Business / Industries

Snack food enjoys healthy growth

By Wang Zhuoqiong (China Daily) Updated: 2014-11-28 08:21

Though the fast-moving consumer goods market has witnessed slower growth this year, the snack food segment has managed to buck the trend with good growth rates.

According to a new study from Kantar Worldpanel China, a consultancy that specializes in fast moving consumer goods, the snack foods sector posted average growth of 10.6 percent for the 12-month period ending October, compared with 5.6 percent growth for the whole food sector in the same period.

"We expect the relatively strong performance to continue for the rest of the year also, as consumers are willing to spend more on snacks to enrich their lifestyles," said Jason Yu, general manager of Kantar Worldpanel China.

"The real stand-outs in terms of growth have been: yogurt at 18 percent, chocolate at 16 percent and biscuits at 12 percent."

In the more "Western" snacks like chocolates and biscuits, multinational brands are still the leaders in market movement and innovation. Most of the local brands are just followers in this segment, the Kantar study said.

Citing the example of chocolate, where brand and product heritage are more important, the study said international brands like Snicker's, M&M's and Kisses are clearly the market leaders. Most of these brands have launched family sharing packs to further increase their product penetration, it said.

Mondelez International Inc, which saw its market share grow from 15.1 percent in 2012 to 15.9 percent in 2013, is the market leader in the snack foods segment. Nestle SA, Want Want Holdings Ltd and Ting Hsin International Group are the other key players.

For Mondelez, Yu said the key innovation this year has been the Oreo Thin, which was launched six months back. Though the new product has been performing well in the market, it is still too early to make any firm conclusions, he said.

A significant outcome of the trends during the last 12 months has been the shift in market priorities, Yu said. Global brands that used to focus on top-tier cities earlier are now expanding aggressively in the lower-tier cities. However, the companies also face challenges like increasing brand availability, Yu said.

"They have to rely more on traditional wholesalers and distributors to make their products accessible to ordinary consumers." Hence the ability to navigate through the complex distribution system in China often becomes a challenge for these companies, he said.

"Companies will need to partner more closely with key modern trade retailers, especially local and regional retailers, to drive the same shopper experience as they do with their global partners such as Walmart and Carrefour stores.

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