Research and Markets: Revealing the Impact the Global Financial Crisis Has Had on China’s Food and Beverage Industry
In the fist half of 2009, China above-scale food industry accumulatively achieved RMB2.299 trillion of total output value, up 14.76% compared to the same period of last year, of which, the agricultural non-staple food processing industry’s rose 15% to RMB1260.646 billion, the food processing industry’s increased 14.55% to RMB407.909 billion, and the beverage manufacturing industry’s rose 18.92% to RMB348.186 billion.
Impacted by the global financial crisis, the food and beverage industry’s operating revenue changed from rapid growth momentum to downturn in H2 2008. During Jan-Feb 2009, the revenue of the overall food and beverage industry increased only 14% year on year, 23 points lower than that of Jan-Feb 2008, recording new low in recent years. The growth rate in Jan-May 2009 rebounded a little to 15%.
In the past several years, the operating revenue of the food processing industry, one sub-industry of the whole food and beverage industry, has grown faster than that of the other two sub-industries, food manufacturing and beverage manufacturing. Due to the price decline of meat products (mainly pork), the food manufacturing industry rebounded slowly during the financial crisis, while the beverage manufacturing industry showed certain decline-resistance ability, whose operating revenue rebounded steadily during Jan-May 2009, up 16% year on year, 1 point higher than the figure in Jan-Feb 2009 and higher than the average level of the whole food and beverage industry. Taking Kweichow Moutai Co., Ltd for example, its liquor output in H1 2009 was 23,833 tons, up 35.9% year on year; its sales revenue went up 20% to RMB5.5 billion and net profits rose 25% to RMB2.8 billion.
In H1 2009, the high-alcohol Moutai liquor products took 84.27% of the company’s operating revenue, while the low-alcohol liquor products accounted for 9.63%.
Based on the authoritative statistics from the National Bureau of Statistics of China, the China National Food Industry Association, China Alcoholic Drinks Industry Association, Dairy Association of China, etc, this report makes an in-depth analysis of the status quo of China’s food and beverage industry and its influencing factors, giving priority to the analysis and research of its eight sub-industries on market scale, industry concentration, regional distribution, economic benefits, production & sales as well as growth space. Besides, It also predicts the future development trends of the industry.
Key Topics Covered:
1 Food and Beverage Classification and Research Scope 2 Development of China Food and Beverage Industry 3 Segmented Industries 4 Regional Development 5 Key Listed Companies 6 Development Trends and Prospect of China Food and Beverage Industry
Golden Dragon Holdings, Inc. is a Chinese company which conducts the majority of its food and beverage business in the Asia-Pacific Rim economies. The company’s functions as a importer, exporter and distributor of staple, organic, specialty, gourmet and foreign foods and beverages.
This week, Gold Dragon Holdings announced that it had registered its new trademark for its private label wine, “Endless Wines.” Both the red and white wines are made from a blend of exclusive grapes from Spain’s Rioja region.
The company mission statement is simple. “Good food, high-quality food, wholesome, healthy, and delicious food”. Gold Dragon Holdings strives to help independent producers and growers worldwide of fine quality foods, introduce their products to China and other areas in the Asia region.
Chief Operating Offiicer, Mr. Cesar Cuenca explained in this article“We have identified a unique niche in the wine market in China, we call this niche the 100RMB retail wine market. Typically imported wine in China sells at a higher end of the wine market, we have selected exceptional grapes to start producing high quality red and white wines at reasonable cost to consumers. Good wine does not mean expensive wine.”
I highly recommend checking out the full article linked here and in the above paragraph because it is full of the company’s assessment of various elements of the China wine market.
Current State:
China is a large emerging country with an amazing potential of wine consumption. The influence of western eating, drinking habits and rising average incomes have been key factors in the fast development of wine market in China. China has stepped into one of the ten largest wine consumption markets in the world. The value of the market has more than doubled over the last five years and a lot of signs are showing a bright future of China wine market.
Growth Rate:
What greatly spurs the speedy growth of imported wines from wine producers around the world, such as France, Italy, Spain, Australia, New Zealand, Chile, Argentina, South Africa, Austria, US and some other European traditional wine-producing countries. The annual growth rate of imported wines is up to 13-15%.
Targeted customers:
Wine is now becoming the fashionable drink for the wealthy younger generations in China’s cities, and the “badge” drink for China’s wealthiest elite. With about 600 million young Chinese exploring new types of alcoholic drinks, the potential market for sales of wine in the future is so great without any doubt.
Mir Global Marketing LLC has completed it’s summer tour of China, and what a journey is has been! What do we have to report? Well, quite a bit. Since it is too much to compile into one simple blog entry, I have decided to begin with some travel advice and general words of wisdom about doing business in China.
July 13 — New York City –> Beijing (12.5 hours on Continental’s direct flight.) Highly recommend anyone traveling to China from the New York City area and not obligated to any specific carrier book their ticket on this flight. You save between 4-8 hours in additional travel time / transfer time at airports. You do not risk missing a connecting flight, and the service on the plane is quite good for a US owned airline. The one negative side is the cranky American flight attendants, which you do not find if you’re traveling JAL, Cathay, Asiana, etc.
Arrival in Beijing was quick and easy. Customs allowed me to pass with more wine than I was probably legally allowed to bring, I recovered from jet lag quite fast and was out on the town showcasing our wines from Chile and Argentina by my second night.
