May 01, 2012, to June 01, 2012
Brands from the United States and France are dominating the Asian cosmetics market, according to GDM Group USA CEO Judith Higgins and her partner Chris Han. The marketing specialists said that online sales and the use of celebrity endorsers are the most effective means of building up new brands in the market. Total sales of cosmetics in China are expected to reach RMB 220 billion, or $34.7 billion, by 2015. Higgins and Han said that in communicating with Asian consumers, cosmetics companies should make their target audience feel important. For example, L'Oréal used the slogan "Because You're Worth It."
With snack food sales essentially stagnant in the U.S. for the past two years, manufacturers are marketing their products -- some with slightly different formulas -- overseas. The timing is right, because busy people in developing countries like China and India are acquiring a taste for “on-the-go” American snacks. But there's a slight problem with the strategy: the flavors of snacks like Oreos and Lay’s potato chips have had to be tweaked to suit regional tastes. For example, Kraft fiddled with the Oreo recipe when it learned that the Chinese don't like treats as big or as sweet as Americans do. The result is an Oreo cookie that is a little smaller and a bit less sweet.
Procter & Gamble refuted online allegations made by some Chinese consumers that its Crest toothpaste sold in China is made of industrial wastes and does not contain fluoride. A complaint posted by a Hong Kong resident became popular online and has been reposted more than 35,000 times, generating more than 5,000 comments. P&G posted a report by the quality testing center for toothpastes showing that Crest toothpastes had passed tests conducted in October 2011 and met national standards requiring fluoride toothpastes to contain 0.05–0.15 percent of fluoride.
April 01, 2012, to May 01, 2012
Avon Products Inc. group vice president Kerry Carr resigned her job in connection with the probe by the U.S. Department of Justice and the U.S. Securities and Exchange Commission into possible violations by the company of the Foreign Corrupt Practices Act, which prohibits American companies from bribing foreign government officials. U.S. prosecutors are focusing on a September 2005 internal audit report by the company, which found Avon employees may have been bribing Chinese officials.
Procter & Gamble is among companies included in China's Top 100 Green Companies, a list of enterprises honored for their sustainable business operations in the country. The list, prepared by the China Entrepreneur Club in partnership with Daonong Center for Enterprise and the Green Herald Magazine, considers how companies "blend the right values into their business models;" remain true to business ethics and bottom line while "living in harmony with men, society, and nature; and face with resolve problems that impede sustainable development in their industries.
Procter & Gamble announced expansion plans in China and emerging markets that could mean more problems for its largest rival Unilever. P&G began constructing a new factory in Guangzhou, China, and unveiled plans to cut costs by $10 billion by 2016. Also, the company plans to build 20 manufacturing facilities in Brazil, China, and Eastern Europe by 2015.
March 01, 2012, to April 01, 2012
Guangzhou Shiqi Cosmetics Co. Ltd. filed an appeal with the Beijing High People's Court to annul the Beijing Number 2 Intermediate People's Court's ruling that the cosmetics company's ZMShike trademark violates the copyright of Smith Kline & French Laboratories, a subsidiary of GlaxoSmithKline. Shiqi Cosmetics denies the allegation although the ZMShike trademark uses the same Chinese characters and is pronounced the same way as SK&F.
Following a lawsuit that alleges that Avon, Estee Lauder, and Mary Kay “purposely defrauded consumers by falsely claiming that their products were ‘cruelty free’ while undertaking animal testing in order to sell their products in China and reap hundreds of millions of dollars in Chinese sales”, Avon defended its position. The company claimed that for over twenty years it has been committed to not testing on animals ‘except where required by local law’ and that that some governments require the company to perform additional product safety tests.
UK-based pharmacy and beauty retail chain Alliance Boots announced its expansion plans in Asia for the next five years. Prevented from acquiring more companies in UK and Europe by the European Union's anti-trust rules, the company has shifted its focus on the Asian market currently limited to Thailand, where the company recently opened its 200th store, and China, which recently revised its rule prohibiting foreign retailers from owning more than 30 stores to allow more foreign investment.
October 01, 2011, to March 01, 2012
Unilever chief operating officer Harish Manwani said multi-national companies must be flexible enough to manage challenges posed by the need to balance inflation and growth in emerging markets, which are also affected by the global economic slowdown. He added that emerging markets will account for up to 70 percent of Unilever’s business and revenue.
Chinese shoppers who are buying more premium products and expanding their overall consumption of fast moving consumer goods (FMCG) contributed to an 18 percent growth in FMCG value in China in 2011, though the primary driver was inflation, according top researcher Kantar Worldpanel. The big winner during the last quarter of 2011, in terms of market share, was Walmart, which now claims 7.8 percent of the Chinese FMCG market. Other top retailers, meanwhile, are struggling, either remaining level or losing share, as Carrefour did. It’s a tough battle for international retailers, who are enduring considerable competitive pressure from China’s local retailers, who are dominant outside of the four key cities: Shanghai, Beijing, Guangzhou and Chengdu.
