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Imported food brands woo affluent mainland consumers

Exhibitors of imported foods and drinks at this year's Food Hospitality World China believe that the mainland's appetite for their wares shows no sign of being sated despite the premium prices of many of these popular products.

Photo: Imported foods – premium priced, but preferred by purchasers.
Imported foods – premium priced, but preferred by purchasers.

With the mainland now more open to imported food products than ever before, the timing of this year's Food Hospitality World China (FHW China 2013) could scarcely have been better. The event, held at Guangzhou's China Import and Export Fair Pazhou Complex, attracted exhibitors from across the world, including companies from Taiwan, the Netherlands, Japan, Brazil and Italy, as well as a substantial contingent from across the mainland.

Imported food and drinks are now a staple of every major mainland city and are increasingly popular with consumers. Much of their allure lies in their reputation for quality, guarantee of high food safety standards and their status as global brands.

A recent arrival in the imported dairy products sector is Taiwan's Dau Cheng Enterprise, the official distributor for the Taiwan Provincial Farmers' Association. The 40-year-old company has only been exporting to the mainland since August 2012, initially focussing exclusively on the Shanghai market. Such was the demand for its "imported from Taiwan" products that the company quickly expanded its operations across the mainland. At FHW, the company was showcasing its range of milk drinks, including its homogenised, chocolate, malt- and fruit-flavoured varieties.

The company's growth on the mainland has already far out-performed its expectations, according to its head of operations, Lisa Wang. Despite only being in the market for just over 12 months, Dau Cheng now has a network of distributors across the country, including representatives in Guangdong, Zhejiang, Sichuan, Chongqing and Jilin.

Its products are also now on sale in a number of mainland supermarket chains, including Aeon, Carrefour, Ole', etc. With its dairy brands now established, the company is now planning to introduce a number of Taiwanese seasoning sauces and edible oils.

An even more recent arrival to the mainland market is the Korean brand Duomeixiao and its range of banana-flavoured milk drinks. The Guangzhou Beipin Trade Co Ltd is the brand's mainland distributor and began importing the product in January of this year. According to Zhou Chen, the Head of Beipin Trade, despite the drinks being presented in their original Korean packaging, they have proved a huge hit with mainland consumers, with sales volumes doubling nearly every month.

As well as making inroads into conventional shopping outlets, online sales have become increasingly important for imported foods. Yihaodian, one of the mainland's most popular online supermarkets, currently offers a wide range of such goods, purchasing them in bulk from a number of recognised suppliers.

Describing the quality checks the online retailer undertakes, Wang Hai, Yihaodian's Customer Service Manager, said: "Any food and beverage products imported into China through official channels are subject to strict inspection by the customs authority, ensuring a high standard of quality for such items.

"The persistently high number of food safety scares on the mainland has seen many consumers turn to imported food. There is a belief that overseas brands are of a higher quality and are less likely to be adulterated than their domestic counterparts. Many companies have been swift to recognise the huge opportunities offered by this preference for imported foodstuffs."

Domestic suppliers versus importers

With many domestic manufacturers offering similar products to those now being widely imported, the scene would seem set for an intense battle for market share across the mainland. Despite this, though, many importers do not see any real conflict with their domestic counterparts.

There is a widespread belief that imported items appeal primarily to medium and high-end consumers, with many making purchase decisions based on quality and brand reputation rather than on price.  With the majority of domestic manufacturers favouring a low-price proposition, it is thought that that two food sectors are targetting largely separate demographics.

According to Wang, as the income levels and purchasing power of Chinese shoppers continue to rise, quality has become far more important than price for many affluent consumers. This has seen imported foodstuffs targeted, almost exclusively, at these high-end purchasers.

In line with this, the packaging of many of these imported items has adopted a distinctly upmarket feel. Dau Cheng's milk drinks, for instance, are packaged in vacuum-formed glass bottles. Of course, the content has to have a quality that matches its exterior presentations.

With this very much in mind, Wang emphasises that there are no additives or preservatives used in the company's milk drinks. All of its products, she says, undergo an ultra-high temperature sterilisation process and, as a result, should stay fresh for around eight months.

