Business / Economy

Variety of forces tug on shoppers' purse strings

By Wang Zhuoqiong (China Daily) Updated: 2014-02-21 07:18

"The macro-environment in 2013 was one of soft growth, minimal in the developed world and below recent levels in the emerging markets," Nestle Chief Executive Paul Bulcke said. "2014 will likely be the same."

Nestle, based in Vevey, Switzerland, the world's largest food maker by revenue, said growth in its Asia Oceania Africa region, which contains the Chinese market, cooled to 7.4 percent in 2013 from 10.3 percent a year earlier.

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Nestle, maker of Kit Kat chocolate bars and Nescafe instant coffee, said its full-year profit fell 2.2 percent to a worse-than-expected $11.16 billion. The company cited Hsu Fu Chi, a confectionery maker in China, as a weak point, because of the slowing down of the country's sweets market.

Spirits manufacturer Pernod Ricard has seen its sales slide over the past year after China's anti-corruption campaign curbed lavish banquets and the practice of gift-giving among officials and executives.

The Paris-based company warned that a sales decline in China would weigh heavily on the group's profits going forward.

"There will be a recovery, but we don't know when and how," Chief Executive Officer Pierre Pringuet said.

Pringuet said he remains hopeful the group will return to double-digit growth in China but the glory days of Chinese consumers sipping $2,000-a-bottle brandy may be over.

In January, Unilever Plc, which makes Ben & Jerry's ice cream and Dove soap, warned of uncertainty in emerging economies that likely will hold back growth.

The Anglo-Dutch company, which gets nearly 60 percent of its revenue from China, India and other emerging markets, said underlying sales growth fell to 4.3 percent from 6.9 percent a year earlier, the first drop recorded since 2009.

Snack maker Mondelez International Inc, based in Chicago, said organic sales grew 1 percent in Europe in the fourth quarter but dropped 6.1 percent in the Asia-Pacific region because of lower pricing across most of the region and a decline in China, where revenue had a mid-teens percentage decline.

Despite the policy shift and stagnant macro-consumption environment, Yu of Kantar Worldpanel cited a lack of competitive strategy as the major cause for weakened growth in the foreign consumer industry.

According to Kantar Worldpanel, in the past quarter, local retailers continued to see stronger performances than their foreign rivals.

But brick-and-mortar retailers continued to struggle as shoppers increased their visits to other channels, such as e-commerce, where prices and convenience are more competitive.

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