Food from Britain

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China Roadshow
Lincolnshire 22nd May 2007 John Vernon, UKTI
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Exports of food and drink from the UK 2005By
value, millions of British Pounds
1,875.57 1,255.22 894.56 846.72 597.10 446.89 379.
42 339.43 180.42 165.56
1. Ireland 2. France 3. USA 4. Spain 5.
Germany 6. Netherlands 7. Italy 8. Belgium 9.
South Korea 10. Canada
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Exports of food and drink from the UK 2005By
value, millions of British Pounds
160.32 156.37 152.93 145.29 141.10 125.72 116.48 9
6.41 96.25 95.13
11. Denmark 12. Japan 13. Greece 14.
Sweden 15. Portugal 16. Australia 17.
Taiwan 18. China 19. South Africa 20. Russia
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Fastest growing per capita consumption of food
drink from the UKTop 20 ( change 2005 vs. 2004)
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Top 5 product sector exports to China
47.6m 85

• Spirits
• 2. Frozen fish
• 3. Sugar
• 4. Crustaceans
• 5. Wine

31.3m 72
3.4m 63
1.9m 237
1.0m 243
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Retail formats Grocery retail sales by format
Source IGD
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Features to be aware of or look out for..

• Hypermarkets
• Two floors
• Inside shopping centres
• High staffing levels
• Retail-tainment

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Features to be aware of or look out for..

• Hypermarkets
• Two floors
• Inside shopping centres
• High staffing levels
• Retail-tainment
• Supermarkets
• Dominated by domestic retailers
• Carrefour Champion (6 in Beijing)
• Convenience stores
• Focus on chilled drinks, snacks, cigarettes, RTE
  dishes

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International Retailers
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International retailers

• Present since early 1990s
• Growth of hypermarkets
• Change of location and ownership rules in
  December 2004
• Currently present in the market
• Auchan (Fr)
• Carrefour (Fr)
• Ito-Yokado (Jpn)
• Metro (De)
• Tesco (UK)
• Wal-Mart (US)

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Retail sales of international retailers in China
2003/4
Source IGD
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International Retailer Profiles Carrefour
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International Retailer Profiles Wal-Mart
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International Retailer Profiles Metro
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International Retailer Profiles Auchan
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International Retailer Profiles Tesco/Hymall
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International Retailer Profiles Ito Yokado
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International Retailer Profiles Others

• Lawson, Family Mart (Jpn) both present in
  Shanghai
• E-Mart (S Korea) Shanghai
• Lotus (Thai)
• Trust-Mart, RT Mart (Taiwan)

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Domestic Retailers
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Domestic Retailers

• Dominant numbers of stores, turnover
• Reacted and developed in face of international
  competition sink or swim
• In decline
• State owned retailers
• Traditional wet markets

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Domestic Retailers The Bailian Group

• Merger between state-owned Shanghai Hualian and
  Shanghai Lianhua, 2003.
• 4 members in the Group
• Shanghai No. 1 Department Store
• Shanghai Lianhua
• Century Lianhua hypermarkets
• Lianhua supermarkets
• Quik convenience stores
• Shanghai Hualian Co Ltd
• Lianhua Group
• Both companies still operating as separate
  entities
• Lianhua JV with Dia stores to come to an end.

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Domestic Retailers Wu Mart

• Established in 1994
• Strong presence in Beijing
• Wu-Mart private label range
• Hypermarkets Retail-tainment, local product
  focus
• Developed by acquiring state-owned enterprises

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Grocery retailing in Shanghai
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Shanghai

• Main players in Shanghai
• Carrefour, Hymall, Auchan, Metro, RT Mart, Lotus,
  Trust Mart, E-Mart, Lianhua, Hualian
• Wal-Mart established its first Supercenter in
  2005
• Convenience stores industry in Shanghai is most
  developed in China with over 3,500 stores
• Quik, Alldays, Kedi, Shanghai Buddies, Mei,
  Lawsons, 21st Century, C-Store

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The Future
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The future

• Shopping malls bigger and bigger
• More hypermarkets and supermarkets in primary
  cities
• Growth of stores in second tier cities - pioneers
• New formats
• Multi format strategy (Carrefour)

South China Mall, Guangdong province
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Foodservice
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Foodservice in China

• Fast food
• Yum Brands (KFC, Pizza Hut, Taco Bell)
• McDonalds
• Import 5-10 of food (including french fries)
• Hotels
• International 5 30-50 of food imported
• Largest chain Jiangjiang
• Target Executive chefs and purchasing managers

Source USDA
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Foodservice in China

• Restaurants
• More Chinese restaurants using imported products
• Esp. Shanghai 380 specialising in foreign food
  in Shanghai
• Institutional
• Eurest, Gate Gourmet, Sodexho
• International schools 25 in Shanghai
• Airline catering up to 50 of food is imported
  for international flights.

Source USDA
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What is working?

• Categories
• Brands
• Packaging
• Appeal to the consumer

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Case study Morning Foods, China

• Brand support
• UK origin
• Company history and prestige
• Long-standing local relationship
• Moving success forward

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Routes to market Consider the options

• Via UK consolidator
• Via local distributor
• Joint venture/acquisition
• Transfer production skills
• Finish product locally
• (For China) via Hong Kong??

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Routes to market Other considerations

• Product suitability
• Target markets
• Listing fees
• Tariffs
• Margin expectations
• Product registration process?

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Summary

• Further research and investigation is key
• as is careful selection of partners in the
  markets
• Consider starting with Shanghai
• Find your niche
• Take a long-term view

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Contact at Food from Britain

• Emma Walters
• Development Markets Manager
• ewalters_at_foodfrombritain.co.uk
• 020 7468 8569