China Market Research

The China Market research lays down the facts that the long-term outlook for the food and beverage sector in the country is poised for good growth. There are a few reasons for this, primary among which is the continual interest i... view more

China Market Research

The China Market research lays down the facts that the long-term outlook for the food and beverage sector in the country is poised for good growth. There are a few reasons for this, primary among which is the continual interest in the same by foreign investors and the like. But if the short-term outlook is to be considered, then the picture does not seem so rosy because of the chinks in the economy. The gaps should widen in the next few months and the Chinese economy could face a down-slide. The inflation in the country is going higher and the economic activity growth is going down which makes it even more viable for a recession period. This will be heightened by the strict regulation of monetary policies. Around 2011, there will be a Chinese slowdown with real GDP growth estimated at 7.5% for the time period. After that, the real GDP will continue to stay stagnant around that mark which might lead to an industry slowdown. The per capita food consumption will be around an 11% increase by the end of the year 2010 which will further increase to 54% by the end of 2014. The beer volume sales will increase from a positive of 13% to 74.9% by the end of the estimate period. The soft drink sales will go up by 12% in the 2010 year while there is a 65.4% by the end of 2014.

The research shows that there are continuous international investments pouring into China’s food and beverage sector, which has helped it to carry on its good growth. In May 2010, US soft drink behemoth PepsiCo unveiled its plans of investing US$2.5bn over the next three years for the Chinese beverage market. This comes hot on the heels of a US$1bn investment package which is completing its run by the end of this year. PepsiCo hopes to continue on its expansion in the Chinese market and its plans to cut down on whatever risks are present in the market currently. Apart from investing in the soft drink and snacks market, PepsiCo is also planning to expand into the agriculture part so that this will give a better part of control over the raw materials needed or production of food and beverage.

In July 2010, Carrefour, which is a retail giant, successfully acquired 51% stake in Hebei-based supermarket operator Baolongcang for an undisclosed sum. Apart from Carrefour, there were a whole lot of other retail chains which were vying for the deal. This speaks volumes about Chinese MGR’s long term potential. But on the downside, the research shows that the Chinese economy could be heading towards a slowdown and this would be coupled with a burst in the property bubble as well. The direct result of this would be that there is going to be a slight waning of China’s competitiveness in exports.