China has overtaken the United States to become the world’s biggest market for grocery shopping. The Chinese grocery sector will continue its fast growth over the next few years to hit almost GBP1 trillion by 2015, according to grocery industry researchers IGD. Economists warn it will also put upward pressure on already high food prices. The Chinese grocery sector was worth GBP607 billion at the end of 2011, while the U.S. market slipped to second place at GBP572 billion. Researchers forecast that China’s market will grow at twice the pace of the U..S. to be worth GBP918 billion by 2015. China is a crucial growth market for many of the world’s largest grocery retailers as forecasts suggest there will be over 200 Chinese cities with a population of over a million by 2025. Chains such as Tesco have already been expanding in emerging markets. The UK-based retailer opened its first stores in China in 2004 and now runs more than 100 stores there while also pushing online sales and opening a number of shopping malls. China is its strongest performing Asian market in terms of sales growth according to its most recent results, but at 4 million customers a week, Tesco’s business there is still dwarfed by the more than 20 million weekly shoppers it serves in the UK. IGD estimates that international grocery retailers could open more than 2,700 stores in China over the next four years – around 13 a week, the South China Morning Post reports. Nutrition experts warn the boom in grocery sales would also lead to consumption of less healthy convenience foods. “Obesity is already growing in the younger generation in big cities,” said Peter Ben Embarek, Food Safety Expert at the World Health Organization (WHO).

Rich Chinese spend about 3% of their personal wealth a year, with travel, daily luxuries, children’s education and gifts as the top consumption items. With fortunes of CNY49 million on average, the rich spent CNY1.45 million a year, including 19% on travel, 15% on daily luxuries, 12% on children’s education, and 10% on gifts, according to the Chinese Luxury Consumer White Paper 2011, published by the Hurun Research Institute and the Industrial Bank. The findings came from a survey conducted between October and January among 878 Chinese citizens, 39 years old on average, with more than CNY6 million worth of personal assets. There are 2.7 million such rich individuals living on China’s mainland, including over 60,000 ultra-rich people, whose fortune exceeded CNY100 million. On average, the rich took 3.6 leisure trips in China and 2.4 such trips abroad last year. Hong Kong is now the indisputable destination for lavish spending by the rich, as 73% of them said it was their preferred location for purchasing luxury goods. Purchases are concentrated in watches andvjewels, while the ultra-rich group is showing increasing interest in super-luxury goods like yachts and private jets. Up to 85% of the high net-worth individuals said they have plans for their children’s overseas education. Shanghai and Beijing are growing rapidly in importance in the view of high-net-worth individuals and will take fourth and third places in a list of the world’s top cities in 10 years, according to a report by Knight Frank and Citi Private Bank. They are currently in eighth and ninth positions on this year’s list. London and New York are seen as the most important world cities for the super rich and will remain so for the next 10 years, concluded the report, which defines those with more than USD25 million in investable assets as high-net-worth individuals.

Gome Electrical Appliances, the second-largest home appliance retailer in China, plans to maintain its pace of expansion by opening about 260 shops this year after reporting a 6.2% decline in net profit for last year to CNY1.84 billion. Revenue grew 17.5% to CNY59.82 billion. At the end of last year, the firm had 1,079 stores across the country, an increase of 253 from the previous year. The company said a more than 70% jump in capital expenditure had dragged down net profit last year as it invested more in new shops, remodeling existing stores and buying IT equipment. This year, “the group will adopt an operational strategy which emphasizes both store network expansion and same-store growth”, said Chairman Zhang Dazhong. He added that the company would start to “position e-commerce as the key area of development”. Gome operates two online shopping platforms: gome.com and coo8.com. Rival Suning Appliance, which operates more than 1,700 home appliance shops, has said its revenue for last year was CNY93.8 billion, about 1.6 times that of Gome. Its net profit, which stood at CNY4.8 billion, was nearly triple that of Gome.

Department store and supermarket operator Aeon Stores (Hong Kong) plans to open 10 new outlets in Southern China to tap the rising demand from developers for quality retailers in their property projects. Aeon Stores (Hong Kong) reported a 45% rise in net profit to HKD405.9 million last year. Revenue increased 9.5% to HKD6.69 billion. The operator of Jusco supermarkets and Aeon department stores attributed this to the strong growth of its China business. The China market generated HKD3.6 billion in sales last year, up 24% from the year before. Revenue from Hong Kong operations, meanwhile, dropped 3.7% to HKD3.07 billion because of weak consumer sentiment and the closure of two stores. As of December, the company operated 38 stores in Hong Kong and 20 in Southern China. Managing Director Lam Man-tin said global economic uncertainties might result in conservative consumer sentiment in Hong Kong this year. Yet, he added, it could also be a good opportunity for the company to secure better locations and leasing terms for new stores as rental growth was likely to slow down. Meanwhile, he said he was optimistic about the South China market, which is set to benefit from rising income levels and the government’s drive to increase consumption. Aeon is the largest retailer in Japan. This month the company established its China headquarters in Beijing.

Kraft celebrated the 100th birthday of its Oreo biscuit in Shanghai by turning the waterfront into a vast Oreo advertisement, painting the landmark Oriental Pearl Tower Oreo blue, plastering skyscrapers with multi-story neon Oreo adverts and staging fireworks over the Huangpu river. Oreo is China’s best-selling biscuit. The way Kraft has transformed this most quintessentially American cookie is a model for how successful multinational brands are approaching the China market, retail analysts say. What passes for an Oreo in China these days often bears only a glancing resemblance to the black and white sandwich biscuit first sold in Hoboken, New Jersey in 1912. In a bid to please Chinese taste buds, Kraft has made an Oreo with Chinese characteristics. The original Oreo is less sweet in China than in the U.S. Some Oreos in China are shaped like a straw, or like a wafer, and even the traditional round ones come in flavors such as green tea ice cream, grape-peach, mango-orange and raspberry-strawberry. Kraft says some of these flavors, developed first in China, have since become hits globally. Kraft calls it “reverse innovation”. Oreo, introduced into China in 1996, largely languished until Kraft made changes in distribution and advertising to boost sales – and created new flavors and tastes suited to the local market. “Any foreign company that comes to China and says, ‘there’s 1.5 billion people here, goody goody, and I only need 1% of that … (is) going to get into trouble. You have to understand how the consumer operates at a really detailed level,” says Lorna Davis, former General Manager of Kraft Foods in China, as reported in the Financial Times.