General Mills inks deal to expand into lower-tier China markets
General Mills aims to expand into lower-tier markets and accelerate its product offerings in China through a tie-up with food and beverage giant Ting Shin Group to gain a stronger foothold in the food and catering sector.
The strategic tie-up will initially include sales channel expansion beyond current physical store coverage in about 80 domestic cities for General Mills' ice cream brand Häagen-Dazs.
"We see tremendous opportunities to accelerate the expansion in lower tier cities by complementing with Ting Shin's strong local distribution channels and catering stores," said James Chiu, president and managing director of General Mills China, in an interview in Shanghai as it inked the framework deal on Thursday.
Ting Shin's presence in the domestic market included Master Kong packaged food, Weichuan drinks, Dicos fast-food chain restaurants and Family Mart convenience stores as well as a wide range of bakeries and cafes.
Kantar Worldpanel noted that China's out-of-home spending for food and beverage increased 15.1 percent in the second quarter compared with a year ago as catering and leisure activities gradually recovered.
According to the National Bureau of Statistics, retail sales of domestic catering services surged 48.6 percent to 2.17 trillion yuan (US$334 billion), returning to pre-pandemic level.
Domestic and overseas retailers are rushing to launch a series of new offerings with adventurous new flavors in a highly competitive market.
The two sides also plan to innovate and co-create in a wide range of categories such as bakery, drinks and catering solutions, by combining their complementary advantages.
They have set a preliminary target to launch new offerings within six months, such as co-branded products or tailor-made new flavors that suit local demand.
"We also stand ready to contribute to the dual-circulation development model by better linking the two parties' capabilities with local resources and expertise," said Stephen Lu, general manager of Ting Shin's food trading arm Golden Field and its membership online store operator Good Selection Holding Co.
"It's essential for multinationals to speed up local development to offer tailor-made local offerings by joining hands with a strong local player like Ting Shin," added Chiu.
The two parties are considering sales of frozen desert through mini store formats with less dine-in space at existing Ting Shin Family Mart convenience stores or Master Kong or Dicos canteens.
General Mills said it has already started to test the waters in terms of ice cream coupon sales through Ting Shin's e-commerce site Good Selection Co and has seen satisfactory preliminary results.
Traditional festive occasions such as Chinese New Year and mid-autumn festival would also provide additional chances to collaborate on co-branding and new product launches.
Potential collaborations also include logistics, packaging materials and membership benefits between Family Mart convenience stores and Häagen-Dazs physical stores.
