Building a Sustainable Chocolate Market in China

Transcription

1 Building a Sustainable Chocolate Market in China

2 How well do you know China? Some background on China In the year 1 AD, the % of world s economy represented by China was? 7% In 2030, what % of world s economy will be represented by China? China s Share of World GDP 15% 9% 18% 15% 20% 26% 22% French & US revolutions Industrial revolution Oil crisis Qing Dynasty China civil war

3 How well do you know China? Twenty years later Twenty (Year years 2012) ago Shanghai Lenovo G20 G7 (China (no China!) is there!)

4 China = Complexity NORTH - Extremes Summer - very hot ( 20+ C) Winter - very cold (<5 C) Rainfall - light (up to 1,000 ml) (Latitude = Southern Russia) 18 SOUTH/ S WEST - Sub-Tropical Summer - very hot (25-30 C) Winter - moderate (0-20 C) Rainfall - heavy (> 1,500 ml) (Latitude = North Indian) Guangzhou : 10 mil Beijing : 18 mil Shanghai : 20 mil Shenzhen : 10 mil Popln: Size: HH size: 1.3 bn City > 1mn: mn sqm 3.1 (Urban) 5.6 (Rural) 2345 cities/counties 4 Municipality Cities 27 Provinces 663 Cities 1682 County towns Bulk of GDP in heavily populated central plain & coastal areas with exception of Sichuan province First 50% of GDP Next 25% of GDP

5 China s growth and population China s Share of World GDP Total Urban Population in China 991m > US+EU (809m in 30E) 633m +358m 2010 French & US revolutions Industrial revolution Oil crisis Qing Dynasty China civil war Urban GDP per capita (RMB) 254m m 36m E 7kb m In 2030, 22% of the world s economy will be represented by China China s urban population Expected to be 1 billion by 2030

6 Asia will drive ~45% of global GDP growth over the next 5 years 100% = $5.4T European Emerging 3% MEA 5% 5% Latin America 23% Asia $10.5T $10.4T 10% 6% 7% 8% 8% 7% 35% 43% Western Europe 27% 19% 12% US & Canada 37% 22% 24% SOURCE: 6 Global Insight; The Economist

7 China an Evolving Market Role from World s Factory to Top Retail Market Population w/ annual income >=RMB 70k Private Consumption by Country USD billions * 1990: 1m 2000: 17m 2010: 413m 2020E: 655m 1 5,316 7,608 9,316 11, ,136 2,443 2,655 3, ,121 1,623 1, , ,280 1,516 1, ,084 1,317 1, ,306 1,568 * 2005 prices, fixed 2010 exchange rates SOURCE: McKinsey Insights China, 2011

8 Since political & economic reform, Chinese consumers income levels have significantly increased. 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 Disposable income: X10 in 20 years GDP per capita: X 30 in 30 years 4,000 2,000 0 Disposable income per capita in China urban (RMB) Data source: National Bureau of Statistic of China

9 China s purchasing Luxury Goods Consumption in China ~180b CAGR 18% 55b 64b 80b By 2015, China will have 20% share of the global Luxury goods market (RMB) 5b E 2015E Global Share <1% 6% 8% 7kb 36 10% 20%

10 China: 23% of the world's population. Chocolate consumption low relative to other categories but growing PCC (kg) POPULATION (370 m HH) TOP 10 cities 75m TOP 50 cities 170m 180 cities with 1m+ pop Biscuit Crispy Snack Food Jelly & Pudding Chocolate

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12 Chocolate is still relatively small, but currently enjoys the No. 1 growth rate within Food Category. Moving annual growth rate FMCG Total Food Total Non Food Total Impulse Food Total Chocolate Confectionery

13 Chocolate consumption in China Chocolate consumption thought to grow 13% in 2011 Chocolate the fastest growing confectionery category More consumers seeing chocolate as everyday indulgent treat Everyday consumption and gifting trends set to continue growing Dark chocolate (premium, healthy) could grow strongly SO WHAT? 13 Source: Euromonitor International

14 Supply, Demand,.and Sustainability It s happening in China Growth in Chocolate Consumption China will be as big as the USA Opportunity and Challenge Where is this extra 1 mio MT going to come from? 14 Confidential Internal Use Only

15 Mars China has been here since MCH Chocolate Factory (Beijing) MCH Chocolate Factory (Jiaxing)

16 It is an exciting time to be in China! 16 Confidential Internal Use Only

17 The Indian Middle-class = A group in transition The thing that is changing the fastest is not their wealth or their lifestyle or their traditions but their attitude and their confidence The past The present Longed for the past Looks forward to the future Driven by Anxiety Driven by Aspiration Cautious Savers Defined themselves by who they are Family Background Education Village/Town of origin Tradition Risk Takers and Explorers Spenders Define themselves by what they own Their job Their recreational travel (esp abroad) The clothes they wear The things they own housing and consumer debt grew by over 40% a year from 2001 to That shows their confidence in their ability to repay, not intemperance. - The Economist (Nov 19 th, 2008) SP BM for EM outline_v05.pptx 17 17

18 There are three Indias SP BM for EM outline_v05.pptx 18

19 As a market leader Mondelēz International s brands cater to all three Indias with a varied portfolio SP BM for EM outline_v05.pptx 19

20 Consumption barriers Availability Affordability Cultural Relevance 1. Weighted av erage, excluding Brazil (Gross-to-Net anomaly currently being checked with local f inance) Note: All f igures in USD Fixed FX AC '13 Source: Country P&Ls SP BM for EM outline_v05.pptx 20

21 Mondelez Interntional is responding to these challenges with the innovation mindset of a market leader Availability Affordability Cultural Relevance SP BM for EM outline_v05.pptx 21 21

22 The category is growing rapidly in every town/city tier and in villages Category is expected to triple to ~ 400,000 Tons by 2020 SP BM for EM outline_v05.pptx 22

23 What defines a thriving cocoa community 1. Farming We believe cocoa farmers deserve to earn an income that lifts them out of poverty so we help farmers improve their yields and livelihoods 2. Community We believe in empowering cocoa farming families to create the kind of communities they and their children want to live in. We believe gender equality benefits everyone and work to improve women s empowerment. 3. Livelihoods We believe providing business knowledge and skills will create farming entrepreneurs and support farmers to increase incomes from other sources. 4. Youth We are working towards eliminating child labor by helping communities tackle its root causes. We believe cocoa farming should be an attractive business for the next generation, so we work to inspire young people about a future in cocoa farming. 5. Environment We believe in protecting the landscapes in which cocoa is grown to maintain eco-systems and provide viable environments and farming land for future generations

24 Cocoa- the defining ingredient for chocolates therefore needs a holistic approach towards sustainability Cocoa Research Cocoa Nursery Creating Awareness Farmer Outreach Farm Meeting Field Demonstration Cocoa Collection Industrial Fermentation Central Drying SP BM for EM outline_v05.pptx 24