China Beverage News

China's startup Luckin Coffee will have 2,000 stores by the end of this year, more than doubling its current locations, the company announced at a press conference Wednesday.

In seven months after its launch on a trail base in January, the company has opened 809 stores across 13 cities in China, selling more than 18 million cups of coffee with a customer base of more than 3.5 million.

The fast-growing company also planned to expand its business to light meals and snacks, as it will partner with UK-based Bakkavor, U.S.-based Bama Companies Inc. and China's food group COFCO Corp as its suppliers.

To increase its foothold and market share, all stores will offer a 50 percent discount for both delivery and pick-up of food items, includingsandwiches, muffins, and salads, from Aug. 1 to Dec. 31, the company said.

"Light snacks are natural companions of coffee as a key part of coffee business, and have a great potential,"said Guo Jinyi, co-founder and senior vice president of Luckin Coffee."We hope to help customers develop habits for light meals through subsidies."

Luckin Coffee was founded by Qian Zhiya, former COO of UCAR, one of China's biggest car rental services.

Considered as an emerging rival to Starbucks in the Chinese market, Luckin Coffee has provided customers with delivery services since its launch by working with a local delivery company.

After placing orders online, customers can choose to either pick them up in nearby stores or have them delivered within 30 minutes.

"The average delivery time of each Luckin order is now about 18 minutes,"said Guo.

Source: china.org

(Reuters) - Starbucks Corp is partnering with Alibaba to deliver its coffee in Chinese cities starting this fall, betting the move will revive sales growth in its second-largest market that is witnessing aggressive local competition.

Starbucks flagged in June that it was pursuing such a tie-up after reporting a sudden slowdown in China sales growth, which it blamed partly on a crackdown on third-party delivery firms that had previously helped drive orders at its cafes.

“I consider this strategic partnership to be one that ... will just be rocket fuel for Starbucks’ growth and continued expansion in China,” Starbucks Chief Executive Kevin Johnson told reporters in Shanghai on Thursday.

The Seattle-based company will pilot delivery services from 150 Starbucks stores in Beijing and Shanghai and plans to expand that to more than 2,000 stores across 30 cities by the end of the year, Starbucks and Alibaba said in a joint statement.

Starbucks expects to start seeing some of the benefits from the partnership in the next quarter and the full impact in 2019, Johnson said.

The companies will collaborate across businesses within the Alibaba group, including delivery platform Ele.me, supermarket chain Hema, online retailers Tmall and Taobao, and mobile and online payment platform Alipay. Starbucks will also open a virtual store on Alibaba’s platforms where customers can buy Starbucks merchandise, they said.

The delivery program will leverage Ele.me’s 3 million registered riders, with an aim of delivering orders within half an hour. Starbucks will establish “Starbucks Delivery Kitchens” inside Hema stores and use the supermarket’s delivery system to fulfill Starbucks delivery orders.

Starbucks had no formal online delivery in China before this deal.

Instead, unapproved third-party delivery services had filled that gap by picking up bulk orders for their own customers. Analysts have said an official delivery arrangement would push up costs for Starbucks.

Starbucks said its delivery menu will only contain items that can meet its half-hour deadline, but did not specify whether it will charge for the deliveries. Its pilot delivery program in Manhattan and Seattle a few years back fizzled partly because it charged too much: $5.99 per delivery.

Luckin Coffee, a local startup that wants to go toe-to-toe with Starbucks, charges less than $1 per order and has said its deliveries took an average of 18 minutes.

Starbucks and Alibaba did not give financial details of the partnership and declined to say whether the companies had discussed taking equity stakes in each other.

Some parts of the agreement, including the Ele.me tie-up was exclusive, while others were not, Starbucks executives said. The partnership had been discussed for more than a year, the companies said.

OPPORTUNITY = COMPETITION

China has offered Starbucks rich pickings in recent years, thanks to a burgeoning cafe culture which has helped offset saturation in the United States. It has 3,400 stores in the country and plans to almost double that number by 2022.

But there is pressure from local companies such as Luckin, which has expanded rapidly and offers cheap delivery, online ordering, big discounts and premium pay for its staff.

Luckin said on Wednesday it planned to more than double its number of stores in China to 2,000 by the end of 2018.

Johnson acknowledged the competition but added that the significant opportunity in China made that unsurprising.

Starbucks’ move to offer delivery “is in part to make sure they don’t fall behind Luckin Coffee in terms of offering high quality delivery services” to a customer group of young office workers who do not want to stand in line, said Ben Cavender, an analyst at China Market Research Group.

