How to Make the Most of a US$2.4 Trillion Opportunity in Asia

The grocery markets of China and India are set to grow in double digits and be worth US$2.4 trillion by 2020, according to the latest forecast by food and grocery researchers IGD.

IGD states that growth in “lower tier” middle-income cities and more mergers and acquisitions in China, which is the biggest grocery market in the world, are expected to be key influences shaping this market over the next five years. Chinese grocery sales are set to grow by a third between now and 2020, reaching US$1.5 trillion per year, according to IGD’s forecasts.

Joanne Denney-Finch, IGD’s Chief Executive, says, “China will maintain its position as the world’s biggest grocery market for the foreseeable future. Although the Chinese growth rate is slowing, it’s still very impressive, particularly in ‘tier three and four cities’. These are regional, medium-income cities, undergoing rapid development. There are many more opportunities for retailers and Western brands. For example, online grocery will enjoy explosive growth in China, though from a modest base, tripling in size between now and 2020.”

India, the third-largest global grocery market, has plenty of potential but has proved challenging for international retailers to date. This is due to the strength of local traditional trade and legislative restrictions on international investment.


Source: IGD

“While traditional stores will continue to take the lion’s share of the Indian grocery market, consumer spending per capita in real terms will grow faster in the subcontinent than in any of the top grocery markets. Combined with an expanding working-age population this will support the growth of modern convenience and supermarket retailing. Retailers are also rapidly setting up online grocery services hoping to tap into the potential of India’s half a billion smartphone users. Despite restrictions on foreign direct investment (FDI), international retailers continue to see the potential of investing in India,” says Denney-Finch.

In both countries there is also a great opportunity for online retailing in key cities and for international brands. Marks & Spencer (M&S), for example, has recently reported impressive growth via Alibaba’s digital marketplace in China.

According to IGD’s forecast, the top 15 global grocery markets are set to grow by 34 per cent – to a worth of US$8 trillion by 2020, with Asia, the Middle East and Africa, and Latin America accounting for more than 70 per cent of the world’s grocery growth over the next five years.

“Although growth prospects appear limited in Europe at the moment, this is a time of tremendous opportunity for grocery companies further afield. The vast majority of global grocery growth will come from Asia, Africa and the Middle East supported by increasing affluence, urbanisation, and rising population. With many European products and brands highly regarded in these regions, this will be a boom time for companies with export skills,” concludes Denney-Finch.

IGD suggests three key opportunities for retailers to make use of this forecast growth:

• Expanding private label ranges
• Franchising with local partners
- For those that can demonstrate the resonance of their brands and formats internationally, this can be a low risk route to growth
• Making the most of a specialism
- There is plenty of growth potential for quality brands that are able to demonstrate local relevance

IGD is a research and training charity that helps the global food and consumer goods industry deliver what matters to the public in a fast-changing world, and is a Food Industry Asia (FIA) Associate Member.