A Carrefour hypermarket Beijing sells groceries to a rising Chinese middle class. (Photo/Xinhua)
China became the world's largest market for food and groceries last year, with investment in the sector set to reach US$1.46 trillion in five years as spending in the country continues to grow rapidly, says a report by UK-based food and grocery analyst IGD.
China's food and grocery market reached US$970 billion last year alongside rises in food prices, personal wealth, spending and population, said IGD. That has put it ahead of the United States, where the market came to US$913.5 billion in 2011. Joanne Denny-Finc, CEO of IDG, predicts that the gap between the American and Chinese market will widen by 2015, when China's food market is expected to reach US$1.46 trillion.
The report expects the BRIC economies — Brazil, Russia, India and China — to enter the top-five list of grocery markets, joining the US, within five years. China and India were the second- and fourth-largest markets by value in 2010; Russia and Brazil ranked sixth and seventh, respectively.
Though Beijing has lowered its GDP growth target for this year to 7.5%, the lowest figure since 2005, policies aimed at encouraging domestic demand present abundant business opportunities to retailers. A rising middle class is also expected to contribute. IDG predicts that the number of Chinese stores operated by international retail chains will reach 2,700 in the next four years.
Rahul Sharma, founder of emerging market investment consultancy Neev Capital, says that sales at household product companies Proctor & Gamble and Unilever have continued to grow despite sharp price increases, reported Want Daily, our Chinese-language sister newspaper.
Multinational fast food chains are also thriving in China as more people opt to eat out instead of cooking at home. Hypermarket chains such as Carrefour and Walmart are struggling, however, as Chinese consumers tend to shop at traditional markets and are more price-sensitive about certain products sold at large stores, Want Daily's report continued.