2017 Top 100 Food & Beverage Companies of China: WH Group Takes the Lead

Chief Editor: Bella

Author: Mote Chan (Wechat ID: motechanfbif)

Translator： Sandy

Thanks to: Paris Zou, Xiaomin Liu, Haibin Jiang, Shushu Li, Wilbur Zhu, Feifei

TIPS:

* Please click : 2017中国食品饮料百强榜 to read Chinese version.

* 2017 Top 100 Food & Beverage Companies of China.pdf

* 2017 Top 100 Food & Beverage Companies of China.xls

Introduction

On August 24, 2017 (Beijing Time), FBIF first released its Top 100 Food & Beverage Companies of China (hereinafter referred to as “FBIF Top 100”). FBIF Top 100 sorts out the top 100 Chinese local food and beverage companies on the basis of their sales performance.

Beyond the seas, there is a World Top 100 Food Companies and a Top 100 Food & Beverage Companies in U.S. and Canada annually issued by Food Engineering and Food Processing respectively. Although domestically various ranking lists are published by some institutions every now and then, there are few lists highlighting “sales performance”; some lists are made up only by a certain index; and some other lists even claim “to rank in a random order”. People can hardly learn anything of industrial structures from these ranking lists, not to mention being convinced.

Only by reference to the external world can a company learn about his own development level and stage. And to better understand Chinese food industry and its current situation, we also need more transparent figures, combined with comparison with the global data.

The past “Information Age” put emphasis on quick access to information. Whoever gets information quicker holds more advantage. However, in this Big Data Era, we believe that the openness and sharing of data is more important. Only with more comprehensive figures, more open and faster circulation channels can information be more valuable and contributable to the development and progress of the industry.

We release the Top 100 Food & Beverage Companies of China this year for the first time. We admit that there might be some flaws and much room to play with its totality, completeness and ranking standards. However, this is our first step and we believe that our endeavors can motivate your acceptance of “Open Data” and finally promote the development of food industry. We also hope to accumulate abundant figures and information concerning Chinese food industry by virtue of this first ranking list. As time flies, with more comprehensive data, we can look back into the past more clearly to find the hidden rules and predict the future more accurately.

Contents

Part One: Analysis of the Ranking List

Part Two: Comparison with the World Top 100 and the Top 100 of NA

Part Three: Top 100 List

Part Four: Contact Author, About FBIF

Part One: Analysis of the Ranking List

Top one: WH Group

WH Group Logo

The top five are WH Group (73.921 bn yuan), Yili (59.172 bn yuan), Tianyi (55.273 bn yuan), Mengniu (53.433 bn yuan) and Wahaha Group (52.91 bn yuan). These five companies are also the exclusive companies with total sales over 50 bn yuan on the list. At present, there is no company with total sales over 100 bn yuan.

There is no surprise for WH Group leading the list, as according to the Top 500 Chinese Companies issued by Fortune magazine on July 31, 2017 at www.fortunechina.com, WH Group held the first position in food industry with sales of 143 bn yuan (21.534 bn dollars). On our list, the sales of WH Group is 73.921 bn yuan (11.073 bn dollars, 1USD=6.6752CNY), because we only calculate its meat products (processing food) business and leave out its businesses of fresh pork and hog raising, just like “the Basis of the List” (explanation as below) says. Its meat products business has generated 51.4% of its total revenue, while the profit of this part accounting for 82.5%.

In 2013, Shuanghui Group (the former WH Group) purchased American pork producer Smithfield Foods with 7.1 billion dollars. The deal became the biggest trade among mainland China companies’ acquisition of American companies in the year and made the annual turnover of the newly named WH Group soaring to over 90 billion yuan (the 2016 turnover of Shuanghui was 51.8 billion yuan). WH Group has become the world’s largest company covering businesses of meat products, fresh pork and hog raising. 

WH Group still continues its globalization steps and expands its blueprint by buying European and American enterprises in the way. Nowadays, with Smithfield Foods, WH Group has become an international company whose overseas performance outruns its domestic performance. In its 2016 annual report, it said, “In 2016, businesses in China generated 36% of the Group’s gross turnover, while the turnover of American businesses accounted for 57.4%”.

