BMI's Executive Summary

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The Sector At A Glance

Key Insights On The Food & Drink Sector Of Taiwan

Taiwan has once again shaken off regional competition to stand alone at the head of BMI’s latest Retail Business Environment Rankings. The country now represents the Asia Pacific region’s most attractive retail investment opportunity and in the newly-published Taiwan Food & Drink Report, BMI examines why the market remains attractive to investors in spite of its advanced state of maturity and the higher growth opportunities that exist in its vast neighbour China.

It is safe to say that a new arrival to Taiwan’s mass grocery retail sector is unlikely. The industry is already highly competitive and consolidated and this situation was only furthered recently when one of the market leaders Carrefour acquired departing giant Tesco. However, the remaining players continue to pump capital into the sector, unwilling to go the way of Tesco and unwilling to compromise an inch in terms of market share.

An obvious reason for commitment to Taiwan, regardless of interest in China, is the profitability of the market right now. If their retail offerings are pitched correctly, BMI does not doubt that multinationals and Taiwanese retailers alike will have phenomenal success in China in the future. However, at present retailers are for the most part merely investing in the possibility of future profitability. To sustain these sort of investments, retailers need markets in which they are already profitable. Taiwan, with its strong economy, low unemployment levels and high consumer confidence represents one such market. Similarly, although private labelling and price wars are becoming more common in Taiwan, retailers can afford to pitch their offering at the premium end of the market, hence the success of the convenience sector – a format which has traditionally provided added-value, in return for higher profits.

However, BMI does not agree with many industry analysts who perceive Taiwan as a stable and soon to be declining retail market. In fact, BMI is forecasting mass grocery retail sales growth of 43.5% to 2010, a far cry from many of the conservative estimations in circulation. Accounting for this forecast is the demanding nature of Taiwanese consumers who support constant premiumisation and innovation in the retail industry. All retailers need to constantly invest in the upgrading and modernisation of their retail offering to avoid losing customers to the retailer that does continue to pursue this premiumisation. Addedvalue offerings that are considered to be the height of premiumisation in some regional markets are quickly abandoned in favour of something even more convenient or even more innovative in the case of Taiwan. Customers are in a position, and willing, to pay the price of this pace of change, and it is this that will sustain impressive growth in the industry regardless of its maturity.

Sector crowding may well limit the potential of Taiwan to an outsider, but it has done nothing to dampen the dynamic nature of the industry internally.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Asia Pacific Business Environment Rankings

SWOT Analysis

Taiwan Food & Drink Industry SWOT

Macroeconomic Outlook

Table: Taiwan - Economic Activity

Chapter 2 – Retail

Regional Overview – Private Labelling in Asia Pacific

Table: Assessment Of Private Label Qualities – By Region

Table: Leading Private Label Categories By Market Share & Annual Growth Rate

Industry Forecast Scenario

Table: Taiwan Retail Indicators Sales Value by Format – Historical Data & Forecasts

Company Developments

Market Overview

Table: Structure of Taiwan's Mass Grocery Retail Market by Number of Outlets

Table: Structure of Taiwan's Mass Grocery Retail – Sales Value by Format (US$bn)

Table: Average Sales per Outlet by Format (US$mn) - 2005

Chapter 3 – Food & Drink

Regional Overview – Dairy in Asia

Table: Per-Capita Dairy Consumption (kg) & Consumption Growth In Selected Asian Markets

Table: Milk Production (000 tonnes) & Production Growth In Selected Asian Markets

Table: Dairy Production (000 tonnes) Forecasts In Selected Asian Markets

Industry Forecast Scenario

Table: Food Consumption Indicators – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Table: Taiwan Agricultural Sub-Sector Production – Historical Data

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Cigarette Value/Volume Sales - Historical Data & Forecasts

Industry Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players in Taiwan's Mass Grocery Retail Sector – 2005

Table: Key Players in Taiwan's Food & Drink Sector – 2005

Regional Company Case Studies

AEON in Asia Pacific

Table: AEON Five-year Financials (JPYmn)

Table: Speciality Store Network (as at February 20 2006)

Coca-Cola Amatil in Asia Pacific

Table: Coca-Cola Amatil Five-Year Financials

Table: Coca-Cola Amatil Market Share By Country And By Beverage Sub-sector – As At Year-End 2005

Table: SPC Ardmona Market Share By Product Category

Heineken in Asia Pacific

Table: Heineken – Brands Distributed In The Asia Pacific Region

Table: Contribution Of Asia Pacific Region To Heineken 2005 Financial Performance

Kraft In Asia Pacific

Table: 2005 Kraft Global Facts

Company Analysis

Taiwan FamilyMart Co

Carrefour Taiwan

Uni-President Chain Store Corp

I-Mei Foods Co Ltd

Taiwan Tobacco & Liquor Corp – Beverage arm

BMI Forecast Modelling

How we generate our industry forecasts

Retail Industry

Sources

Competitive Landscape for Asia Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Asain Food Sources

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BMI's Asian Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: