Kraft Heinz seeks gains in 'gigantic' Chinese market
Kraft Heinz tomato ketchup products are seen at a supermarket in Beijing. [Photo/China Daily]
Condiment giant eyes double-digit growth in China with expanding investment, innovation
As a key part of its emerging market, US-based Kraft Heinz has high expectations for China's huge potential. The food and beverage company has made consistent investments in the country to better satisfy market demand despite the COVID-19 pandemic, said Miguel Patricio, CEO of Kraft Heinz.
"The Chinese food market is gigantic …Today, China is still a small part of our business, but we have big ambitions. China has the potential to be our biggest future growth market," Patricio told China Daily.
Patricio said such strong confidence is backed by China's 1.4 billion population, its continuous economic growth, the important role that food plays in Chinese society and its many innovations in the food industry.
"These reasons make us believe that China is a country where we want to invest and grow. We want to grow with China," he said.
As its business keeps growing along with its significance in China, Kraft Heinz advanced a slew of investments even during the pandemic, when food service experienced a decline.
The investments included relocating its Asian headquarters from Singapore to Shanghai in 2020 and some 47 million yuan ($6.83 million) in the expansion of its Qingdao, Shandong province ketchup production line in 2021, as well as investing around 27 million yuan in the new office and experience center in Shanghai. The experience center consists of a Western kitchen, a Chinese kitchen and sensory, sauce, analytical and packaging labs.
Furthermore, an $11.3 million investment was announced early this year to expand the Qingdao factory's capacity. A total of 280 million yuan has been spent on the facility in the past five years, Patricio said.
"China is critical for our growth … We see the great potential, so we are investing. We are putting efforts into developing our people, brands, capabilities and factories," said Rafael Oliveira, executive vice-president and president of international markets for Kraft Heinz.
"As the economy keeps opening up, we are confident that we are prepared," Oliveira added.
The company saw single-digit growth in the Chinese market due to COVID impacts last year, and Kraft Heinz expects to achieve double-digit growth in China this year.
Oliveira said that as a maker of sliced cheese and ketchup, the company has three major targets in China — becoming the number one Western sauce brand, strengthening and diversifying its Chinese sauce portfolio and becoming a competitive food service provider by targeting customers with customized products and solutions.
Kraft Heinz has been the biggest player in the Chinese ketchup retail market, holding a 27 percent market share. With a wide variety of innovative flavors and creative applications of sauces, the company expects to grow significantly in the sauce market.
Euromonitor International, a market research analyst, said China's sauce, dip and condiment market rose from 116.99 billion yuan in 2017 to 173.45 billion yuan in sales revenue in 2022 and projected the scale to reach 220.65 billion yuan in 2027, nearly double that of 2017.
Consumption in China, however, is still comparatively low in comparison with the global market, which is expected to expand from $158.32 billion in 2022 to $204.74 billion in 2027, Euromonitor International said.