Yili and Mengniu grow solidly, while Tingyi and Wahaha fall from their peak

During the past four years (since 2013), only Yili Group and Mengniu Diary grew relatively solidly. Yili Group has improved its (overall) performance from 47.8 billion yuan in 2013 to today’s 60.6 billion yuan and Mengniu from 43.36 billion yuan to 53.78 billion yuan.

Wahaha and Tingyi underwent a drop from their peak in 2013, though. The total performance of Wahaha has fallen from its summit of 78.3 billion yuan in 2013 to today’s 52.91 billion yuan, and Tingyi from 66.77 billion yuan to 55.878 billion yuan.

Notes: The revenues of Tingyi from 2013 to 2016 are $10.941 bn, $10.237 bn, $9.103 bn, and $8.372 bn respectively with corresponding exchange rates 6.0969 (2013.12.31）; 6.119 (2014.12.31）; 6.4936 (2015.12.31）; 6.6752 (2017.8.13）.

From the above tendency chart, we can see that the growth rate of Yili and Mengniu slowed down while Tingyi and Wahaha fell from their peak and haven’t climbed to its 2013 summit. The author will analyze the reasons of these adverse situations by comparison with global companies later in this paper.

The largest food group of China

Among the 2016 Top 500 Companies of China issued by China Enterprise Confederation and China Enterprise Directors Association on September 1, 2016, we select out some enterprise groups that are closely related to food and beverage and conduct a study by contrast. These groups include China Resources, COFCO Group, Bright Food and Beidahuang Group.

China Resources Group

There are three companies engaged in consumer products under the control of China Resources Group. Below is their sales performance of processing food:

CR Beer: 28.694 billion yuan

CR C’estbon Beverage: 9.347 billion yuan

CR Ng Fung: 1.212 billion yuan (as an outstanding assorted food products enterprise, its turnover reached 10.653 billion yuan in 2016.)

Apart from that, although CR Pharmaceutical owns 28.14% shares of Shandong Dongeejiao, we don’t count this part of revenue due to the lower shareholding ratio. Therefore, the total sales of China Resources processing food business is 39.253 billion yuan.

COFOC Group

COFCO Logo

 “There are 11 listed companies under COFCO Group as its controlled companies through investment”, cited from COFCO 2016 Social Responsibility Report. On this basis we sort out the companies related to food industry and list their sales performance as below:

Mengniu Dairy: 53.433 billion yuan (a finalist in the Top 100)

China Foods: 23.645 billion yuan (a finalist in the Top 100)

COFCO Tunhe: 16.4 billion yuan (a finalist in the Top 100)

COFCO Meat: 0.949 billion yuan ( sales of meat products, its total sales are 6.616 billion yuan)

Jiugui Liquor: 0.65 billion yuan

COFCO Biochemical: 0.545 billion yuan ( sales of cooking oils and by-products, its total sales are 5.6 billion yuan)

China Tea: unlisted, with data unpublished

Companies under the control of Mengniu include:

Modern Farming: 4.862 billion yuan (a finalist in the Top 100, as of March 21, 2017, Mengniu holds 61.3% of its shares)

Junlebao Dairy: 8 billion yuan (a finalist in the Top 100, with 50.99% shares held by Mengniu)

As sales performance data of Yashily and Dumex are contained in Mengniu’s annual report, we don’t calculate them alone.

Furthermore, it has been reported recently that “CPMC (a packaging company belongs to COFCO) plans to buy 30% shares from Qingyuan Jiaduobao”. But how much revenues Jiaduobao can contribute to CPMC is still unclear.

From the above we can calculate that the total sales of processing food which COFCO holds in a direct or indirect way wouldn’t be less than 108.484 billion yuan.

Bright Group

Listed companies under the control of Bright Group include:

Bright Dairy: 17.817 billion yuan (a finalist in the Top 100)

Shanghai Maling Aquarius: 3 billion yuan (a finalist in the Top 100)

Shanghai Jinfeng Wine: 2.125 billion yuan (a finalist in the Top 100)

Its total sales of processing food are 22.942 billion yuan.

