Food and Drinks

China’s biggest snack food retailer Shanghai Laiyifen bets on quality imported products to revive flagging sales

  • Shanghai-listed Laiyifen says sales of products that are sourced overseas will increase by 30 per cent annually going forward
  • Company’s shares have taken a hit as investors dump consumer stocks
PUBLISHED : Thursday, 08 November, 2018, 5:23pm
UPDATED : Thursday, 08 November, 2018, 10:47pm

Shanghai Laiyifen, the publicly traded snack food retailer with the most number of shops in China, aims to increase sales of overseas sourced products by 30 per cent in the next few years, as it taps increasing demand from a growing middle class.

Laiyifen, which mean “get one share” in Chinese, makes and sells cheap and popular traditional Chinese snacks from melon seeds and peanuts to ducks’ stomach and dried beef.

The imported products up for grabs in its physical and online stores will be more premium, ranging from Australia’s milk and Italian spa water to South Korean cheese codfish sausages.

Revenues from sales of overseas products ranging from food to beverages will probably reach 300 million yuan (US$43.2 million) this year and the proportion is likely to account for about 10 per cent of the company’s annual sales, said Yu Ruifen, founder and president of Laiyifen, at the ongoing China International Import Expo, in Shanghai on Thursday.

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Laiyifen, which is listed on the Shanghai Stock Exchange and owns 2,700 shops on the mainland, also signed a contract with the Australian company Freedom Foods Group to buy dairy products worth 100 million yuan.

“We will procure healthy and nutritious products the Chinese people like from all over the world,” said Yu at the signing ceremony.

Chinese retailers are ratcheting up their efforts to broaden domestic consumers’ access to high-quality products from overseas ranging from food to cosmetics through increasing global procurement, betting that demand from China’s middle class of 300 million people will help stem a slowdown in the industry.

Alibaba Group Holding, which owns the South China Morning Post, announced this week that it would import US$200 billion of upscale goods from 120 countries over the next five years to be sold to Chinese families on its online platform.

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China’s consumer market, the world’s biggest, is enduring slowing growth as the nation’s economy grew the least in a decade in the third quarter and the outlook is being further clouded by an intensifying trade war with the US.

Consumer stocks have turned into the most-sold sector in the second half of the year from investors’ favourites in 2017.

Laiyifen was no exception to the industry slowdown. Profit for the first nine months tumbled 87 per cent from a year earlier to 13.4 million yuan as gross profit margins dropped and costs increased.

Its stock dropped 0.6 per cent to 10.39 yuan on Thursday in Shanghai, extending its loss to 45 per cent this year.