Senior Packaged Foods Analyst, Francisco Redruello, discusses how changes in legislation in China will affect the local packaged foods industry. Changes in the law will increase the cost of production, therefore raising unit prices. This change in price will ultimately have a negative impact on Chinese consumers, but it will give a chance for international manufactures to enter the Chinese market.
Due to the economic crisis, China has had a relatively large inflation rate, and global unemployment is still high. Because of these influences, global economic growth is slow and demand is weak for some packaged foods, such as chocolate, but strong for necessary items, such as milk and soup.
When Kraft took over Cadbury, Kraft acquired a presence in the Asia Pacific market. Now that these two companies have merged, the combined resources mean lower prices for their products. Confectionery products – which is one of the fastest growing categories in the region – may now gain an even stronger demand in Asia Pacific due to these lower prices.
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