Beidahuang Agriculture

Jiusan Oils & Grains: 41.047 billion yuan (a finalist in the Top 100)

Wondersun: 4.5 billion yuan (a finalist in the Top 100, calculated based on 2015 sales)

Its total sales of processing food are 45.547 billion yuan.

Notes:

1.The above “total sales of processing food” only contain published sales of “controlled enterprises”. The figures are for your reference only.

2.As subsidiaries of some group companies are listed companies and operate their businesses independently, we calculate each subsidiary separately and leave out the group companies. The follow-up analysis in the article will also not refer to the operation of these group companies.

Based on the above contrasts, we can figure out that COFCO Group is the largest food group in China from the aspects of controlled enterprises and total sales. If we consider the total processing food sales of COFCO when listing the ranking list, COFCO would undoubtedly rank the Top one.

The most profitable company, the threshold, the average sales revenue and the 10 billion yuan companies

The Most Profitable Company

Kweichow Moutai Liquor

Image Source: www.dfic.cn

Not all companies in the list are listed companies, therefore it is hard to compare the profits of all. However, with total sales of 38.841 billion yuan (ranking 7) and net profit up to 16.718 billion yuan, there is no doubt that Kweichow Moutai is the most profitable company. WH Group has only 11.9 billion yuan (1.788 billion dollars) of overall profit margins. Besides, the profit of Yili, Tingyi, Mengniu, and Wahaha that rank at the top are less than 6 billion yuan respectively.

The Threshold

Hebei Hengshui Laobaigan Liquor is the last finalist in the Top 100, with total sales of 2.065 billion yuan. Therefore, 2.065 billion yuan is the threshold to be listed. According to the statistics for over 400 companies, more than 80 companies have total sales of 1~2.065 billion yuan and most of them are listed companies. As our data may be limited, we believed that there are much more companies whose sales run higher than this figure, such as Lee Kum Kee and Infinitus.

The 10 Billion Yuan Companies

The average sales of FBIF Top 100 companies are 10.795 billion yuan. It’s not a daydream out of reach for domestic food companies to obtain sales over 10 billion yuan. According to the list, there are more than 26 companies with sales equal to or exceeding 10 billion yuan, 16 companies with sales over 20 billion yuan and 5 companies over 50 billion yuan.

Companies established after 2000 and 2010: an emerging power that cannot be neglected

Three Squirrels Logo

Because of lack of ranking information in past years, we could not make a comprehensive comparison for tendency of companies’ ranking. However, from the perspective of the establishment year and growth rate, we can learn that some companies rise rapidly during a short period.

In the list, 16 companies were established after 2000 and only a company established after 2010. The only company is Three Squirrels which was established in 2012.

By leveraging e-commerce, after five years’ growth, Three Squirrels obtained total sales of 4.423 billion yuan in 2016, and ranked 60th in the list. Its growth rate doubles almost every year.

There are other companies that were founded after 2000 and grow fast, including Juewei Food (Rank 73th), Zhou Hei Ya (Ranked 84th), Bestore (Ranked 40th), XIANGPIAOPIAO Food (Ranked 93th), Ausnutria Dairy (Ranked 88th), Shanghai Laiyifen (Ranked 75th), etc.

Ausnutria Dairy: compared with 2015, its sales in 2016 have grown 30.3%.

Zhou Hei Ya: compared with the same period of 2015, its sales in 2016 have grown 15.8%.

Juewei Food: its revenue in 2016 reached 3.274 billion yuan, with year-on-year growth of 12.08.

XIANGPIAOPIAO Food: compared with 2015, its sales in 2016 have grown 18.32%.

…

With the rapid development of economy and in a Chinese market that is pushed forward by internet, e-commerce and new retail, we are totally convinced that there would be great change for each year’s FBIF Top 100.

The province with the largest food sales in China

Notes: As we didn’t collect sales figures of foreign companies which are located mainly in Shanghai, Beijing and Guangzhou province, therefore, the conclusion of analysis will focus on domestic companies.

Taking consideration of GDP and population these two factors, it’s not hard to guess the province with the largest food sales. The top three economic provinces in 2016 are Guangdong, Jiangsu and Shandong, and the top three provinces with a large population are Guangdong, Shandong and Henan.