After reconvening with Xu Wenquan, Mir Global Marketing’s director of sales in China/ Asia we set out a game plan for how to best approach diverse selection of potential buyers / contacts. We would need to fine tune our marketing strategy for three different market segments.
- Chinese government owned entities.
- Chinese entrepreneurs / business owners of bars and night clubs which cater China’s rising middle and upper class. In other words, the sons and daughters of wealthy Chinese who are looking to make a name for themselves and are have chosen to start a business. Not with the goal of attracting foreign customers (although they would not object), bur rather China’s new consumers looking for a good time and some nice drinks.
- Western operated and privately owned establishments in Beijing, Shanghai and Guangzhou. These type of businesses cater to China’s trendy, diverse, metropolitan cultures. I define this group as a mix of foreigners and urban Chinese you would find at a popular bar in a major city like Beijing.
Now, I present a few words of wisdom for those considering to do business in China. These are my own opinions, and I welcome those who would like to discuss any of these points. Please add your comments below or drop me a email, bennett.reiss (at) gmail.com
1. The more interaction you have with China, and the longer you stay, the more you realize how little you truly know and understand the country. Don’t think a mere semester or two of studying in China, speaking Chinese, reading books about “doing business in China,” foreign policy or cultural communication classes make you a expert. They do not.
2. What you learned in business school will not necessarily apply in China. You must cautiously and selectively archive into the back of your mind what you have come to accept as common business practices. What you learned in all those over-priced business classes will usually not apply in China. This is especially true when dealing with Chinese partners, be it from the private sector or a government owned entity.
3. Smile. Even if you are impatient, frustrated, mentally a mess, cranky, jet lagged, suffering from heart break, or angry with life itself… Smile and put a face that mixes happy, calm and confident all in one. The moment you allow what you have bottled up inside to show, vis-à-vis body language or with words, you have lost the battle. You will fail at negotiating a cheaper hotel, you will fail to convince your taxi driver to take the shorter route and you will fail in business negotiation. A calm, collected persona and a smile go a long way in China. Remember this.
4. Keep an open mind and remain flexible as to adapt to any given situation you face. It is popular in western cultures to look for a logical explanation for something you do not understand or a problem you may face. Westerners also tend to believe it is possible to control things like your schedule. Many times in China, there is no logical answer, and controlling things is quite difficult when you are operating in a country as complex and large as China. Accept this now, before you lose your mind, and therefore compromise all the elements I described above in point #3.
5. Dress to impress if you’re doing business. Even if its hot and humid, put on that suit and leave the tie and jacket behind. As they say, you only get one first impression. When you’re dealing with a Chinese businessman/ woman, it is incredibly important to do all in your power to make your first meeting as professional as possible.
** Reminder to all readers, opinions expressed in this entry are my own and should be not treated as fact. Thank you.
~ Bennett Reiss – International Trade Consultant at Mir Global Marketing LLC
WA winemakers are turning to emerging markets in Taiwan, Nepal and South Korea to help the industry through the global economic crisis, as traditional markets in Britain and the US dry up.
Major wine importers from Japan, Nepal, South Korea, Sri Lanka, Taiwan and Thailand toured WA wine regions this week in search of supplies.
The value of Asian markets is rising rapidly, with China and Taiwan buying 54 per cent and 23 per cent more of Australian wine over the past year, while the volume of exports to Nepal is up 97 per cent.
Taiwanese wine importers Shelly Wu and Winston Lin signed a deal last month to import Cullen Wines from Margaret River and said there was a strong market for Australian fine wine in Taiwan but it was overwhelmingly for red varieties. Ms Wu said WA shiraz was popular. “The market for (fine wine) has been developed over the last 20 years but they mostly used to drink French wines. Now there is stronger interest in new world wines,” she said.
“There is strong interest in shiraz from Australia and the cabernet sauvignon is beautiful compared to the European style. We are adding to our portfolio of WA wines because the wine style is very elegant and very approachable to the Taiwanese palate.”
Nepalese wine buyer Amit Agrawal imports wine from the Hunter Valley in NSW and is yet to buy any WA wine.
He said the tiny country’s thriving tourism industry generated demand for fine wine. “Because we like spicy types of food, sauvignon blanc goes well,” he said.
Britain and the US remain by far the biggest wine export markets but their value has fallen 20 per cent and 12 per cent respectively over the past year.
Chile’s leading wine exporter Concha y Toro CHT.SN(VCO.N) said on Wednesday its first quarter net profit rose 37.6 percent from a year earlier
to 8.395 billion pesos ($14.4 million).
Concha y Toro said consolidated sales rose 12.6 percent during the period to 68.458 billion pesos.
“In this quarter, we saw significant growth in the UnitedStates market,” CEO Eduardo Guilisasti said in statement, adding the company also saw growth in the United Kingdom and Japan.
Concha y Toro reported in February its profit for 2008 slipped 5.23 percent to 35.152 billion pesos.
The company said in November it planned to raise up to $189 million in a capital increase and bond issues on the local market to pay for future projects and pay down short-term debt.
Welcome to Mir Global Marketing’s blog, Globowines!
~~ Click here ~~ to visit our company website. Our current catalog includes new wines are from Argentina and Chile, which have have been especially chosen for the China and Singapore market