The partnership is also a leg up for Ele.me in its race for market share in the Chinese delivery market against Meituan-Dianping, which is backed by gaming giant Tencent Holdings.

Ele.me said last week that it will spend more on subsidies at a time when Meituan is preparing for a $4 billion Hong Kong listing.

Source: Reuters; Reporting by Brenda Goh and Pei Li; Writing by Sayantani Ghosh; Editing by Muralikumar Anantharaman

Heineken N.V. ('HEINEKEN') today announced that it has signed non-binding agreements with China Resources Enterprise, Limited ('CRE') and China Resources Beer (Holdings) Co. Ltd. ('CR Beer') to create a long-term strategic partnership for Mainland China, Hong Kong and Macau (together 'China'). In the context of this partnership, HEINEKEN will become CRE's 40% minority partner in holding company CRH (Beer) Limited ('CBL'), which controls CR Beer, the undisputed market leader in the world's largest beer market, China.

As part of the strategic partnership, HEINEKEN China's current operations will be combined with CR Beer's operations and HEINEKEN will license the Heineken® brand in China to CR Beer on a long-term basis. Together, HEINEKEN, CRE and CR Beer are perfectly positioned to win in the rapidly growing premium beer segment in China.

Strategic rationale

China's beer market, the world's largest beer market by volume, is now the second largest premium beer market globally and is forecast to be the biggest contributor to premium volume growth in the next five years, driven by its rapidly growing middle class. Profitability of the Chinese beer market is expected to improve significantly, driven by premiumisation, demand for international beer brands and cost optimisation.

The combination of HEINEKEN and CR Beer in China is highly complementary. CR Beer has a best-in-class route to market (RTM) network, a wide brewery footprint and a deep understanding of the Chinese market. HEINEKEN has proven premium brand building capabilities and a world-class international brand portfolio, led by the iconic Heineken® brand for which it has built strong equity over the years in China.

HEINEKEN, CRE and CR Beer are convinced that their strategic partnership will drive growth for their businesses. The partnership will enable CRE to advance its premiumisation strategy and it will help HEINEKEN to significantly expand availability of the Heineken® brand in China to fully leverage the brand's potential.

Other brands

Under the strategic partnership agreement, HEINEKEN will be CRE's exclusive partner for international premium lager beers in China. HEINEKEN and CR Beer will investigate which other premium brands from HEINEKEN's portfolio can be licensed to CR Beer in China.

HEINEKEN and CRE will also investigate if the Dutch brewer's global presence and marketing capabilities can be leveraged to support and accelerate the international growth of CR Beer's Snow® brand and its other Chinese brands to become the Chinese beers of choice.

Chairmen statements

Commenting on the strategic partnership, HEINEKEN Chairman of the Executive Board & CEO Jean-Françoisvan Boxmeer said: "We very much look forward to joining forces with CRE and CR Beer, the undisputed market leader in China. We believe that our strong Heineken® brand and marketing capabilities, combined with CR Beer's deep understanding of the local market, its scale and best-in-class distribution network will create a winning combination in the growing premium beer segment in China. We look forward to working together with CRE's leadership in our newly formed Strategic Advisory Council, and supporting CR Beer in its ambition to internationalize."

Chen Lang, Chairman of CRE, said: "We are very excited about this partnership and see immense potential in the combined strengths of CR Beer and HEINEKEN. With HEINEKEN's long heritage and world-class iconic brand portfolio, along with our leading presence and deep understanding of China, we believe we can win together in this new era of the Chinese beer market, in which the premium segment will become increasingly important. In HEINEKEN we have found the perfect partner to achieve our ambitions in China and - as an international partner - to support us in growing our business outside China."

Terms of the non-binding agreements

The geographical coverage of the strategic partnership with CRE and CR Beer is China. Under the non-binding agreements, HEINEKEN and CRE or CR Beer (as applicable) will enter into the following transactions to be completed simultaneously:

1) HEINEKEN will acquire a shareholding of 40% in CBL and CRE will own the other 60% in CBL. The Partnership will be governed by a shareholders agreement. CBL holds a controlling interest of 51.67% in CR Beer, a company listed on the Main Board of The Stock Exchange of Hong Kong Limited, operating the beer business in China. Post completion of the transaction, HEINEKEN will have an effective 20.67% economic interest in CR Beer (see appendix for shareholder structure overview) and will get representation on the board of CBL and nomination rights to the board of CR Beer. HEINEKEN will invest a total amount of HK$24.3 billion in CBL, which translates into an implied purchase price of HK$36.31 per share in CR Beer.

2) CRE will acquire 5.2 million Heineken N.V. shares (equivalent to a 0.9% shareholding in Heineken N.V.) which are currently held in treasury for a total consideration of €464 million or €88.66 per share.