The number of companies in each province and its summed sales are also in keeping with the province’s economic development level and population. Guangdong province and Shandong province tie for the first place as each has ten companies entering the Top 100 list. However, with total sales of 120.071 billion yuan, Shandong province outpaces Guangdong province whose total sales are 81.106 billion yuan. Therefore, we can say that Shandong is the province of the largest food sales.

Part Two: Comparison with the World’s Top 100 and the North American Top 100

Notes:

1.      Below are the analyses of FBIF Top 100 by contrast with The World’s Top 100 Food and Beverage Companies of 2016: Transformation of a New World (sales of 2015) (hereinafter referred to as the World’s Top 100) and The North American Top 100 Food and Beverage Companies of 2017 (sales of 2016) (hereinafter referred to as the North American Top 100). The selection scope of the world’s Top 100 and the North American Top 100 did not cover all the companies in the world. For example, there are only four Chinese companies (including Smithfield Foods bought by Shuanghui Group) in the World’s Top 100. As the sales of the last finalist in the World’s Top 100 is “3.72 billion dollars” (about 24.675 billion yuan), 11 Chinese companies listed in the FBIF Top 100 could be qualified to enter the World’s Top 100 ranking list.

2.      The definition of “food manufacturing industry” varies in World’s Top 100, the North American Top 100 and the FBIF Top 100. For example, the World’s Top 100 lists out sales performance of livestock and poultry slaughtering, while the North American Top 100 contains sales of pet food.

3.      The North American Top 100 presents companies’ sales only in North America, including overseas companies (e.g. Nestle). While the FBIF Top 100 demonstrates China’s companies’ sales all over the world.

4.      Based on the above factors and with exchange rates on August 13, 2017, there might be some errors of compared figures.

By contrast with figures on the World’s Top 100 and the North American Top 100, we can find that certain gaps exist in terms of sales volume and company quantity. Below is a brief analysis of the shortage that Chinese companies have and the transformation directions they might need steering for.

Large gap in terms of volume and quantity

Gaps from the aspect of sales volume

For overall sales, the total sales of companies in the World’s Top 100 and North American Top 100 are 1275.875 and 483.583 billion dollars, while those of companies in the FBIF Top 100 are 161.711 billion dollars, which is only one third of North American sales.

There are 83 American companies in the North American Top 100. If we compare the top 83 Chinese companies with the top 83 American companies, we’ll find that the total sales of American companies are still almost 2.5 times higher than those of Chinese companies.

As the largest Chinese food company, WH Group’s food sales are 11.074 billion dollars and its overall sales are 21.534 billion dollars which can only rank the 17th in the World’s Top 100 (without regard to deviation caused by the exchange rate).

Nestle, as the world’s top one in 2015, has sales of 79.4 billion dollars, and PepsiCo ranking the second has sales of 63 billion dollars (among which 39.4 billion dollars generated in North America). In the view of sales volume, Nestle is 3.7 times and PepsiCo almost 3 times higher than WH Group.

Moreover, according to our statistics, there is no Chinese company over 100 billion yuan in its sales. However, there are 23 companies with the same scale worldwide, among which 7 companies are American. Besides, in North America, 71 companies have sales more than 10 billion yuan, while there are only 26 Chinese counterparts.

Gaps in quantity

Among the World’s Top 100, there are 8 companies whose sales surpass those of WH Group (21.534 billion dollars). These companies are PepsiCo, Coca-Cola, Tyson Foods, Archer Daniels Midland Company, Mars, Mondelez International, Cargill, and Kraft Heinz Company.

As the above illustrated, there could be 11 Chinese companies entering the list of the World’s Top 100. Then how many finalists are there in other countries? As the second largest economy, does China have a matching position in the World’s Top 100?

From the above chart, we can learn that 11 Chinese companies’ total sales are even lower than those of countries like America, Japan, France, Holland and Switzerland. There is only Germany that we surpass in terms of the average sales.

What on earth are the reasons that cause such great gaps between Chinese companies and global companies?

