The sales breakdown of various sales channels in global organic agriculture is currently as follows: supermarkets account for 25%-50%, organic specialty stores account for 25%-40%, and direct sales account for 10%-40%. Domestic organic product sales channels exhibit the following trend:
1. KA store
The Chinese retail market is mainly monopolised by several international retail groups. Carrefour, Walmart, Metro and Tesco have already completed their rollouts across the country's major markets, while Lotus (now renamed Lotus Supercenter), JUSCO and ParknShop have also established a firm foothold in several regional markets across China. Meanwhile, apart from China Resources Vanguard, which has already established a nationwide presence, most domestic Chinese supermarkets are expanding within regional markets, such as Nong工商 (Nonggongshang) and Century Lianhua in Shanghai, Suguo Supermarket and Times Supermarket in Jiangsu, Wumart in Beijing, and Renrenle Chain Commercial Group in Shenzhen.
Although lagging behind Walmart on the international market, Carrefour has firmly secured the top spot in China's foreign retail market by relying on a flexible system and the advantage of entering the Chinese market early, with its advantages being particularly evident in northern megacities such as Shanghai and Beijing. At the same time, Carrefour was also the first retail enterprise to introduce organic food into supermarkets. Currently, organic vegetable and grain counters are set up in Carrefour supermarkets across all major cities, and several top-ranking organic companies in terms of domestic sales in China—such as Beijing Organic Farm Science and Trade Co., Ltd., Beijing Qingpuyuan Vegetable Co., Ltd., and Shanghai Chongbentang Agriculture Co., Ltd.—were among the earliest batches of Carrefour's suppliers.
Walmart has already started contract manufacturing organic products in China, mainly including grains and honey.
Perhaps because it originates from Germany, Metro is one of the hypermarket chains in China that is relatively supportive of organic food. They sell organic meat products, and at the same time, you can also find imported organic products from Germany—such as organic pasta—among their own private-label imported goods.
Compared with local supermarkets, foreign-invested supermarkets sell a greater variety of imported food products. These imported foods are generally imported and distributed by imported food companies located in Shanghai, Beijing, and Shenzhen, and belong to the most mainstream, lower-priced category of imported foods.
Traditional supermarket chains hold a dominant position in the Chinese retail market and maintain an absolute upper hand in negotiations with suppliers. At the same time, amid growing concerns over food safety and product quality, large chain supermarkets are imposing increasingly stringent demands on suppliers. However, most domestic organic food enterprises in China are emerging small businesses, with very few possessing the actual strength to supply traditional supermarket chains. Furthermore, large chain supermarkets primarily pursue low prices and high sales volumes, while simultaneously levying hefty sales fees and various unexplained expenses on suppliers. Consequently, the pricing and supply shortcomings of the high-end organic foods currently handled by many Chinese organic producers or importers mean that they are unable to enter large chain supermarkets for sale.
2. Organic specialist retail stores
In 2005, China's first organic food specialty store, Ostore, opened in Shanghai. Ostore was invested in by Chinese-Americans and Taiwanese, and a large proportion of the products it sold were imported organic goods, including the famous German brand Rapunzel, which they imported entirely by themselves. At the same time, they featured a café and restaurant, and launched a home delivery service in Shanghai. However, the incompleteness of the organic food supply chain in China led to astonishingly high prices for the products sold at Ostore; a box of organic mung bean sprouts with a net weight of 150 grams was priced at 18 yuan, and in-store sales were consistently disappointing. Without the support of other sales channels, the imported product segment could not operate properly either. After realising this problem, Ostore's operators began pushing more of their products (including those they imported themselves) into other high-end supermarkets in Shanghai, gradually transitioning into distributors. However, due to disagreements among the shareholders, Ostore ultimately closed down in 2007.
Following the appearance of Ostore in China, organic food stores opened successively in Shanghai, Beijing, Shenzhen and even other Chinese cities, yet very few truly succeeded; the main ones that currently continue to persevere and steadily develop are Fields China and Epermarket.
Leho Town was founded in Beijing in 2006 and currently has eight stores in Beijing and one store in Shenzhen, ranging in size from 40 to 400 square metres; its retail network in Beijing has gradually gained scale. In its early stages, Leho Town also focused mainly on expatriates and, drawing on Ostore's experience, sold natural and green products alongside organic food to make up for shortfalls in organic food supplies. At the same time, Leho Town did not initially start its own imports, relying more on existing suppliers. As the number of stores steadily increased, Leho Town opportunely launched its own brand, “Lehosi”, white-labelling a variety of products such as organic honey, jam and grains, and began importing organic food directly from abroad, with imported products including dried fruit, noodles and juice. Affected by the broader economic climate, Leho Town closed its two stores in Shanghai in 2008, with plans to re-enter the Shanghai market in 2009. It is fair to say that three years after its establishment, through continuous adjustments, Leho Town gradually found its footing and business model. The opening of Leho Town's franchise market in 2009 was a milestone in its development, and we look forward to seeing how Leho Town performs in the future.