3) HEINEKEN will contribute its operating entities in China, including three breweries, into CR Beer for a total consideration of HK$2.4 billion, through a share sale transaction.

Combined, these transactions will result in a net investment of €1,948 million (at current exchange rates) by HEINEKEN.

4) HEINEKEN and CR Beer will enter into a Trademark License Agreement (TMLA) for the Heineken® brand in China. HEINEKEN and CR Beer will also sign a Framework Agreement to allow CR Beer to leverage HEINEKEN's global distribution channels to support and accelerate the international growth of CR Beer's Snow® brand and its other Chinese brands, as well as to govern the use of other premium brands owned by HEINEKEN which may be licensed to CR Beer in China.

Upon completion HEINEKEN's pro-forma net debt/EBITDA (beia) ratio is expected to slightly exceed the target of 2.5x. HEINEKEN remains committed to return to the long-term target of below 2.5x. The transaction will be immediately accretive to margins and accretive to EPS in the near term.

Next steps

The Strategic Partnership between HEINEKEN, CRE and CR Beer and the Company Transactions are subject to, among others, due diligence and further negotiations and entering into definitive, binding contractual agreement(s). As at the date of this announcement, the terms and conditions of the definite agreement(s) have yet to be agreed or entered into. As such, these transactions may or may not proceed. If parties reach agreement on definite agreement(s), completion will be subject to customary and applicable (including regulatory) approvals in Mainland China and Hong Kong.

Further announcements will be made as and when appropriate.

Source: Nasdaq

(Reuters) - Heineken is taking a $3.1 billion stake in the parent of China Resources Beer, China’s top brewer, to tap a growing thirst for premium brands in the world’s biggest beer market.

The world’s No. 2 brewer will take a 40 percent holding in CRH Beer, giving it a strong distribution network in China and greater access to a market it has so far found tough to crack.

For CR Beer, the maker of the locally popular Snow beer, the deal is a way to get into the foreign-dominated premium sector at a time when Chinese demand for lower-end brands is waning.

“This (deal) will help accelerate CR Beer’s Snow beer high-end strategy and achieve its goal to take a leading position in the premium market within 5-10 years,” CR Beer’s Chief Executive Hou Xiaohai told reporters on a call on Friday.

Snow accounts for about 90 percent of CR Beer’s total beer sales volumes but is almost exclusively sold in China. CR Beer hopes to use Heineken’s global network to market it abroad.

CR Beer shares initially jumped as much as 10 percent but closed down 0.99 percent, while Heineken’s rose 2 percent.

“Thanks to the strong position of CR Beer and understanding of the market growth of the Heineken brand should improve in the coming years,” analysts at Degroof Petercam wrote in a note.

NOT GOING IT ALONE

Heineken had struggled to compete with the dominant players in China’s premium lager market such as Anheuser-Busch InBev and Carlsberg on a national scale.

The Dutch group had a 0.5 percent share of the China market by volume in 2017, data from research firm Euromonitor International showed, while AB Inbev had 16.1 percent. CR Beer had more than a quarter share.

Heineken chief executive Jean-Francois van Boxmeer said the company would have found it hard to replicate good results it had achieved in provinces such as Fujian throughout China.

“(It) is something that would have cost way too much money and we have no time for that,” van Boxmeer said on a conference call following the announcement of the deal with CRH Beer.

Heineken will inject its three breweries in China into CR Beer and license its Heineken brand in China, Hong Kong and Macau to CR Beer.

China Resources Enterprise will own the remaining 60 percent of CRH Beer and will also buy 5.2 million Heineken shares for 464 million euros ($538 million).

The combined transactions would result in a net investment of 1.9 billion euros ($2.2 billion) by Heineken, the two firms said in a joint statement.

DISTRIBUTION, EXPANSION PLANS

Heineken sells its premium lagers Heineken, Tiger and Sol in China, along with cheaper local brands Anchor and Hainan Beer.

CR Beer’s Hou said the company would use its extensive local distribution network to promote Heineken’s brands and was contemplating bringing in other Heineken-owned brands not yet in China, though that was still under discussion.

Heineken, which noted the deal should boost its profit margins, said it would assist CR Beer to monitor the quality of its Heineken products, marketing efforts and pricing but would otherwise stand back.

“They’re great professionals, we wouldn’t want to second guess what they are doing at the steering wheel in China,” van Boxmeer said, adding it was up to the Chinese group to decide on the future of the Dutch company’s local brands.

The deal would not impact Heineken’s sponsorship of the Chinese Formula 1 Grand Prix, which was part of a global sponsorship arrangement, van Boxmeer added.

The Chinese brewer also hopes to eventually expand Snow beer into overseas markets such as Southeast Asia, Europe, the United States and Australia through Heineken’s network, he said.

The companies are conducting due diligence and will need anti-trust approval from China, a person with direct knowledge said, adding the deal is expected to be completed by year-end.

JP Morgan is advising Heineken, while China Resources has enlisted Nomura and UBS as advisers. The banks did not immediately comment.

Reuters reported in March that China Resources Beer was in talks to acquire Heineken’s China business.

Source: Reuters; Reporting by Donny Kwok and Kane Wu in HONG KONG, and Brenda Goh in SHANGHAI; Additional reporting by Pei Li in BEIJING, Rama Venkat Raman in Bengaluru and Robert-Jan Bartunek in BRUSSELS; Writing by Anne Marie Roantree; Editing by Stephen Coates/Himani Sarkar/Alexander Smith

(Xinhua) Howie Southworth and his friend Greg Matza, two bestselling food authors and devoted foodies from the US, have been eating their way through China for over two decades. Soon after their culinary journeys began, both fell in love with the country's street food.

To tell the fascinating story of their street food adventures in China, this dynamic duo wrote an entertaining cookbook called Chinese Street Food.

"It was an amazing opportunity to write a book such as this," Southworth said at a launch event for the book hosted by the Confucius Institute of George Washington University on Wednesday.

Following one's senses

Brimming with recipes, folklore, origin stories and witty chats with the cooks, vendors and fellow gastronomes they met along the way, the book takes readers on a culinary journey outside of restaurants and into the streets of different regions of China.

"We wrote Chinese Street Food to celebrate a culinary culture that is quickly changing yet deeply rooted in tradition," Southworth said.

The book introduces readers to 100 different kinds of authentic regional street food by presenting small dishes ranging from the balmy rice paddies of Yunnan and spicy flavors of Sichuan to the frozen tundra of Harbin and the imperial majesty of Beijing.

"Our aim is to share a bit of culinary history as well as our personal relationship to the food, the vendors, the cooks and our fellow gastronomes," Southworth wrote in the book's introduction.

"The dishes throughout the book are simple, delicious and far from top-of-the-mind."

Southworth and Matza have a special place in their hearts for street food in China, as it allows them to be impulsive and appeals to the five senses.

"It just makes sense to follow our five senses rather than a restaurant guide. We're also avid cooks, so it helps that with street food, we can eat, watch, and chat with cooks on this block, the next, the next. Endless fun," Southworth said.

In his eyes, though regional specialties in China have begun to make their way to the US in recent years, street food is one important element of Chinese cuisine that remains rare throughout the Western world.

As Southworth sees it, street food is high on the entertainment factor. "A walkable nosh on the way to the office, a quick, cheap lunch, or an evening spent hopping from snack stand to snack stand with friends is an everyday occurrence in China."

"It's a more entertaining option than sitting around a table at McDonald's. It fits in because it's just yet another style of eating to try to diversify the way the Chinese folks eat," Southworth said.

Growing up in a household that was fascinated with food, Southworth's childhood memories are filled with the aroma of Sunday gravy and the amusing scene of his Italian grandmother chasing him out of the kitchen with a hot spoon.

After obtaining a graduate degree in educational administration from New York University in 1996, Southworth moved to a small town outside of China's northeastern city of Shenyang to teach English. The year-long experience ignited his lifelong passion for China, and most notably, for the cuisine.

"I moved to China to eat. I supported this most delectable habit by teaching, but in reality, teaching was a way to pass the time between meals," Southworth quipped about his experience in China.

Looking to the future

Witnessing a rapidly modernizing China as they traveled, the duo noticed the street food scene in China has also been changing over the years.

In recent years, in Beijing, the city government has been closing down a lot of street stalls in order to create a more habitable and clean environment for citizens.

Though the street food scene may be shifting, Southworth believes such a change may also allow street food to improve, as it may force traditional street food preparation to be more refined.

Southworth recounted a recent visit to Beijing during which he had a chat with Chen Xiaoqing, a film director and food author in China. The two had an in-depth conversation about Chinese street food.

As the cuisine itself is enjoying a renaissance in China, Southworth said both he and Chen hope Chinese street food will remain a part of Chinese cityscapes.

"China's society is undergoing big changes. As the migration of people around the country picks up, so does the diversity in cooking, so the future of street food is very bright," Chen said.

