Thu, Apr 05, 2012 - Page 11 News List

PRC food shopping market now biggest

COST:China’s US$954 billion appetite for groceries has overtaken that of the US, providing opportunities for its retailers, but it could intensify upward pressure on prices

The Guardian, LONDON

China has overtaken the US to become the world’s biggest market for grocery shopping, according to the latest report to underscore the country’s growing global economic dominance.

The Chinese grocery sector will continue its fast growth over the next few years to hit almost US$1.5 trillion by 2015, according to grocery industry researchers IGD. That trend brings opportunities for both Chinese and international retailers, but economists warn it will also put upward pressure on already high food prices.

Driven by a growing population, a move to more expensive foods and robust economic growth, the Chinese grocery sector was worth US$954 billion at the end of last year, while the US market slipped to second place at US$913 billion, IGD said in a report released yesterday.

The researchers forecast that China’s market would grow at twice the pace of the US to be worth almost US$1.5 trillion by 2015.

‘PHENOMENAL’

“China’s grocery growth story is phenomenal,” IGD chief executive Joanne Denney-Finch said. “China is a crucial growth market for many of the world’s largest grocery retailers.”

The forecasts echo predictions that China’s economy will overtake the US to become the world’s biggest within years, said Andrew Sentance, senior economic adviser at consultancy PwC.

“Over the next decade, China will overtake the US on a number of indicators,” he said. “This reflects a broader shift in the global economy to the Asia-Pacific region. [The] Asia-Pacific [region] is going to be dominant in the world economy looking ahead. The negative is that this is putting a lot of upward pressure on energy and commodity prices.”

Sentance warned that growth in Chinese markets presents challenges as well as opportunities for businesses in Western markets, which he sees facing a “new normal” of disappointing growth and volatile commodity markets.

IGD forecasts all the BRIC nations — Brazil, Russia, India and China — will be in the top five grocery markets by 2015, with India displacing Japan as the world’s third-largest grocery market by value.

TESCO

Supermarket chains such as Tesco have already been expanding in emerging markets. The British retailer opened in China in 2004 and it now runs more than 100 stores there, while also pushing online sales and opening a number of shopping malls.

China is Tesco’s strongest Asian market in terms of sales growth, but at 4 million customers a week, business there is dwarfed by the more than 20 million shoppers served every week back in the UK.

IGD estimates that international grocery retailers could open more than 2,700 stores in China over the next four years — about 13 a week.

“The Chinese government is taking steps to steer the economy to a more consumption-led growth model with measures to boost incomes, improve the social welfare system and increase access to consumer credit, and as disposable incomes grow, Chinese consumers will be increasingly willing to buy premium groceries,” Denney-Finch said.

The grocery boom brings mixed blessings, nutrition experts say.

DRAWBACKS

Many rural people suffer from malnutrition, while city dwellers are offered convenience foods.

“Obesity is already growing in the younger generation in big cities,” said Peter Ben Embarek, food safety expert at the WHO.

He pointed to further pressures from a rising demand for animal protein.

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