Could Whole Foods Survive in China?

As I wrote in this snacking analysis recently, I believe a consumer push for healthier foods will hit the market in the next 2-3 years, especially in Tier 1 markets. I thought about this again today as I stopped by the Green Grocer in Portsmouth, RI during day 1 of my visit to the States. Having lived in China for over two years now, I forget how many health products and foods are available in these types of markets. From rice chips, to my Organic Raw Kombucha beverage (actually from a Chinese tea), and lets not forget, organic pet food. Many brands have entered the healthy/organic segment with high returns. Yes, China also has a fledgling organic industry with the likes of BioFarms and popular organic brands being offered at expat oriented grocery stores such as CityShop, Pines, and Fei Dan. While it has not hit the mainstream in China, the government is at least starting to regulate food health claims, which will hopefully provide the foundation for the sector.

When assessing the market for health food products in China, one must recognize that traditional Chinese cooking is actually fairly healthy. The foods contain very little diary and carbs (aside from rice and noodles) and always contain lots of green vegetables. This traditional eating, however, is quickly being overtaken by fast foods and convenient pre-packaged foods being consumed by the overworked young white collar worker. These pre-packaged foods are generally less fresh and less healthy, but their convenience has made them an integral part of many Chinese youth’s daily lives. Fortunately, we’ve noted a rise in people’s awareness of the these food’s dangers. In addition, tainted milk scandals have led Chinese to reflect on the quality of their own food products.

Just as luxury spending is spinning out of control with $4,000 Gucci purses in China, I think luxury-meets-food is a market ripe for growth. In addition to a perceived increase in demand, China has also been greatly expanding its domestic organic farming, which is mainly being used for exporting to the European market. I see a huge opportunity to tap into both consumer demand and domestic organic supply chains in the near future. A localized Whole Foods is inevitable, who will be first to market?

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