Reason analysis for gaps between Chinese companies and global companies

If we go deeply into the matter, we know it has much to do with the development stage of Chinese economy. It is only for less than 40 years since the late of 1970s that China Mainland has started developing its economy in a real sense. However, China’s recent GDP relies on its population to a great extent, and its low GDP per capita also displays a low economic development level. According to the list of countries by GDP per capita issued by International Monetary Fund (IMF), China only ranks at the 71th in the medium range.

This article will make a superficial analysis on basis of statistics. The comparison of companies by their establishment histories only represents personal opinions and only for your reference.

I.Historical Accumulation

We think the first reason would be the shortage of historical accumulation. The Chinese companies are too young with too short development period, while the companies in the World’s Top 100 have a very long history.

The young Chinese companies

According to our statistics for the FBIF Top 100, there are 28 state-owned companies, with total sales of 428.307 billion yuan, accounting for 39.68% of the Top 100’s sales. The state-owned companies, as they were, are towers of strength in the FBIF Top 100.

We learn that most of state-owned companies performed the joint-stock system reform in 1980s and 1990s, which means that the periods of their market-oriented operation are very short, and it is only for about 20 years that they have operated businesses in a modern way.

For example, to retrospect the history of Yili Group, we can trace back to “Hohhot Cow-raising Cooperative Group in the Huis (呼和浩特回民区养牛合作小组)” founded in 1956. It was until in 1993 that the group restructured its enterprise system and established Yili Group. From then on, Yili started its development of modernization.

Furthermore, the establishment of private companies are also late. For example, Wahaha was founded in 1987 and Luhua in 1986.

The “Foreign-Owed” in the above chart refers to Hong Kong, Macao and Taiwan companies. Obviously, with average establishment year of 1958, these companies were founded much earlier than state-owned companies and private companies. In terms of sales performance, these companies occupy 10.97% of the total sales with less than 9% companies in the FBIF Top 100. Companies like the famous Tingyi, Uni-President and Want Want China are all Taiwan companies.

The long history of global companies

The Chinese companies are relatively young. Then how old are the global and North American companies?

From the above, we can see that the average establishment year of global companies is 1922. Actually, many global companies that seem to be very “young”, like DMK (founded in 2010) in German, Fonterra Co-operative Group (founded in 2001), also have a very long history. The young age just indicates the establishment of the newly-founded enterprise by merger and acquisition. While The North American companies are over 10 years younger than global companies on average. Both global and North American enterprises have gone through nearly a century of development.

The top three companies in the World’s Top 100, such as Nestle (founded in 1866), PepsiCo (founded in 1898) and Coco-Cola (founded in 1886) are well known century-old enterprises.

It has much to do between development histories and recent gaps of Chinese, North American and global companies. Nowadays, China enjoys a rapid economic growth and its food companies also stride forward with big steps. We believe that as time goes by, Chinese companies will achieve much more progress with great opportunities.

II.Brand Strategy: numerous billion-dollar brands in the World’s Top 100

Except from historical accumulation, brand strategy is the second most important factor.

It was reported by Fortune in 2010 that Nestle had 28 billion-dollar brands, such as Nespresso, Nescafe, KitKat and Maggi, etc. According to Coca-Cola’s official website, up to February 24, 2017, Coca-Cola Company has 21 billion-dollar brands, such as Coca Cola, Fanta, Sprite, Minute Maid, etc. PepsiCo also displays its 22 billion-dollar brands on its website, these brands including Pepsi, Gatorade, Lay’s, Tropicana and Quaker and so on.

Due to limited authoritative information, we make a rough chart of leading companies with the number of their current and previous billion-dollar brands.

However, few Chinese Local companies have several great powerful brands. It presents an idea that only with several billion-dollar brands can a company ascend to the world’s top 100.

Multi-brand strategy basing on Cross Category is essential

Coca Cola Custom Glass. On the Best Global Brands 2016 Rankings issued by Interbrand, Coca-Cola Company ranks the 3rd and is the top one in consumption category.

Image source: buy.shareacoke.com

Companies in the World’s Top 100 usually have couples or even dozens of brands across different categories and these brands are solid leaders in their categories. For example, Coca Cola and Pepsi govern the “coke”; Lay’s dominates chips and Nescafe leads coffee.

