3 Reasons China’s Grocery Market Continues to Boom in 2018 - BizVibe

China’s grocery market benefits significantly from the country’s booming food and beverage industry, as well as its tremendous retail sector. For decades, the grocery market in China has enjoyed one of the world’s fastest growth rates, thanks to its rapid urbanization and increasing number of middle-class consumers, and an improving food and beverage infrastructure. With the emergence of E-commerce grocery retailing and trends like China’s meat consumption on the rise, China’s grocery market growth is expected to continue.

 

The State of China’s Grocery Market

 

Spending on grocery has continuously increased in China. According to a report from China’s Bureau of Statistics, grocery spending accounted for around 37% of total household expenditures, or about RMB 2,900 in 2005. Only a decade later, grocery shopping accounted for approximately 31% of household expenditure, or nearly RMB 4,100 in 2015, meaning that while the disposable income increased, the money spent on grocery in China also increased by 41% over the ten-year period.

 

The market report from Ken Research indicates the grocery sector in China represented 67% of the country’s overall retail sales in 2015. It is expected that China’s grocery market will achieve steady growth over the next few years. The food and grocery retailing market in China is forecasted to grow at a CAGR of 11.17%, to reach an estimated value of RMB 25,982 billion by 2020. Chinese grocery online spending on food and grocery is projected to grow at a CAGR of 34% during 2015-2020 period. The biggest supermarket in China is China Resources Vanguard (华润万佳), followed by RT-Mart (大润发), and Wal-Mart (沃尔玛)

 


Must Read: Top 10 Largest Food Retailers in China


 

The Supermarket Comparison

 

Currently, supermarkets and hypermarkets are dominating China’s grocery market in all major cities, and their ongoing expansion to smaller cities is expected to further enhance the competition in the market. Among all the sale channels over the next few years, hypermarkets are expected to achieve the highest growth rate, followed by convenience stores, due to consumers’ rising disposable incomes and preferences for convenience and modernized lifestyles. When it comes to product type, packaged food, and products that address other consumer concerns, such as health and food safety, are expected to be more popular in China’s grocery market.

 

Must Read: What Makes Superfoods so Super?

Grocery E-commerce Trends

 

In recent years, E-commerce has been a key driver for grocery market growth in China. Today, over 10-30% of retail imported food and drink products are sold through E-commerce channels in China. Almost all major online retailers and platforms such as Amazon, JD, Tmall, Womai, and YHD, sell food and beverage. Other niche grocery retailers also sell fresh fruit, imported wine and spirits, cakes and nuts via their E-commerce platforms.

 

Must Read: Amazon Acquiring Whole Foods at $42 a Share

 

Grocery market growth in China is expected to see a stable performance over the near future. Although the overall number of grocery retail outlets is anticipated to decline, due to growing pressure caused by rising rental costs and the growth of the Chinese grocery online retailing, the market value growth is still estimated to be positive, mainly driven by rising disposable incomes with growing demand for healthy and high-quality food products.

 

Updated in 2018.

 

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