Local brands challenge multinationals
Multinational food and beverage companies are facing challenges from local brands but they can leverage opportunities brought about by tech giants' new retail platforms, according to a report by RaboBank.
Globally, packaged food and beverage manufacturers are under pressure from local players who are quicker to adapt to consumers' shifting preferences and market trends, said RaboBank Shanghai Branch's Food and Agribusiness Research director Michelle Huang.
Food companies are advised to actively seek business transformation and to better leverage innovative technologies such as data analysis and precision marketing.
Out-of-home beverage vendors, boutique coffee shops and milk tea vendors are also taking on a new look thanks to location-based service and on-demand delivery.
The rise of China's super tech giants is also reshaping the retail landscape as they have gathered information about consumers' preferences and can sell them private label brands at much lower prices.
"Consumers are also demanding packaged food be more individualistic to suit their tastes thus driving the adoption of the customized manufacturing model," said RaboBank's Huang.
Consumers' pursuit of fresh tastes is pushing food vendors to innovate new products.
These new flavors often come in limited quantity and are mostly sold through online channels. This has led to a transformation of new product launch cycles and marketing approaches.
However, there might be challenges to the new models as some multinational companies have internal restrictions on how new products would be developed and launched.
As for agricultural products, the rise of digital platforms as well as their logistics and payment affiliates are also reshaping the supply chain to allow more effective distribution of fresh food.
New entrants to the market such as Pinduoduo are also pursuing a similar model by linking online shoppers directly with the places of origin of agricultural products.