingredients Asia 42

6.5 Agro-Foodtech 42

6.6 SIAL China 42

6.7 International Fast Food Products Exhibition 43

6.8 Zhengzhou Sugar, Alcoholic Drink & Food Trade Show 43

6.9 Guangzhou Exhibition on Machinery for Food, Packaging, Printing & Plastics 43

6.10 China Northeast International Exhibition on Food, subsidiary Material, Processing Technology & Equipment 43

6.11 International Exhibition For Food & Drink South China 43

6.12 International Exhibition For Hotel & Bakery South China 44

6.13 International Quick Frozen Food Exhibition 44

6.14 Beijing National Food & Food Processing Machine & Packaging Machinery Show 44

6.15 Food China 44

6.16 International Food, Packaging, Print, Plastic Products Exhibition 44

6.17 Zhejiang Food & Drink Summer Sales Show 44

6.18 Dalian International Food Manufacturing & Packaging Machine Exhibition/Dalian International Food, Raw Materials & Food Additives Show 45

6.19 Shanghai International Food Machine & Package Machine Expo 45

6.20 China International Fair For Food, Food Processing & Packaging 45

6.21 Shanghai International Supermarket Expo 45

6.22 Shanghai International Food Expo 45

6.23 Packtech & Foodtech 46

6.24 Liaoning Food Show 46

6.25 Food & Hotel South China 46

6.26 Chengdu International Food, Food Processing & Packaging Show 46

6.27 International Food Show 46

6.28 Interfood Shanghai 46

6.29 International Food Processing & Packaging Machinery Exhibition 47

6.30 China Food Industry Exhibition 47

APPENDIX 1 - CHINA MARKET BACKGROUND 48

A.1 Fast Facts 48

A.2 Regions of China 49

Map A.1 CHINA: PROVINCES AND MUNICIPALITIES 49

A.3 Demographics 51

A.3.1 Demographics: Total Population 51

Table 1.1 TOTAL POPULATION, 1996-2002 51

A.3.2 Demographics: Population by Location 51

Table A.2 POPULATION BY URBAN-RURAL DIVIDE, 1996-2002 52

A.3.3 Demographics: Population Breakdown by Location 52

Table A.3 POPULATION BREAKDOWN BY URBAN-RURAL DIVIDE, 1996-2002 52

A.3.4 Demographics: Population by Province 53

Table A.4 POPULATION BY PROVINCE, 1999-2002 53

A.3.5 Demographics: Population Density by Province 54

Table A.5 POPULATION DENSITY BY PROVINCE, 1999-2002 54

A.3.6 Demographics: Population Concentration 54

Map A.2 POPULATION CONCENTRATIONS BY PROVINCE, 2002 55

A.3.7 Demographics: Population by Gender 55

Table A.6 TOTAL POPULATION BREAKDOWN BY GENDER, 1996-2002 56

A.3.8 Demographics: Population by Age Group 56

Table A.7 POPULATION BY AGE GROUP, 1996-2000 56

Table A.8 POPULATION BY AGE GROUP (PERCENTAGE), 1996-2002 57

A.4 Consumer Attitudes 58

A.4.1 Consumer Attitudes: Overview 58

A.4.2 Consumer Attitudes: Response to Political Change 58

A.4.2 Consumer Attitudes: Response to Economic Change 59

A.4.3 Consumer Attitudes: Changes in Lifestyle 60

• Livelihood 60
• Individual loans 60
• Housing 60
• Possessions 61
• Travel 62
• Entertainment 62
• Health and Fitness 63
• Purchasing Influences 64
• Taboos 65

