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Market Report, "China Food & Drink Report Q1 2014", published

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2013-12-14 13:59:54 - New Food research report from Business Monitor International is now available from Fast Market Research

While we are bullish on the long-term prospects for the Chinese consumer sector, the country's domestic demand rebalancing is likely to be a long, drawn-out process. An acceleration of household spending driven by sizeable personal savings and rising wages would compensate for a reduction in capital outlay, helping to keep the economy motoring along at its current rate of expansion. Indeed, the vast size of China's consumer base, the undeveloped nature of organised retail, the relatively low penetration of services, and the strong scope for premiumisation are all structural positives and underpin our view that private consumption will slowly rise as a share of nominal GDP over the next decade.

Headline Industry Data

* 2013 food consumption = +13.3%; compound annual

growth rate (CAGR) forecast to 2017 = +9.4%.
* 2013 beer volume sales = +8.3%; CAGR forecast to 2017 = +8.7%.
* 2013 soft drinks volume sales = +7.5%; CAGR forecast to 2017 = +6.9%.
* 2013 mass grocery retail sales = +8.8%; CAGR forecast to 2017 = +9.1%.

Full Report Details at

Key Company Trends

A Year To Forget for Yum! Brands: Yum! Brands reported a 68% decline in global profit for Q313 (to September 2013) to US$152mn, leading to a 5.2% decline in its share price on October 9 2012. This has all but wiped out gains in the stock since the beginning of the 2013. The company, which owns KFC, Taco Bell and Pizza Hut, can attribute its poor performance over the last year to depressed sales from its KFC brand, particularly within China. While this has been a year to forget for Yum! Brands, its position in China, with the potential that the country holds, should see the company return to growth in the near future.

Instant Noodles Sales Slowing Down: Shareholders are asking about the growth stage of China's noodle industry. According to Nomura (FT), China consumes about 3 kilograms of instant noodles on a per capita basis annually, which incidentally compares with about 5 kilograms in Hong Kong. There could be room for the mainland to catch up with the more affluent Hong Kong, yet rising health consciousness could cap, to a degree, how much more mainlanders can consume per annum. More volume growth is possible as people work longer hours and the country's favourite convenience food could continue to grow as the population becomes more time-poor.

The idea that the sector is slowing down was backed up by the first half 2013 results announcement by Tingyi, the leading noodle company in China, with more than half of the market for instant noodles, according to the Financial Times. Noodle sales, which accounted for 43% of Tingyi's business in 2012, grew by 6.4% in the first half of the period, well below the 10% or so they averaged over the past few years.

Tingyi's overall sales have grown at a five-year average rate of 23%, led largely by its faster growing beverages arm, which accounts for more than half of its business. Noodles have lost quite a bit of their lustre as a driver of growth and, as a result, have become progressively less important to overall sales despite having contributed 53% of total revenues back in 2005.

Fonterra Hit As Contamination Fears Unfold: The Chinese government's decision to recall milk imported from New Zealand in July 2013 over contamination fears marked the latest blow to the latter's dynamic infant formula segment in recent weeks. New Zealand-based dairy major Fonterra is likely to be most severely impacted by the scandal: approximately 90% of China's imported milk comes from New Zealand, and the company is China's largest single supplier of infant nutritional products.

Partial Table of Contents:

BMI Industry View
- Food
- Drink
- Mass Grocery Retail
Industry Forecast
- Consumer Outlook
- Food
- Food Consumption
- Table: Food Consumption Indicators - Historical Data & Forecasts, 2010-2017
- Canned Food
- Table: Canned Food Value/Volume Sales - Historical Data & Forecasts, 2010-2017
- Confectionery
- Table: Confectionery Value/Volume Sales - Historical Data & Forecasts, 2010-2017
- Drink
- Hot Drinks
- Table: Hot Drinks Value/Volume Sales - Historical Data & Forecasts, 2010-2017
- Alcoholic Drinks
- Table: Alcoholic Drinks Value/Volume Sales - Historical Data & Forecasts, 2010-2017
- Soft Drinks
- Table: Soft Drinks Value/Volume Sales - Historical Data & Forecasts, 2010-2017
- Mass Grocery Retail
- Table: Mass Grocery Retail Sales - Historical Data & Forecasts, 2010-2017
- Trade
- Table: Trade Indicators - Historical Data & Forecasts, 2010-2017
Macroeconomic Forecast
- Economic Analysis
- Table: China - Economic Activity
Industry Risk Reward Ratings
- Asia Pacific Risk/Reward Ratings
- Table: Asia Pacific Food & Drink Risk/Reward Ratings Q114
- Table: Asia Pacific Food & Drink Risk/Reward Sub-Factor Ratings Q114 (scores out of 10)
- China Risk/Reward Ratings
Market Overview
- Food
- Food Production
- Instant Noodles
- Confectionery
- Trade
- Agriculture
- Dairy
- Organics
- Drink
- Soft Drinks
- Hot Drinks
- Alcoholic Drinks
- Mass Grocery Retail
- Leading Players
- Table: Structure Of China's Mass Grocery Retail Market By Estimated Number Of Outlets
- Table: Structure Of China's Mass Grocery Retail Market - Sales By Format (US$bn)
- Table: Structure Of China's Mass Grocery Retail Market - Sales By Format (CNYbn)
- Table: Annual Average Store Sales By Format, 2011
- Table: Grocery Retail Sales By Type, 2012 & 2021
Industry Trends And Developments
- Food
- Table: China Beef & Veal Production & Consumption, 2012-2017
- Table: China Pork Production & Consumption, 2012-2017
- Table: China Poultry Production & Consumption, 2012-2017
- Table: Top 10 Producers In China's Yoghurt Sector
- Drink
- Mass Grocery Retail
- Key Industry Trends And Developments

Full Table of Contents is available at:

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

About Fast Market Research

Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.

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