Haikele Organic Food Chain is invested in by Shanghai Tongmai Food Co., Ltd. Currently, it has 14 stores in Shanghai, primarily small specialty stores with an area of around 100 square metres. The original plan to open 20 stores in Shanghai by the end of 2008 was also suspended due to the impact of the economic climate. Unlike LOHAS, Tongmai sells almost exclusively certified organic products. At the same time, the proportion of imported food at Haikele is relatively small, mainly because its target customer base consists primarily of Chinese people. Haikele has also carried out simple private labelling, but has not yet begun importing on its own.
Taiwan's Non-Toxic Home has established itself in the Guangdong market, having already opened three stores in Shenzhen, with branches in Zhuhai and Jiangmen opening soon. Compared to Lohas City and Tongmai, they introduced the franchise model from Taiwan to the domestic market earlier. However, the incompleteness of the domestic organic industry chain will be the biggest challenge for organic store franchising. It is worth mentioning that Planck Organic Stores in Nanjing have grown to eight branches through four years of development, with seven of them achieving break-even, indicating that after in-depth promotion, the organic market holds significant growth potential.
Traditional upmarket food supermarket
Upmarket food supermarkets are currently the main distribution channel for imported organic food. The upmarket food supermarkets referred to here comprise two categories. The first category consists of chain supermarkets focused mainly on imported foods and catering primarily to expatriates living in China, such as BHG Marketplace in Beijing, Jenny Lou's chain supermarkets in Beijing, and City Shop and Pine Marketplace in Shanghai. The second category comprises upmarket food supermarkets affiliated with large upscale shopping venues, such as Pacific Department Store in Beijing, Dennis Department Store in Zhengzhou, Danlu Department Store in Wenzhou, and Jiuguang Department Store and Parkson Supermarket in Shanghai, as well as Golden Eagle International Shopping Center in Nanjing.
Among them, City Shop and Pine & Co in Shanghai are importers in their own right. City Shop in particular accounts for half of Shanghai's imported food market. At the same time, they have agents or branch offices all over the world to help them find the newest and most popular products, though they do not deal directly with the manufacturers. Therefore, City Shop features dedicated organic food counters where many of the latest organic products from various countries can be found—such as Germany's most popular organic drink, Bionade, and America's Newman's Own and Amy's Kitchen—yet at the same time, these manufacturers are unaware that their products are being sold in China.
All other high-end food stores are generally supplied by imported food agents. At present, China also has specialised organic food importers and agents, such as Shanghai Shiyi Trading and Nanjing Maoshengyuan Technology.
Online and mail order sales
Although online sales still account for a very small share in China, their growth rate is astonishing. Although food is not a major category of online sales and is constrained by freshness issues during food delivery, online sales of organic foods combined with home delivery systems have boomed over the past year. All kinds of supermarkets, including organic food chains, have their own online sales systems; at the same time, many organic suppliers have also established their own online and catalogue sales systems, such as Beijing Organic Farm, Hong Kong Green Dot Home, and Shanghai Chongbentang.
Here we mainly introduce several online delivery and sales systems that do not have physical stores.
Tootoo Organic Sourcewww.tootoofood.com) is a B2C platform specialising in organic food sales, fully developed by The9 Corporation (NASDAQ: NCTY) in 2008. It has already commenced sales in Beijing and Shenzhen, and plans to expand into Shanghai.
Redbaby is China's most successful mother and baby retailer, operating primarily through catalogue and online sales, with branches and warehouse logistics systems established across the country. Healthy natural food is a major focus of its food sales, and a number of organic food companies currently sell their products through Redbaby.
YiGuo is China's most famous online fruit delivery company, operating in Shanghai and Beijing. The company has now expanded its products to other high-end foods, including organic food, and mainly focuses on packaged foods.
Shanghai Helekang was founded in the first half of 2008, and currently delivers organic and natural food in the Shanghai area. It has also expanded into the Suzhou area, with the potential to expand into surrounding cities in the next few years, offering products that are primarily everyday items.
Based in Beijing, Beijing Boyang (Ofood) is China's earliest and most comprehensive online organic food sales platform. In addition to its own website, it sells primarily through Taobao and offers nationwide delivery. It has currently launched the Boyang series of organic products and is transitioning towards becoming a supplier.
Additionally, websites like Jiali Shopping, Nasreddin (Afanti), and Green Collar Community also entered the online organic sales sector in 2008. At present, none of these specialised online retail companies have their own upstream channels and instead purchase through suppliers.
