U.S. Grocery Market Will Be Dwarfed By China In Just Three Years

Articles
June 07, 2012

U.S. Grocery Market Will Be Dwarfed By China In Just Three Years

As population growth in the United States has slowed in recent years a number of U.S. based firms have stepped up their activities overseas, noted the latest FOOD INSTITUTE REPORT.

As population growth in the United States has slowed in recent years a number of U.S. based firms have stepped up their activities overseas, noted the latest FOOD INSTITUTE REPORT.  Indeed, emerging global markets are expected to account for a full quarter of HJ Heinz sales in the near future, according to a recent webcast when Pittsburgh, PA-based firm reported sales of $11.65 billion for the fiscal year ended Apr. 29. And during the presentation, data about the growth in those markets made it apparent why the ketchup and baby food maker is so optimistic.

According to Heinz and projections from the Institute of Grocery Distribution, (IGD), China became the world’s largest grocery market in 2011, surpassing the United States for the first time with sales of $975 billion, compared to $919 billion domestically. And that gap will grow rapidly by 2015, when IGD projects China’s grocery market will be 36% larger than the U.S., totaling $1.475 trillion. Looking at it another way, China’s grocery market compound annual growth rate (CAGR) is projected to be 15% from 2011- 2015 compared to just 4% in the U.S.

“All the BRIC (Brazil, Russia, India, China) nations will be in the top five grocery markets by 2015,” stated IGD. Joanne Denney-Finch, the group’s chief executive explained why, stating “China’s rapid expansion has been fuelled by three main factors: rapid economic growth, population and rising food inflation.

For Heinz, emerging markets are expected to surpass its developed market sales in the ketchup and sauce category by 2018, when they are projected to hit $80 billion – or a 9.6% CAGR. The 2006-2011 CAGR for more developed markets is seen at just 2.1%, reaching $78 billion by 2018.

Meanwhile, Heinz notes that one-third of all births in the world occur in India and China, with India actually outpacing China, with an estimated 25 milllion births annually, compared to China’s 17 million. Meanwhile, births in the U.S. total about 4.3 million annually, accounting for only 3% of the world total. Heinz reports that of 40% of its infant/nutrition sales come from emerging markets already, which is not surprising considering the birth rates.

To keep on what major players in the food industry are doing in the U.S. and abroad, be sure to turn to the Food Institute Report and the food institute website at www,.foodinstitute.com.