Chewing gum's the next big bubble

Overseas brands face tough competition

Foreign confectionary and food companies are facing stiff competition from major domestic players.

Stephen Maher, president of Mondelez China, a subsidiary of the multinational confectionery, food and beverage conglomerate based in the United States, plans to increase market share by promoting key brands.

Mondelez International Inc includes leading products from Kraft Foods and has major global brands such as Oreo and Chips Ahoy biscuits, Cadbury chocolate and Ritz savory snacks.

But its biggest rivals here are Chinese companies such as the sprawling conglomerate, Bright Food Group.

According to research jointly published by consultancy firms Bain & Co and Kantar Worldpanel last year, domestic companies dominated the confectionary and snack business.

They held market share in 18 out of 26 categories, including biscuits, chocolates, chewing gum and juice, which accounted for about 70 percent of the market value.

Foreign brands edged ahead in only eight categories including tissue paper, beer and hair conditioner.

"It's interesting to see how they are coping with changing Chinese consumer aspirations for healthy and less sugary products, while at the same time competing against local brands," Jason Yu, general manager with the research company Kantar Worldpanel China, said.

Last year, Yu pointed out, that mushroom biscuits rolled out by a Chinese pharmaceutical company, Jiangzhong Group Co Ltd, caught foreign brands off guard. The firm picked up 2 percent market share from international brands.

As sales of core products show signs of stagnating, Maher aims to revitalize the company's products such as Oreo and Chips Ahoy biscuits, and boost sales. Increased investment in the Chinese market is planned as well as improving and streamlining distribution to stores.

"Using global good practices and applying them to the market in China, as well improving manufacturing efficiency, will help us expand," Maher said.

In an era where an increasing number of consumers shop online, Maher believes the challenge is to tap into that market by using innovative ideas and techniques.

Online sales of fast moving consumer goods are set to grow rapidly in China this year, reaching $130 billion by the end of 2025, according to a report published by Kantar.

"We need to have the courage to let more junior people find solutions," Maher said. "The beautiful thing is what we solve here in China is something we can really bring to the rest of the world."