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China Food and Drink Report Q2 2010
Market |
Food and Drink |
Report Type |
Market Research |
Country |
China |
Published |
22 February 2010 |
Number of Pages |
93 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
File Format |
- |
The Chinese economy appears to be well on its way to recovery following the effects of the global financial crisis, with real GDP growth of 8.4% expected for 2009 before rising to 8.8% in 2010. As a result a number of the country's food and drink manufacturers have announced investments this quarter as they seek to take advantage of the opportunities presented by Chinas sustained economic growth, these are discussed in our recently published China Food and Drink Report for Q210.
Domestic food producer, Tingyi Holdings, is one such company keen to capitalise on the country's growth, announcing plans in December 2009 to almost double capital expenditure in 2010 to US$500mn.
Of this the company plans to invest US$100mn in its mainland instant noodle business, with instant noodle sales forecast to increase an impressive 94.5% to reach CNY74.7bn to 2014 this investment seems well placed.
China's food industry as a whole looks to be performing well with a number of producers having posted positive results in Q409 and Q110. Included within this are Emerald Dairy, American Diary and Yili who all announced that profit for Q309 had increased when compared to the same period a year ago, indicating that the dairy sector is recovering well following the melamine scandal that hit in 2008.
Elsewhere, the country's drink industry has also been on the receiving end of investments. The soft drink sector is of particular interest; value sales are expected to increase 69.2% to 2014 while volume increases are forecast to be even higher at 97.0%. Such promising growth is prompting producers to make investments in production capacity increases and in December 2009 SkyPeople Fruit Juice acquired apple juice concentrate producer Yingkou Trusty for approximately US$3.3mn in order to expand SkyPeoples concentrated apple juice production capacity by about 10,000-20,000 tonnes per year.
Meanwhile, China's mass grocery retail sector has received a significant amount of interest, not surprising given its present state of relative immaturity and the growth opportunities this presents, value sales are expected to rise 10.5% in 2010, and 67.9% through to 2014. However, China's major cities have begun to crowd and retailers are being forced to look to tertiary towns and cities, possibly even rural areas, to fulfil growth prospects. Despite this retailers remain keen to invest in expansions and Japanese retailer Lawson Inc confirmed plans in December 2009, to increase its Chinese store network tenfold over the next 5-10 years. China Resources Vanguard (CRV) also announced ambitious expansion plans, intending to open 60 new hypermarkets and 300 new supermarkets.
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