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June 25, 2012 3:26 pm
Bright Food, the state-owned Chinese food group, is on an overseas buying spree to acquire some of the world’s most famous brands.
Last month Bright, one of China’s largest food groups, bought 60 per cent control of the iconic UK breakfast food brand Weetabix.
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Before that, the company had several false starts in attempts to buy other famous foreign brands, including Yoplait, the French yoghurt maker, GNC, the US vitamin retailer, and another UK household name, United Biscuits, maker of Jaffa Cakes and Hula Hoops.
Analysts said the Weetabix deal was the largest overseas acquisition by a Chinese company in the food and beverage sector and showed the maturation of Bright’s overseas acquisition strategy.
But why would a Chinese brand, itself a famous and trusted name among 1.3bn mainland consumers, want to buy an ageing UK brand that operates in a mature European market?
Wang Zongnan, the Bright chairman, made clear last month that the main rationale behind the deal was to sell more Weetabix products in China, and other parts of Asia.
Breakfast habits in China, where breakfast foods like rice gruel or deep fried dough are often bought from street vendors, are very different from those in the west. But food analysts in China say western packaged breakfast cereals are beginning to catch on as China urbanises.
According to figures from Euromonitor, the breakfast cereal market in China had sales of only Rmb1.2bn last year, but it has had double-digit growth for several years and growth this year is forecast at 12.5 per cent.
“Bright Foods has a clear strategy of buying into overseas food companies as a direct response to food safety issues in China,” says Dale Preston of Nielsen, the market research firm, in Shanghai. “Nielsen research shows consumers in China are definitely attracted to imported products and are also prepared to pay a premium for the perceived higher standard of quality and safety”.
Pan Jianjun, Bright spokesman, said the company planned to exploit its mainland strength to introduce global brands. “China is a huge market and Bright Food has a broad sales network in China. We hope to leverage that advantage to introduce international brands to Chinese consumers at a fast pace”.
Mr Pan says Bright eventually wants to sell its products through the distribution channels of the overseas companies it acquires, like Weetabix. “We hope to introduce China’s dining culture to the world,” he says.
That will not happen immediately, but when it does, says Mr Pan, the company will start with famous local brands such as Dabaitu (toffee) and Maling (tinned meat).
With additional reporting by Shirley Chen
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