It goes quite differently in China, however. An obvious characteristic of Chinese companies is that a brand covers several categories. One brand extends to several or even dozens of kinds of products, and never thinking about abandoning usage of their companies’ logo. They may occupy the most important position in one category, but few of them can take up another market with the same weight. Because the fact is that a single brand is difficult to lead several categories.

Certainly, the multi-brand strategy is only appropriate for companies that have grown to a certain stage. We suggest that in the preliminary stage, a company shall focus their limited resources on one brand until the brand becomes leading brand in the related category. Before that, it’s not suitable for the company to perform the multi-brand strategy.

III.Globalization

Another factor that helps companies in the World’s Top 100 to grow continuously is the globalization strategy.

Globalization in the World’s Top 100

Nestle Logo

A distinguishing feature of the global and North American leading companies is the high level of globalization. For example, up to 2016, Nestle has sold its products to 191 countries and employed 328,000 employees worldwide.

Sales by Nestle’s main markets are shown in its Annual Review 2016. We select out and compare Greater China Region, United States and Switzerland altogether. The sales of Greater China Region reach up to 45 billion yuan, accounting for 7.3% of total sales.

We can also find that as a Swiss company, Nestle’s sales in Switzerland only take up 1.65% which is very little. Its biggest market lies in the United States, which contributes 29.84%. Therefore, it is evaluated by some people that Nestle is the most globalized company.

Another globalized company is AB InBev with over 200,000 employees in the 50 countries. Its sales in 2016 were 45.517 billion dollars among which 15.698 billion dollars were generated in the United States, only accounting for 34.49% (AB InBev 2016 annual report).

Still another globalized company is PepsiCo. According to its 2016 Annual Report: PepsiCo as a global corporation with a presence in more than 200 countries and territories around the world—more than the membership of the United Nations. Its overseas sales amount for 42% with 24% operating profit margins.

Above is the globalization of the top five companies in the World’s Top 100. Let’s see a company with a lower rank. Kellogg Company ranks at the 27th in the list. According to its 2016 annual report, up to February 21, 2017, it has produced its main products in 21 countries and sold them in over 180 countries. Its markets outside America contribute 31.30% sales.

In conclusion, we can find that the majority of the leading companies in the World’s Top 100 operate their businesses worldwide (in over 50 countries) and their overseas sales account for 1/3 or even more.

For the past decades, these international companies almost all have fully enjoyed great dividends brought by globalization, especially the opportunities in the emerging markets.

Globalization of Chinese Food Companies

 “A global company shall refer to a company who integrates various resources worldwide, invests and constructs subsidiaries in the world’s most suitable places and provides products and services to the global markets” said an article “How to Become a Real ‘Global’ Companies(如何才能成为真正的“全球化”企业？ )” from Harvard Business Review. The article also mentioned, “Experts from Willis Towers Watson believed in five different stages for companies to accomplish globalization, i.e. Export, Initial Expansion, International, Multinational and Global.”

According to its standards and combined with the above illustrated world’s leading companies (with over 50 countries markets), we can hardly find the qualified “global companies” in the FBIF Top 100. These main food companies either walk on the stage of Initial Expansion, or enter the stage of International.

A company on the stage of International usually focus on local places for procurement, marketing and selling, with sometimes carrying out overseas merger and acquisition. The company organizes its businesses by geographic areas and increases coordination between subsidiaries. In terms of its organization structure, the head office brings a differentiated management for different scales of its overseas companies. Often, a subsidiary with a larger scale can be upgraded directly to a business division and managed directly by the head office. And the smaller overseas companies are still under the control of the international company. (“How to Become a Real ‘Global’ Companies”)

Through our comparison, we think WH Group, Ausnutria Dairy and Xiwang Foods are in much conformity with standards of International. (Remarks: The Hong Kong company Lee Kum Kee is also a company of International characteristics as it has plants in America and sells products to over 100 countries. However, as the company declined to provide any business volume figures, herewith, we didn’t count the company in FBIF Top 100 nor analyze it in this article.)