5. Catering services
The organic catering industry in China has not truly begun yet. Currently, restaurants flying the organic flag have emerged in Shanghai, Beijing and Shenzhen. Among the more well-known ones are Beijing's Shanzhai Japanese Restaurant, Shanghai's Qimin Organic Hotpot, and Shanghai's Mintang Organic Cantonese Restaurant. However, consumers have no way of verifying the source of ingredients and 100% organic status is impossible to achieve. At the same time, many catering enterprises, such as Tea's Melody and South Beauty, cater to the development of organic dining by introducing one or more organic dishes. Traditional vegetarian restaurants are gradually using organic ingredients more and more; places like Beijing's Jingxinlian and Shanghai's Jujube Tree are vegetarian restaurants linked to Buddhist concepts.
The biggest opportunity for organic ingredients in the catering services industry comes from high-end hotels and restaurants in China's major cities. In Shanghai, Ostore was the first company to introduce organic ingredients to five-star hotels. As early as 2006, they teamed up with the Westin hotel to launch a weekend organic buffet for hotel guests. Now, several five-star hotels in Shanghai use organic products to varying degrees, mainly including organic eggs, organic cooking oil, and organic milk and yoghurt.
In China's high-end and foreign-oriented catering service industry, many raw materials are imported because domestic ingredients fail to meet their quality requirements. The most obvious examples are coffee, dairy products, flour, and meat (mutton and beef). As early as 2008, organic beef and lamb exporters from Australia came to Shanghai to seek export opportunities. Currently, China does not have organic suppliers dedicated specifically to the catering channel, but a few traditional catering distribution companies have started adding organic varieties to their product offerings, such as Beijing Aroco Coffee Co., Ltd. Additionally, the parent company of Hong Kong's Earth Organic Food Company has branches in Beijing, Shanghai, and Guangdong, primarily engaging in the catering distribution business.
Red wine is a unique category of product, requiring importers to hold a specialist liquor import licence. Currently, most red wine importers are specialist red wine importers. In addition to the catering and hospitality industry, large international supermarkets such as Metro and Carrefour are also major sales channels for red wine.
6. Corporate gift bulk purchasing market
The corporate bulk-buying market is one of the important channels for organic sales, and here the corporate bulk-buying market is further divided into business gifts and welfare gifts. The products of many organic food producers do not even enter the distribution sector for sale, but rely entirely on the bulk-buying market in their locality. The higher profit margins and relatively lower sales costs of the bulk-buying market have led many producers to introduce gift packaging for organic products.
At the same time, multiple companies in the distribution sector are also using group buying as a primary sales channel. Organic food group buying typically takes the form of gift boxes, the most common being organic vegetable gift boxes, organic grain gift boxes, organic mooncake gift boxes, and organic honey gift boxes. This type of group buying is concentrated mainly in the second half of the year, with many traditional gift sales companies adding organic gift boxes to their product lines. As a result, organic brands specialising in organic gifts, such as Hometown Homeland, have emerged. Another model involves larger-scale enterprises balancing their annual sales by issuing gift cards; for instance, Beijing Shengutu Agriculture Development Co., Ltd. uses top-up cards and custom cards to perfectly meet customer needs while allowing delivery workloads to be evenly distributed throughout the year. Additionally, most organic retailers have introduced stored-value cards that can be sold as gifts, with sales performance depending on the level of investment in group buying channels.
7. Farm-gate sales and ecotourism markets
Organic farms are the core of the entire organic food industry, and a vibrant organic market inevitably features surrounding organic farms. Besides production, farms can spin off a variety of marketing activities. The diverse services offered by organic farms can greatly enhance consumer loyalty for organic food businesses. Organic farms located around major cities—whether they belong to suppliers for large supermarkets or act as ancillary farms for organic supermarket chains—mostly offer eco-tourism and farm delivery/group buying, while some have also entered the catering market. Examples include the Liuminying Ecological Farm in Beijing, the Biofarm in Shanghai, the Planck Farm belonging to the Nanjing Planck Organic Network, and the Zhiwan Organic Memorial Farm belonging to Lehocheng. At the same time, many traditional agritainment venues and private farms have also started growing crops organically and conducting organic marketing, such as the Italian Farm in Beijing. These eco-tourism farms are particularly numerous around Beijing.
Meanwhile, some non-governmental organisations and private farms have also initiated plot-leasing schemes for urban households to cultivate, which can be considered precursors to community-supported agriculture (CSA) in China.
Farmers' markets are an important channel for the sale of organic products abroad, but unfortunately, China does not yet have true farmers' markets. In Beijing and Shanghai, some organisations and property developers have organised small-scale organic food markets, but most of those participating are not producers, such as the organic food market at the Eco Design Fair in Shanghai. At the same time, in some regions there are government-led agricultural carnivals and agricultural produce exhibitions, which to a certain extent can be considered a type of farmers' market.文章源自FOFCC-http://fofcc.org.cn/en/11205/
Reprinted from China Marketing and Communications Network文章源自FOFCC-http://fofcc.org.cn/en/11205/