PortfolioHealthy and fresh changing landscape of Chinese F&B industry

The Chinese food and beverage market is getting to be more like the fashion industry as customers crave new products and a variety of choices, prompting analysts to believe smaller players could beat traditional rivals.

Traditionally, food brands were stable. Americans drank Coke for decades while the Chinese, like other Asians, ate copious amounts of rice.

A BNP Paribas research report by analyst Charlie Chen points out the trend has changed.

“One of the risks for the apparel industry is fashion. Fast-fashion companies launch new designs every quarter, selling them at a premium and the residuals later at a discount,” Chen said.

“Traditionally, staples are not like that. Consumers have been drinking cola for decades with the original flavour unchanged, which is why investors tend to like staple companies for their ‘defensiveness’”.

Food companies used to only compete for lower prices but now they must also contend with a virtual deluge of new products.