WH Group

Just as its 2016 annual report illustrated, “our operation in China contributed 36.5%. Contribution of our operation in the U.S. to the turnover (…) of the Group in 2016 was 57.4%.”

It was reported by Reuters in 2017 that “Smithfield Foods completed its acquisition of several meat processing plants and pig slaughtering houses to expand its European business.” In the future, WH Group will be more international.

Ausnutria Dairy

Operating Segment Information

Source: Ausnutria 2017 Interim Report

According to Ausnutria 2016 annual report, its total annual revenues were 2.74 billion yuan, with domestic sales 1.819 billion yuan, accounting for 66.4%, and overseas sales 0.92 billion yuan, contributing 33.6%. There were over 30 countries that had business relationships with the company based on its “Ausnutria Business Landscape and Sales Network”. We can also learn that its domestic and overseas sales both grow at a high rate from its recently-released 2017 Interim Report.

西王食品

Xiwang Foodstuffs

In 2016, Xiwang Foodstuffs acquired Canada’s Kerr Investment Holding Corp whose main business lied in sports nutrition and weight management food with 0.73 billion dollars. As National Business Daily reported, “For Xiwang Foodstuffs whose total assets are only 2.218 billion yuan, the act can be as perilous as a snake eats an elephant.”

Of course, the payback is huge. After the acquisition, in 2016, “operation revenue reached to 3.375 billion yuan, with year-on-year growth of 50.43%.”

In Xiwang Foodstuff 2017 Interim Report, it reads, “In the first half year, our gross revenue reached 2.881 billion yuan, with year-on-year growth of 145.66%; and net margins for the parent company owners are 0.141 billion yuan, increasing 48.62% compared with the same period of the last year.”

According to its interim report in 2017, its overseas sales has reached up to 1.695 billion yuan, contributing 58.8% of the total sales. Therefore, it is predicted that Xiwang Foodstuff will experience a great leap of sales and profits throughout the year of 2017.

Expectation for Globalization

We will see whether WH Group, Ausnutria Dairy and Xiwang Foodstuff can continue their expansion in the world and push their globalization courses much forwards in their future development.

To sum up the current globalization road of Chinese companies, we can see that Chinese food companies haven’t make the most of the wide overseas markets, though they really made great endeavors on it.

With China, the world’s largest emerging market with infinite growth potential at their back, Chinese food companies will embrace a much more brilliant future provided if they can benefit from the globalization.

The Transformation Road for Chinese Food Companies

In Part One, by contrast on a tendency chart, we find that revenues of Yili and Mengniu maintain a solid growth with a lower rate, while those of Tingyi and Wahaha fall from their peak. Here we find partial reasons for these adverse situations: with comparison to the world’s top 100 food companies, we not only find the gaps between Chinese and foreign companies, but also find partial reasons of these gaps.

In March, 2017, we tried to analyze on the sales decrease of traditional giants and find that it is generally due to the gradual rise of new categories and new companies which encroach upon the previous markets that traditional giants occupied.

A company who wants to increase its sales mainly rely on two methods: a.to initiate or cling to a new category to obtain new development momentum; b. to maintain growth through creating new channels (such as, e-commerce, new retail, and globalization).

Here we summarize the reasons of Chinese food companies’ rise by these two methods (only parts of companies cited):

Notes: please refer to the book about Three Squirrels (Chinese Name: 松鼠老爹与三只松鼠：互联网品牌IP化、人格化运营之路, 鼠念念著）written by Niannian Shu to better understand new channels.

When we look back at some traditional giants, we find that a single brand covers too many categories. According to positioning theory, these companies attempt to extend the brand once getting into the consumer’s mind to much more categories and even totally irrelevant categories. However, from the consumers’ points of view, the positioning of the brand will be bound to be weakened by its outstretched products. Besides, single-brand strategy brings close ties between products of different categories, which may be a foreshadowing of future risks.

In conclusion, we put forwards the following suggestions for companies targeting on a slow sales growth or decreasing sales:

I.Multi-Brand Strategy

Based on solving customers’ pain points or satisfying their demands, companies shall use a new brand to create a new category. Giants with greater strength shall perform the multi-brand strategy based on cross category even quicker.