A.5 Consumer Wealth 66

A.5.1 Consumer Wealth: GDP and Cost of Living 66

• Dealing with WTO 66
• Confident Shoppers 67

Table A.9 GDP AND COST OF LIVING INDEX, 1996-2002* 67

A.5.2 Consumer Wealth: Provincial Differences in GDP 68

Table A.10 GDP RANKED BY PROVINCE, 1996-2002* 69

A.5.3 Consumer Wealth: GDP Growth by Province 70

Table A.11 GDP GROWTH RANKED BY PROVINCE, 1996-2002* 70

A.5.4 Consumer Wealth: GDP Per Capita by Province 71

Table A.12 PER CAPITA GDP RANKED BY PROVINCE, 1999-2002 71

A.5.5 Consumer Wealth: Concentration of Wealth by Province 72

Map A.3 VALUE OF GDP PER CAPITA BY PROVINCE, 2002 72

A.5.6 Consumer Wealth: The Major Cities 72

Table A.13 LEADING CITIES KEY ECONOMIC INDICATORS, 2002 73

A.6 Households 74

A.6.1 Households: Overview of Household Conditions 74

A.6.2 Households: Total Households by Size 75

Table A.14 NUMBER OF HOUSEHOLDS BY SIZE, 1996-2002 75

A.6.3 Households: Total households by Urban/Rural Split 75

Table A.15 NUMBER AND SIZE OF HOUSEHOLDS BY LOCATION, 1996-2002 76

A.6.4 Households: Income Earners Per Household 76

Table A.16 AVERAGE NUMBER OF INCOME EARNERS PER HOUSEHOLD, 1996-2002 76

A.7 Employment 77

A.7.1 Employment: Number of Workers by Sector 77

Table A.17 NATIONAL EMPLOYMENT BY SECTOR, 1996-2002 77

A.7.2 Employment: Growth by Sector 78

Table A.18 GROWTH IN EMPLOYMENT BY SECTOR, 1996-2002 78

A.7.3 Employment: Number of Workers by Gender 79

Table A.19 TOTAL NATIONAL WORKFORCE BY GENDER, 1996-2002 79

A.7.3 Employment: Number of Workers by Habitation 79

Table A.20 NATIONAL WORKFORCE BY HABITATION, 1996-2002 80

A.7.4 Employment: Urban Unemployment 80

Table A.21 URBAN UNEMPLOYMENT RATES, 1996-2002 80

A.8 Consumer Income 81

A.8.1 Consumer Income: Average Incomes by Sector 81

Table A.22 AVERAGE INCOMES BY SECTOR, 1996-2002 81

A.8.2 Consumer Income: Growth by Sector 81

Table A.23 GROWTH IN AVERAGE INCOMES BY SECTOR, 1996-2002 82

A.8.3 Consumer Income: Average Incomes by Region 83

Table A.24 AVERAGE INCOMES BY REGION, 1998-2002 83

A.8.4 Consumer Income: Growth by Region 84

Table A.25 GROWTH IN AVERAGE INCOMES BY REGION, 1998-2002 84

A.9 Consumer Market 85

A.9.1 Consumer Market: Spending Trends 85

Table A.26 CONSUMER EXPENDITURE* BY BROAD SECTOR AT CURRENT PRICES, 1996-2002 85

A.9.2 Consumer Market: Per Capita Consumer Expenditure 86

Table A.27 PER CAPITA CONSUMER EXPENDITURE* BY BROAD SECTOR AT CURRENT PRICES, 1996-2002 86

A.9.3 Consumer Market: Retail Sales and Consumer Spending 86

Table A.28 RETAIL SALES AS A PROPORTION OF CONSUMER EXPENDITURE, 1996-2002 86

A.9.4 Consumer Market: Urban Income and Spending Compared 87

Table A.29 URBAN AVERAGE ANNUAL INCOME/EXPENDITURE, 1996-2002 87

A.9.5 Consumer Market: Average Urban Weekly Shopping Basket 88

Chart A.1 AVERAGE WEEKLY URBAN SHOPPING BASKET, 2002 88

A.9.6 Consumer Market: Average Rural Weekly Shopping Basket 89

Chart A.2 AVERAGE WEEKLY RURAL SHOPPING BASKET, 2002 89

A.9.7 Consumer Market: Average Urban & Rural Weekly Shopping Baskets Compared 90

Chart A.3 URBAN & RURAL SHOPPING BASKETS COMPARED, 2002 90

A.10 Exchange Rates 91

A.10.1 Exchange Rates: China 91

Table A.30 AVERAGE ANNUAL EXCHANGE RATES, 1997-2002 91

A.10.2 Exchange Rates: Hong Kong 91

Table A.31 AVERAGE ANNUAL EXCHANGE RATES, 1997-2002 91