Significant rises in wages across China has led the country’s food and grocery market to rapidly expand to become worth $1000bn, making it the world’s largest grocery market, according to a report by consumer goods research company IGD. There has been a surge in the number of high-income earners in China, which has led to soaring demand for new products and brands. IGD predicts that China’s food and grocery market will be worth $1500bn by 2016.
China has become a draw for international retailers and, according to greenfield investment database fDi Markets, between 2003 and 2013, China received the most greenfield investments in the retail sector globally. In this period, China's consumer goods sector and food, beverage and tobacco sector attracted a total of 1151 greenfield projects, worth $4.7bn.
“International and domestic grocery retailers are expanding quickly in China with diverse formats,” said Joanne Denney-Finch, the chief executive of IGD. “This not only creates new supply chain opportunities for manufacturers, but also presents a wealth of choice for Chinese shoppers. For food and consumer goods companies, the Asia-Pacific and Latin American grocery markets offer long-term growth opportunities, with many businesses already profiting from entering them.”
The US was the second most attractive market for food and grocery companies between 2003 and 2013, attracting 935 FDI projects in the period. IGD predicts that the country’s grocery market will be worth $1100bn in 2016.
IGD has identified several markets in which strong growth is likely to occur over the next few years. It said that retailers will ramp up their investments in India, which is home to an estimated 1.2 billion people and, in three years, its grocery market could grow to become worth $566bn, which would make it the third largest market in the world.
IGD predicts that Brazil, the largest market in Latin America, will become the world’s fourth largest grocery market by 2016, worth an estimated $468bn, while Russia will be the fifth largest market with a grocery market worth $467bn.
“Over the next few years, Brazil will be hosting big sporting events such as the World Cup and Olympic Games, presenting a further boost for its economy and for the performance of retailers in the region,” said Ms Denney-Finch. “By 2016, the top 15 global grocery markets will have a total value of $6500bn. The top five – the US and the BRICs – will increase their share to a combined value of $4200bn.”