New markets key for grocery brands

LONDON: Brand owners in the grocery category will gain major benefits from ramping up their focus on key emerging markets like Brazil, Russia, India and China, a report has suggested.

IGD, the specialist research firm, recently published its latest annual study of the sector, and estimated that China has now surpassed the US as the biggest single retail outlet for these goods worldwide.

More specifically, it stated that sales in the Asian nation hit £607bn in 2011, versus the £572bn posted by the US. Japan took third place, some way back on £254bn, ahead of India on £244bn.

"Despite its various logistical and bureaucratic challenges, China is a crucial growth market for many of the world's largest grocery retailers," said Joanne Denney-Finch, chief executive of IGD.

"Even beyond the major cities there are huge opportunities: forecasts suggest there will be over 200 Chinese cities with a population over a million people by 2025. But given China's size and diversity, it's essential not to treat the country as one homogenous market."

In further evidence of China's importance, IGD predicted domestic revenues would stand at £918bn by 2015, tripling the amount for 2006, due a mixture of inflation plus economic and population growth.

Totals for the US are pegged to reach £675bn in 2015, when India should be third in the rankings on £385bn. Russia is also in line to witness an improvement from £198bn to £292bn.

As such, it will overtake Japan, where sales at the end of the forecast period are anticipated to come in at £263m, thus also falling behind Brazil, where the grocery segment should expand from £212bn in 2011 to £287bn by 2015.

"All the BRIC nations have been steadily increasing in value and by 2015 they are tipped to dominate the top five grocery slots, and many UK food and grocery companies are already pursuing this opportunity," said Denney-Finch.

Turning to Europe, France will see revenues rise from £187bn to £206bn. This can be compared with lifts from £143bn to £162bn for the UK, and from £144bn to £144bn for Germany.

"In the UK, we expect the online sector to perform well, with internet sales boosted by the increasing use of smartphones and tablet computers," Denney-Finch added.

Data sourced from IGD; additional content by Warc staff, 5 April 2012

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