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China overtakes US as world’s biggest grocery market

China overtakes US as world’s biggest grocery market thumbnail

China has overtaken the United States 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 £1tn 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 £607bn at the end of 2011, while the US market slipped to second place at £572bn, IGD says in a report on Wednesday . The UK was the world’s ninth largest grocery market.

The researchers forecast that China’s market will grow at twice the pace of the US to be worth £918bn by 2015.

“China’s grocery growth story is phenomenal,” said IGD’s chief executive, Joanne Denney-Finch.

“Despite its various logistical and bureaucratic challenges, China is a crucial growth market for many of the world’s largest grocery retailers. Even beyond the major cities there are huge opportunities: forecasts suggest there will be over 200 Chinese cities with a population of over a million by 2025.”

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, noting that more than 50% of the world’s population lives in the region.

“This reflects a broader shift in the global economy to the Asia Pacific region. Asia Pacific 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. So while consumers seem to be benefiting in some ways, they are also facing pressures they have never seen before.”

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 says all the Bric nations – Brazil, Russia, India and China – present retail opportunities for UK and other companies. It forecasts they will all be in the top five grocery markets by 2015, with India displacing Japan as the world’s third largest grocery market by value.

Chains such as Tesco have already been expanding in emerging markets. The UK-based retailer opened in China in 2004 and now runs more than 100 stores there while also pushing online sales and opening a number of shopping malls. China is its strongest performing Asian market in terms of sales growth according to its most recent results, but at 4 million customers a week Tesco’s business there is dwarfed by the more than 20 million weekly shoppers it serves in the UK.

IGD estimates that international grocery retailers could open more than 2,700 stores in China over the next four years – around 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,” said Denney-Finch. “And as disposable incomes grow, Chinese consumers will be increasingly willing to buy premium groceries.

“But, as with any other market, there are several challenges to doing business in China. It is not always easy to open new stores, because legal requirements can make the process slow and arduous.”

The grocery boom brings mixed blessings for China’s population, nutrition experts warn. Many rural parts suffer from malnutrition while urban areas are being increasingly served by outlets offering less healthy convenience foods.

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

He pointed to further pressures from a rising demand for animal protein. “Today we don’t know how we are going to produce all the protein that is going to be demanded globally.”

The Guardian

10 Comments on "China overtakes US as world’s biggest grocery market"

  1. DC on Wed, 4th Apr 2012 11:24 am 

    Just like China fell for our Cars-only transportation idea, now there falling for our Big-Box Grocery stores filled with industrial pseudeo-food too! Were only vaguely beggining to grasp just how bad the sitation is here in N.A. with a tiny cluster of immensely powerful corporations controlling virtually all our food. From farm to big-box. I sometimes wonder what all those high scoreing chinese math science students are actually doing over there. There sure not getting jobs as govt advisors. Maybe they should train a few more experts in western history, economics and sociology. If they did, they could tell them what a huge mess weve made of things and w/e we are doing-do the exact opposite!

  2. BillT on Wed, 4th Apr 2012 2:13 pm 

    Ah, but they are going to be Number 1 soon, and then it will not matter. After all, the government controls everything and that includes the food chains. Capitalism does not go as far there as it does here in the Us. The Leadership needs to keep the lid on that billion plus population and will not let multi-nationals ruin that control. That is why they are shedding dollars as fast as they can without causing a panic and setting up their own currency for trade with all their new trading partners which are most countries south of the Equator, Russia, Central Asia and East Asia. In other words, about 4+ billion of the world’s 7 billion.

    I see a nationalization of all Western corporations in China at some point. They will soon have enough Us trained engineers and executives to run the corporations now built in China. No? Why not? How many oil fields that used to belong to western corporations now are owned and controlled by the governments of those countries. That can happen to any and every other corporation just as easy. What can they do about it? Sue? lol.

  3. Welch on Wed, 4th Apr 2012 10:13 pm 

    The shoppers are a lot more sexy too.

  4. Arthur on Thu, 5th Apr 2012 8:14 am 

    Indeed Welch, obesity is not really a problem in the eurasian landmass. And it certainly is not going to be a problem in the future. Come to think of it, one of the few advantages of the resource depletion story is that the entire world will be freed of the obesity problem.

  5. Arthur on Thu, 5th Apr 2012 8:33 am 

    The current situation, namely globalism with globalist institutions like IMF, UN, WTO, dollar, etc., under a semi-hegemonic US, is not going to last until the sun will burn up in two billion years (or is that a lie as well? Peak-sun?lol). My guess is that it will be China that at some point will blow up the current order, likely because it will be forced to do so when the US will cross the Iranian Rubicon. At that point China will say to the US: thank you for your industries, we are not going to finance your deficits anymore, nor are we going to deliver goods to you in exchange of green toilet paper and, oh yes, this morning at four a.m. twohundred thousand paratroopers were dropped in Taiwan. Furthermore, we deny that a land army of another two hundred thousand men just crossed the Chinese-Afghan border and is on it’s way to secure the Iranian oilfields.

  6. BillT on Thu, 5th Apr 2012 12:13 pm 

    Hahahaha…thanks for the clear view of the situation, Arthur. Too bad so many don’t believe that this can, and likely will, happen. The Chinese have this Empire thingy down pat. After all China IS one of the oldest countries in the world and contains 12% of the world’s people. If they only send 200,000 to Iran, I would be surprised. With 3 million active and reserve and more able bodies men and women in the age range for military service that there are total people in the US. They are even more able to take over any country they want than the Muslims, Indians, or Russians.

  7. Arthur on Thu, 5th Apr 2012 2:04 pm 

    China needs a lot of troops at home to keep it’s own civilians in check. And besides, China probably lacks the means of transporting millions of troops over 1000 miles. Last week there was this strange news item about the chinese government shutting off a lot of website’s on rumours that a nationalist hardliner Bo Xilai had made a coup attempt. China might be an ‘old and wise’ civilization, in the past century it was not resistent against the marxist horrors, just like Russia. Chinese are very nationalistic, or ‘racist’ as the ADL prefers to call it. I am afraid that China, once pressed with the back against the wall due to resource starvation, might turn agressive/fascistoid authoritarian nationalistic and get rid of Marx & Engels altogether. That moment could come at the first signs of an economic downturn. And that will come as soon as the oilflow recedes, that is soon.

  8. Kenz300 on Fri, 6th Apr 2012 4:42 am 

    China’s population 1,347,350,000 December 31, 2011

    United States, population 313,303,000

    China and India both will surpass the US in everything. China is already the worlds largest auto market.

    Too many people and too few resources. And yet the world added a billion people in the last 12 years and is still growing.

  9. Arthur on Fri, 6th Apr 2012 9:15 am 

    I think nobody is going to overtake anybody in the long run. Ultimately the boxers will leave the ring in search for a piece of bread and will have no energy to organize a planetary fight. But that is in the long run. Now they still can.

  10. Arthur on Fri, 6th Apr 2012 9:17 am 

    There is a possibility that China actually already has surpassed the US economy.

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