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雷达卡
Issuing Date: Oct 14
Publisher: Credit Suisse
Page: 33
Language: English
SECTOR REVIEW
Watch This Space for M&A Activity
Following our trip to Shanghai for Credit Suisse’s first “Global Brands in China”
conference, this report provides some of our observations of consumer trends in
the small but growing packaged foods industry in China. On the basis of per
capita consumption, the whole concept of packaged foods is still in the early
stages of development in China, but numbers can be deceiving. Most of the
consumption is concentrated among wealthy consumers in the major cities
where category development and brand loyalties are already at an advanced
stage. The cultural barriers to introducing new categories are quite high.
Entering the market for the first time is now an expensive and difficult
proposition.
As a result, we expect the businesses that do have a head start in China to get
a lot of attention from potential acquirers. European titans like Nestle and
Unilever are much bigger than their American counterparts in China, so at first
glance it does not look like they need much help. But with the low hanging fruit
in the big cities now largely picked, these companies need to expand their reach
into the interior of the country to keep their growth curves steep. Broadening
their portfolios with acquisitions provides the critical mass that is necessary to
expand profitably. Increasing the “drop size” for customer deliveries provides
cost and revenue synergies.
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