Calbee set to compete in China’s $898m breakfast cereal market

By Douglas Yu contact

- Last updated on GMT

Calbee's claims its products sold in China are manufactured in non-polluted regions in Japan. Pic: China Candy
Calbee's claims its products sold in China are manufactured in non-polluted regions in Japan. Pic: China Candy

Related tags: Breakfast cereal market, Breakfast cereal, China

Calbee has entered China’s brick-and-mortar retailers with its fruit cereal brand Frugra, as the company’s CEO Akira Matsumoto hopes the country will contribute one-third of Calbee’s international sales by 2020.

Market analysts from trade body, China Candy, believe that Calbee can compete with the larger breakfast cereal companies, like Kellogg and Nestlé, as China is still experiencing a cereal market boom.

Kellogg made its foray into China in 2006, launching its granola cereals through online retailer JD.com (京东) in 2016. It later partnered with processing firm YiHaiKerry (益海嘉里) to further expand its distribution.

Nestlé has also increased its breakfast cereal portfolio from three SKUs to 14 over the past 13 years, targeting women and children with different product lines. It recently introduced its Australian cereal brand Uncle Tobys​ to China through VIP.com.

Bigger potential

Historically, Calbee was only available in China via e-commerce.

Online retail makes up around 20% of the country’s total $898m breakfast cereal market, yet the category nearly doubled its sales over the past three years, according to China Candy.

Euromonitor’s latest report showed breakfast cereals continued to grow in 2017, registering 10% growth in current value terms.

“Breakfast cereals, featuring both convenience and healthy positioning, gained popularity, especially among the younger generation who were deeply influenced by Western dietary habits,”​ the market data provider said.

However, “wholesale and brick-and-mortar channels have bigger potential for Calbee” ​as they account for the majority of cereal purchases, ​it added.

Nuclear pollution concern

What might stumble Calbee’s growth is Chinese consumers’ concern over the safety of certain Japanese dry goods, said analysts.

Last year, China’s consumer transparency report, 央视315晚会, found some of the Japanese food items were sold on domestic sites after the state government banned importing products manufactured in nuclear polluted areas (Fukushima) in 2011, including Calbee’s cereals.

However, Calbee has noted its Frugra brand and other products are produced in a facility in the non-polluted Hokkaido region.

The company also plans to introduce products made in a new plant in Kyoto Prefecture in the summer of 2018 to Chinese consumers. 

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