II.Globalization

The overseas markets are definitely the new channels for companies. Overseas merger and acquisition or exportation is a good idea for companies to make fully use of the global resources.

Here ends the harangue. Below is the FBIF Top 100 list.

Part Three: FBIF Top 100 List

* Sales in 2016

* Unit: in CNY 100 million

Notes:

1. “E” refers to estimated sales. “E 15” refers to the estimated sales in 2015.

2. Food sales only, 100 Million Yuan

Basis of the List

The following information is for your better understanding of the basis of this List and its information source.

Food Manufacturing Industry

1. We only collect sales data of companies falling into the food manufacturing industry. (Most of product categories are quoted from Classified Catalog for Food Production Licenses issued by China Food and Drug Administration with some categories discarded, such as grain processing, starch and derived products, food additives and other food, and some added, such as cooking oil and sugaring.)

2. Based on above principles, as listed companies have more transparent information, we only collect information related to food. Where there is stated "Others" in their income composition, we take no account of. Therefore, we list a "Listing" column for better understanding. For unlisted enterprises whose major businesses concern food and beverage, as it is difficult to distinguish their income composition, we regard their overall performance as food processing performance. For those unlisted enterprises whose major businesses contain non-food business which accounts for over one forth (subjective judgment), we leave them out.

 

Enterprise Territorial Scope

1. Only Chinese companies (including Hong Kong and Taiwan companies) are considered when we scheme out this Top 100 Food and Beverage Companies of China.

2. As information is limited, so there is no foreign companies (except companies from Hong Kong, Macao and Taiwan) and companies acquired by foreign companies. We welcome any related figures.

3. The statistic scope of performance covers performance in the whole world, not limited in China.

4. To ensure comprehensiveness of this List, we have researched over 400 companies, including

a) Listed companies related with food, Alcoholic drink, agriculture and medicine from China Mainland, Hong Kong and Taiwan

b) Lists of top 100 companies or light industry companies in each province and some big cities

c) Top 10~20 companies of each subdivision category

Data Source

1. We obtain most of companies' sales from their annual reports and data published by authoritative institutions, with only a few data provided by the company directly or our estimation based on open information. To be fair, open and transparent, we give notes on each data source and welcome any correction. Please refer to the "Source" column of this List in Excel version.

2. For listed companies like COFCO Group and Bright Group, we calculate sales figures of their member enterprises separately to avoid needless duplication and for information accuracy. And for other listed companies, such as WH Group whose annual report contains Shuanghui Group and Smithfield Foods, we see all the members as a whole.

3. The estimated sales are based on data provided by companies, mainstream media and other reliable source and according to that, it should be estimated sales in 2015. Companies with only sales available before 2015 are not listed in.

4. For companies without open data, or refusing to provide data, or we have no channels to access to confirm their sales, all these companies are not listed.

5. Considering the limited information we have, or other inevitable mistakes, we accept comments and corrections from our peers.

6. Finally, we hope everyone can provide figures positively to make the list more complete in the future.

Monetary Unit & Exchange Rate

1. All the above figures are measured in RMB per 100 million.

2. Without special declaration, the relevant currency can be calculated by the exchange rate on August 13, 2017.

USD Vs. CNY 1 USD=6.6752 CNY

HKD Vs. CNY 1 HKD=0.8536 CNY

TWD Vs. CNY 1 TWD=0.2204 CNY

Part Four: Contact Author

Mote Chan (Wechat ID: motechenfbif)

TIPS:

* Please click : 2017中国食品饮料百强榜 to read Chinese version.

Food & Beverage Innovation Forum 2018 / FBIF2018 (Click to read more), themed as "the Rising of New Categories", will be held in April 18th to 20th in Shanghai, China. Previous FBIF has successfully attracted leading F&B brands such as Coca Cola, PepsiCo, Mondelez, COFCO, Master Kong, UNI-PRESIDENT, Yili, Royal FrieslandCampina, Abbott, Meiji, Mars, Cargill, Glico and Unilever etc. 1800 senior executives from F&B industry are expected to attend FBIF2018. Please reply "FBIF" at the main menu to get more information.

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