International brands, such as L'Oreal and Gucci, have to compete with Shanghai Jahwa United Co. and other local manufacturers in the $33.7-billion luxury market in China. Previously associated with producing cheap counterfeits, China's consumer brands are shifting their attention to the high-end market, which is driven by increased consumer wealth, a growing middle class, and overall economic growth.
September 01, 2011, to October 01, 2011
Chinese food and beverage company Nutrastar International said it plans to significantly expand its organic and specialty food consumer products business over the next year and a half. Production capacity expansion will total 890,000 square meters on the existing production grounds. The company said it will add hundreds of greenhouses with an annual projected organic production capacity of 6.5 million kg. The company’s current consumer product businesses include a specialty mushroom line and several beverage lines. The company is taking advantage of local government initiatives – sparked by China’s food safety problems – that provide financial support through subsidies to organic and green producers.
French retail chain Carrefour reported a 2.3 percent increase in sales in the first half of 2011 to €39.6 billion ($56.3 billion), but a drop in profit of €927 million ($1.3 billion), compared to a profit of €14 million a year ago. The company attributed the drop in profit to “unsatisfactory performance” in France and a “tough environment” in Europe. Weak sales and unsatisfactory profit performance were the key problems in France, along with underperformance in Italy and Greece. Latin America, however, experienced solid growth in sales, and included an “encouraging turnaround” in Brazilian hypermarkets. The company also reported good growth in China and a confirmed recovery in Taiwan.
PepsiCo has launched an initiative with the People’s Republic of China to promote sustainable agriculture projects and accelerate the development of the Chinese countryside. The company will work with China’s Ministry of Agriculture to build and operate demonstration farms that apply advanced irrigation, fertilization and crop management techniques. According to PepsiCo, they will also promote best practices in China's farming system to improve yields, increase income levels and raise living standards for farmers throughout the country. The partnership underscores the company's support for China's 12th Five-Year Plan, which establishes objectives for developing sustainable agriculture and speeding up agricultural modernization.
August 01, 2011, to September 01, 2011
Herbalife plans to increase its manufacturing operations in order to make more products in-house and also either boost margins or reduce prices. The company is looking at Brazil, India, and Eastern Europe have emerged as possible sites for the planned factories which forms part of its effort to produce 80% of its products in-house by the end of the decade. Herbalife is doing well direct-selling its supplements: revenue grew 27.7 percent to $879.65 million in the quarter ending June 30. and it aims to triple sales by 2020 by expanding its presence in emerging markets and enhancing distribution in mature markets. Sales dropped slightly in China as it transitioned to a daily consumption model, but surged 121 percent in India, while Mexico and Asia Pacific saw double-digit growth rates.
Estee Lauder plans to open more retail outlets in China, adding five more cities to the 38 it currently has. It also indicated it will launch ecommerce channels in the country which is now the world's third-largest market for cosmetics and toiletries. Estee Lauder's sales grew 13 percent in 2010, with China accounting for a large part of the jump in sales. Chinese consumers no longer look at cosmetics as luxury items are and increasingly are able to purchase a wide range of products in the country rather than overseas. The market is increasingly competitive and other cosmetics companies are expected to follow Estee Lauder's move.
Coca-Cola Company and bottling partners Swire Beverages Ltd. and COFCO Coca-Cola Beverage Co., Ltd. plan to invest US$4 billion in China over the next three years from 2012. The companies aim to enhance the sustainability of their operations in China and will have invested more than $3 billion in the country for the last three years, by the end of 2011, with total investments reaching $7 billion in 2009-2014. Coca-Cola's sales grew 6 percent worldwide, according to its second quarter 2011 financial results. China accounts for 7 percent of the global volume of Coca-Cola, which now operates more than 40 plants in the largest and fastest-growing consumer market.
July 01, 2011, to August 01, 2011
Stevia developer GLG Life Tech Corporation has created a subsidiary to provide naturally sweetened zero and reduced calorie food and beverage formulations to customers outside mainland China. AN0C Stevia Solutions Company’s product lines will include natural sweeteners, natural flavors and natural colors in zero or low calorie beverage and food products. AN0C Stevia Solutions will focus on customer opportunities internationally; AN0C Anhui will focus on opportunities in China, Taiwan and Hong Kong. AN0C Stevia Solutions is also developing customer opportunities in the Middle East and India.
