Nov 09, 2011 • By

Growing with China’s emerging middle class

One of the aspects I love most about my job is learning about countries and cultures around the world – and the role food plays in those cultures.

In September, my colleague Wendy Tai wrote about the mooncake tradition in China – holiday gift-giving is very important in the Chinese culture, and mooncakes are a delicacy given in celebration of the mid-Autumn festival. Häagen-Dazs provides a delicious update to a decades old tradition in China with ice cream mooncakes. I love this example of combining cultural insights with innovation to market ice cream in a whole new way.

Today, Chris O’Leary, executive vice president and chief operating officer of General Mills International, and Gary Chu, senior vice president and president of General Mills Greater China, told analysts how they are innovating across borders around the world to continue to drive growth in our international business.

Speaking at the CLSA AsiaUSA investor forum in San Francisco, Chris said that over the past five years, International has been General Mills’ fastest-growing business, with both sales and operating profit increasing at roughly twice the company average. And within our International business, China is our largest growth market.

Gary, based in General Mills’ Shanghai office, opened his presentation by painting a picture of the emerging middle class in China. Over the last 40 years, Gary said China’s GDP has increased at double-digit rates, creating a rapidly growing middle class. And strong growth is expected to continue.

By 2020, the number of middle class and affluent families across China is expected to double to 200 million households, creating a growing market of potential General Mills consumers.

Gary said that at the end of this year, we expect to have roughly 200 Häagen-Dazs shops in operation across Greater China, and we expect to open new shops – and reach additional cities – in the years ahead. The shops are upscale dining destinations, where consumers come to sit, relax and enjoy their favorite Häagen-Dazs treat.

From a simple scoop, to an elaborate dine-in creation, these products represent an affordable luxury for China’s growing urban consumer segment. Consumers can even order their favorite treat online.

In addition to Häagen-Dazs, General Mills markets Wanchai Ferry dumplings and dim sum in China, and this brand has an inspiring story. Back in the 1970s, Madame Chong, a single mother of two young daughters, left her home in Central East China for a new life in Hong Kong. To support her family, she began making dumplings and selling them from a wooden cart along the Wanchai Ferry Pier in Hong Kong.

Demand for her great-tasting dumplings grew quickly, and over the next 20 years, she expanded her distribution throughout Hong Kong, and moved into frozen dumpling varieties to make her creations more widely available. The Pillsbury Company acquired her business in 1997, and it became a part of General Mills in 2001 when General Mills acquired Pillsbury.

Today, Gary said Wanchai Ferry is in more than 100 cities across Greater China – with plans to enter new cities and new markets moving forward, including Thailand. In a country where dumplings are ubiquitous, he said Wanchai Ferry dumplings are the category leader in every city where we have market share data.

Gary also discussed our snacks business in China. Bugles, a popular snack in the U.S., is sold in China in local flavors, such as seaweed, beef and tomato, and ketchup. Our snacks are sold in small pouches, at prices affordable to a broad base of Chinese consumers.

Our distribution currently covers retail locations in over 300 cities across China – we reach some by bicycle!

You can hear more from Chris and Gary in an archived copy of their presentation here on GeneralMills.com.

In your own travels, what are some local food traditions that have surprised or delighted you?