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RetailStaff WriterWed 08 Feb 17

Conquering The Chinese F&B Market: JLL

iStock-607741582_620x380

In partnership with LocalGravity, JLL recently released a report which analyses the factors that can help or hinder global food and beverage (F&B) giants in their efforts to conquer the China market.

In the retail research report,

Foreign F&B Expansion in China, JLL and LocalGravity conducted a study on recent store openings by 32 well-known international F&B brands that are expanding their China presence.

They examine the brands’ expansion strategies in 2015 alongside a number of variables, ranging from their country of origin to the wealth levels of target cities.

The report found that food and beverage remains one of the country’s most active areas of growth, as overall expansion rates for the 32 F&B brands contained in the report were high at over 20% y-o-y in 2015. The sector continues to be a major growth contributor to the country despite signs of slower expansion in 2016, the report said.

Chinese cities were also ranked in a tier system after going through the report's grading system, which used 30 property and economic indicators to score each city according to demand potential for commercial real estate.

As a result, the report determined that the top level (Tier 1) consists of four cities - Shanghai, Beijing, Guangzhou, and Shenzhen. Their “Tier 1.5” describes the upper echelon of Tier 2 cities that are either wealthy satellites of the Tier 1 cities (such as Hangzhou, Nanjing and Tianjin) or are distinct regional centres for areas such as west China (Chengdu), central China (Wuhan), and northeast China (Shenyang).

The report found that while expansion in coastal areas and Tier 1 cities continues, lower tier cities overall were more active with brands becoming more confident about farther afield regions.

"There is some risk in the less-wealthy provincial capitals, where many brands have over-expanded, having failed to assess the potential of provincial capitals individually," the report said.

Smaller café-format shops that sell coffee, tea and ice cream were the most active category, expanding at over 30% y-o-y in 2015.

Most F&B chains, especially in the south, experience strong regional bias and have the potential to rival the figures in wealthy east China. According to the report, many brands have established a presence in eastern cities, but their demographics indicate potential for additional expansion.

RetailInternationalAustraliaSector
AUTHOR
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"TheUrbanDeveloper.com is committed to delivering the latest news, reviews, opinions and insights into the best of urban development from Australia and around the world. "
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Article originally posted at: https://theurbandeveloper.com/articles/conquering-chinese-fb-market-jll