Nestlé has agreed with the Hsu family to acquire 60% of Hsu Fu Chi, a Singapore-listed manufacturer and distributor of confectionery products in China. The Hsu family will retain 40% of the company, with Hsu Chen remaining as CEO and chairman of Hsu Fu Chi. Nestlé offers to buy the shares of the company's independent shareholders who account for 43.5% of the shares in Hsu Fu Chi as part of the deal, which is subject to approval by regulators in China.
China's organic food market has grown significantly and now accounts for 5% of the world trade in organic foods, with the country ranking third in terms of size of organic farmland. Data from the China Organic Food Certification Center shows that China's organic food exports reached $350 million in 2006 (the latest data available). Chinese exporters take most of the organic produce to markets in Hong Kong, Japan, and Taiwan. Some observers believe that the exports sector is the leading factor driving the organic food market's growth, while some analysts assert that domestic demand is the major growth driver.
May 01, 2011, to July 01, 2011
Dutch food and beverage ingredients company Royal DSM announced that it has closed a joint venture agreement with privately-held biotechnology company Yixing QianCheng Bio-Engineering Co Ltd for QianCheng’s food enzyme activities. The JV creates a new company DSM (Jiangsu) Biotechnology Co. Ltd. DSM says the global market for enzymes amounts to € 2 billion and is growing by 6-8 percent per year. The Chinese market for food enzymes is one of the world’s largest and is experiencing growth rates far above the global average. DSM is the majority shareholder in the joint venture with 85 percent of the shares. Yixing QianCheng Bio-Engineering Co Ltd will own the remaining 15 percent.
Consumer goods manufacturers in China, including food companies, are launching products with smaller packaging to manage production costs. Smaller sizes also help companies to protect their bottom lines without running afoul of the National Development and Reform Commission's anti-inflation policies that encourage companies to maintain their prices. China's government, fearful of inflation's possible impact on economic growth and stability, are very sensitive of price increases and recently fined Unilever $300,000 for announcing future price increases in the media. Examples of smaller packaging moves include Cofco Coca-Cola Beverages Ltd.'s and Pepsi's release of 500-milliliter bottles and Master Kong's introduction of 450-milliliter juice bottles.
Researchers in China, Canada and the U.S. who studied the impact of monosodium glutamate (MSG) on metabolism found a positive association, regardless of calorie intake, between the flavor enhancer widely used in Asian cuisine and weight gain. The study analyzed health data collected on more than 10,000 healthy Chinese adults from 1991 to 2006. They found that a daily intake of .6 g to 3.8 g was positively associated with being overweight, defined as a body mass index (BMI) of 25 or higher. The researchers urged further studies be undertaken to determine how MSG acts in the body, but they guessed that the compound influences energy balance through the disruption of the hypothalamic signaling cascade of leptin action.
April 01, 2011, to May 01, 2011
Women and older consumers across the world are generally more environmentally conscious overall, a new study from market researcher Synovate has found, while young people are the least eco-conscious. The study, which looked at “green” behavior globally, also found that the way people feel about the future, their family, and their country aren’t very important factors in determining green habits. Synovate asked 22,000 people in around the worldt about their recycling habits, purchase of ecological products, purchase of organic foods, etc. Women ranked higher than men across all green behavior categories, and people aged 56-65 years old ranked highest in recycling and buying ecological products. People 46-55 years old were more likely to buy organic food. Lowest green scores among age groups? Young people aged 16-25 years old. Data from the study were also broken down by country.
A six-month phase 1b clinical study conducted in China by Ohio State University researchers has found that eating freeze-dried strawberries has a beneficial effect on patients with esophageal precancerous lesions who are at high risk for developing the cancer. The researchers found that ingestion of strawberry as a treatment is not only safe and easy, the strawberries “decreased histological grade of precancerous lesions and reduced cancer-related molecular events.” The 36 participants ate about two ounces of freeze-dried strawberries daily over six months, after which biopsies were taken and analyzed. Twenty-nine of the 36 participants showed a decrease in the precancerous lesions, suggesting that strawberries might someday be used instead of or in addition to chemotherapy drugs for prevention of esophageal cancer.
Nestlé has acquired a 60 percent stake in Chinese food company Yinlu Foods Group for an undisclosed sum. Yinlu Chairman Chen Qingyuan will continue as the top executive under the new ownership arrangement, termed a “partnership” by Nestlé. The acquisition must be approved by Chinese regulators before it is finalized. A well-established household brand in China, Yinlu markets ready-to-drink peanut milk and canned rice porridge, and is a co-manufacturer of ready-to-drink Nescafé coffee in China. Yinlu’s 2010 sales were CHF 750 million (US$843 million). Nestlé has operated in China for more than twenty years, with 23 factories, two R&D centers and 14,000 employees.