Emphasising the importance of quality control to the brand, she said: "Our milk is 100% pure, while our flavoured milks have a raw milk content as high as 50%. This cannot be matched by the milk drinks produced by any mainland supplier."

At present, Dau Cheng sells its milk products for around Rmb13 per 250 ml bottle, a price point around twice the cost of a domestic brand. Despite this price differential, the product has still proved highly popular among the more affluent consumers.

Another Taiwanese company taking a distinctly high-end approach to mainland market is The Relishing Travel Cakes Cultural Building. During the course of the fair, the company's self-produced pineapple cakes attracted considerable attention, thanks in part to their distinct visual appeal and elegance.

According to Kelly Gong, Head of Cultural Building, the company only uses Tainung No.17 pineapples [one of Taiwan's most highly-regarded pineapple varieties] in the filling, while the cheese used in pastry is directly sourced from Germany. The company prides itself on the fact that its cakes are made from 100% natural ingredients, with no additives or preservatives used in the process.

Photo: Cream of the crop: a variety of Taiwan dairy products from Dau Cheng Enterprise.
Cream of the crop: a variety of Taiwan dairy products from Dau Cheng Enterprise.
Photo: Handmade imported pineapple cakes from The Relishing Travel Cakes Cultural Building.
Handmade imported pineapple cakes from The Relishing Travel Cakes Cultural Building.

Explaining the company's approach, Gong said: "Today, more and more mainland consumers have developed a taste for 100% natural high-end food. Seeing an opportunity to introduce our products across China, we began exporting there last November."

To ensure consistent product quality, the company has opted not to use mass production techniques, preferring to handmake its products and restrict them to an exclusive group of consumers. Currently, its cakes are only available in certain duty free shops and a number of high-end mainland restaurants, while it has maintained a deliberate policy of not supplying supermarkets. Although a thumb-sized slice of its premium pineapple cake retails for a relatively costly Rmb10, it still attracts a substantial number of consumers.

Aside from fine Taiwanese confectionery, a number of other products, both domestically-sourced and imported, attracted considerable attention during the course of the event. Among a sizeable Italian contingent was Farchioni Extra Virgin Olive Oil (distributed by Beijing JoyTang International Trade) and a number of chocolate products – including one with a chilli flavouring – courtesy of the Grande Company.

On the domestic front, the stand of the Guangzhou Huaqi Biotechnology Company featured its range of Lingzhi pork products. These items were all sourced from pigs fed with Lingzhi mushrooms, a traditionally healthy ingredient and one used widely in traditional Chinese medicine applications.

Growing significance of e-commerce

As in many other retail sectors, the importance of online channels is now starting to rival that of more conventional, non-digital outlets. This is particularly important in sectors such as imported food, where margins are not high and volumes are potentially low.

In line with the majority of its competitors, the Guangzhou Beipin Trade Co Ltd now places great emphasis on its e-commerce activities. A number of its products, including its Duomeixiao banana flavoured milk drinks, are now heavily promoted online.

Explaining the company's decision to go digital, Zhou said: "Many of those that buy our milk drinks enjoy a stylish and fast-moving lifestyle, and the Internet has become very much the hub for this particular demographic. Online shopping websites are now an important means for us to approach these consumers." At present Beipin Trade Co Ltd's products are available across a number of e-commerce websites, including the Yihaodian online supermarket, Jd.com and Suning.com.

Photo: FHW 2013: the mainland's important importer forum.
FHW 2013: the mainland's important importer forum.

Dau Cheng is another importer to make use of the Yihaodian online supermarket platform. According to Wang, the Internet has proved an ideal medium for brand promotion, leading the company to prioritise its e-commerce activities.

Yihaodian's Wang sees e-commerce websites serve as providing win-win opportunities for both consumers and vendors. He particularly cites a number of the online supermarket's special promotions as offering consumers discounts, while acting to boost overall sales levels for suppliers. He believes these promotions also encourage sampling, expanding the range of produce that consumers are both familiar and content with.

Food Hospitality World China 2013 (FHW 2013) was held at Guangzhou's China Import and Export Fair Pazhou Complex from 12-14 September.

Xing Ping, Special Correspondent, Guangzhou

Content provided by Picture: HKTDC Research
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