China is buying the world. From wineries in France and Australia to salmon from Norway and avocados from South America, the country is on a buying spree that will make it the world’s largest importer in the next five years, according to economists with a prominent Chinese investment bank. What does it mean for China’s food industry?
Of course, commodities like iron ore and soybeans are a major component of the purchases, but the closing gap will be driven by the purchase of consumer goods, Liu Liu and Liang Hong of CICC wrote in a recent research note. According to the bank, the United States leads China in the import of beef, fish, wine, and fruits & nuts, among other categories, but that is changing as China’s citizens become more affluent. The recent relaxation on imports of Australian, Canadian and American beef, and the round of tariff reductions announced in November, are both an acknowledgement of the growing demand at home for imported food.
This is already evident on supermarket shelves, as customers equate imports with quality and brands move to a premium positioning. A recent report in Nikkei found that Want Want China appears to be losing shelf space to rivals, including pricey imported sweets and chocolates. Separately, Nissin Foods, a major instant ramen noodle manufacturer, plans to use its recent IPO to grow its “premium” instant noodle market in China, as low-end products fall out of favor. Salmon is another growth market, with an estimate coming out last week that China’s salmon market, a wholly imported good, will reach some 240,000 tons by 2025.
Some brands are even taking their new premium positioning abroad, such as Bright Dairy, which recently launched a premium yogurt in Hong Kong, its first stop in an overseas push.
Data from the International Monetary Fund show China’s imports growing above 4% until at least 2021, outpacing the United States. In terms of value, China imports an average of nearly $500 million in goods every quarter, according to China Customs. According to a recent USDA report, the average consumer now spends more than 40% more on food consumption than they did 10 years ago, with consumers in Shanghai far out front in terms of total spend.
Clearly, the demand for imported food is growing, as China’s appetite expands from just the raw materials needed for manufacturing to the finest the world has to offer in terms of F&B. The CICC report highlights specific opportunities in the meat, seafood, produce and snack segments.
How to enter those markets, and how to turn these macro trends in business wins, remains the hard part for many foreign brands. Should brands focus on geographic distribution or pack size first? Should they be courting the female market or should they be thinking instead about an online presence as a top priority?
At The Silk Initiative, sorting out these priorities is what we do. Specifically, our Space Definer product identifies what consumer space your product fits into, and helps you find the market for your new or existing product in order to deliver growth. We are the F&B experts in China. Let us help.