China could overtake the United States as the world’s biggest grocery market within five years, according to market research organization IGD.
Using figures from an International Monetary Fund (IMF) report published in October, IGD extrapolates that China could grow three times as fast as the United States over the next four years, and urges food and beverage manufacturers to consider investing in China and the other BRIC countries, Brazil, Russia and India.
The IMF report forecast a real compound annual growth rate (CAGR) for China of 11.44 percent from 2009-2014, compared to growth of 4.07 percent for the United States.
IGD’s chief executive Joanne Denney-Finch said: "Many retailers and manufacturers are already leading the way, building a strong presence in China and other emerging markets. Those who have not yet invested in these markets should start planning ahead now because the pace of growth for emerging markets will continue to outstrip that of the developed world."
By 2014, IGD predicts that the Chinese grocery market will be worth €761bn (about $1.046 trillion at today’s rates), compared to a forecast US market value of €745bn ($1.024 trillion).
According to IGD, part of the reason for this is that the US has been much harder hit by the recession than China. And population is also growing at a faster rate in China, with 42m more people added to the population between 2005 and 2010, during which time the US population grew by 14m. Chinese population growth between 2010 and 2014 is expected to remain at double that of the United States, according to the IMF’s World Economic Outlook.
"Chinese population growth and economic prosperity are contributing to the rise of China as an important grocery market on the world stage. The US and key European markets still offer an important source of growth for food and grocery businesses, but it is becoming harder to ignore the BRIC countries,” Denney-Finch said.
India’s grocery market size is set to overtake Japan’s to take the number three global position by 2014, the research organization said, while Russia and Brazil are predicted to rank fifth and sixth respectively.