Source: Xinhua

(China Daily) US fast-food chain McDonald's Corp said on Friday that its Big Mac hamburger has become the company's most popular beef burger in China and has been interpreted to have different symbolic meanings in the country.

"In 1990, the Big Mac came to the Chinese mainland together with the first McDonald's restaurant. Nowadays, it has become McDonald's most popular beef burger in China," said Phyllis Cheung, CEO of McDonald's China.

The latest data from the company showed that over 50 million Big Macs were sold in China last year, and Beijing boasts the highest sales in the country.

"Moreover, we are proud to see that the Big Mac has become more than just the name of a burger. It has also become a common word for consumers and the media, and is an indispensable part of their lives," she added.

Citing that the Big Mac has been interpreted to have various meanings including "strong economy" or "a competitive company" in China, she noted that this classic McDonald's product has gone far beyond any other burger.

Cheung made the comments during the celebration ceremony of the 50th Anniversary of the Big Mac, where the company also unveiled a set of collectable coins known as MacCoins to celebrate the Big Mac's birthday.

More than a million such MacCoins can be collected from McDonald's restaurants in the Chinese mainland starting Aug 6.

Each MacCoin is redeemable for a free Big Mac at any McDonald's restaurant in more than 50 countries and regions across the world.

Steve Easterbrook, McDonald's global CEO, said: "The MacCoin is the first food-backed collectable currency and transcends a single currency to commemorate our global iconic burger, while giving customers all over the world a chance to enjoy a Big Mac on us."

According to the company, a total of 1.3 billion Big Macs have been sold last year with an average of 41 burgers sold each second.

Source: By Cheng Yu | chinadaily.com.cn

(Caixin) Heineken NV is spending HK$24.3 billion ($3.1 billion) to acquire a 40% stake in the owner of China’s biggest beer-maker, ramping up its efforts to tap the world’s largest beer market.

The Dutch brewer is purchasing an interest in China Resources Enterprise Ltd., the majority shareholder of China Resources Beer (Holdings) Co. Ltd. (CR Beer), which owns Snow beer.

Heineken is also selling 5.2 million shares, or a nearly 1% stake, to China Resources Enterprises for 464 million euros ($539.2 million), according to a Heineken statement on Friday.

Under the deal, Heineken will sell its existing China operations to CR Beer, including three breweries, and will license its Heineken brand in China to CR Beer on a long-term basis, it said.

The world’s second-largest brewer said the partnership will “help significantly expand” availability of its Heineken brand in China to fully leverage its potential, while CR Enterprises will be able to advance “its premiumization strategy.”

“CR Beer has a best-in-class route to market network, a wide brewery footprint and a deep understanding of the Chinese market,” the statement said. “Heineken has proven premium brand building capabilities and a world-class international brand portfolio, led by the iconic Heineken brand for which it has built strong equity over the years in China.”

CR Beer’s Snow is the world’s best-selling beer even though it is sold almost exclusively in China.

The company said it aims to leverage Heineken’s global presence and marketing capabilities to help pave the way for Snow’s international expansion.

China’s brewery market shows signs of moving into the premium segment, as total beer sales jumped 6.6% in 2017 to 572.7 billion yuan ($83.80 billion), while consumption volume inched down by 0.6% to 45.5 billion liters, according to data-tracker Euromonitor International.

“Profitability of the Chinese beer market is expected to improve significantly, driven by premiumization, demand for international beer brands and cost optimization,” Heineken said.

The Dutch company has some catching up to do in China. Despite coming into the country in 1983, Heineken commanded only a 0.5% share of the market last year, lagging far behind other foreign brands such as Carlsberg, which had a 5.2% share, according to Euromonitor.

The competitive landscape has pushed out some players. Japan’s Asahi Group Holdings Ltd. announced in December it will to sell its stake in Tsingtao Brewery Co. Ltd. to conglomerate Fosun International Ltd. for HK$6.6 billion, citing a market slowdown.

Source: Caixin By Jason Tan

Every August, millions gather for weeks of Bavarian-style bacchanals at what has been dubbed Asia's "Oktoberfest" -- the Qingdao International Beer Festival in Qingdao, Shandong province.

Now in its 28th year, the festival opened on July 20, bringing together 200 beer brands from over 30 countries and regions with more than 1,300 varieties on tap, included brands from Shanghai Cooperation Organization (SCO) member countries.

The 38-day festival ends Aug 26.

Source: China Daily

(China Daily) PepsiCo highlighted its strong and growing presence in China, announcing plans at the start of the month to invest $100 million to expand and transform its Shanghai Songjiang Foods plant.

The investment will establish new manufacturing lines and introduce advanced packaging and warehouse technologies to expand and fully modernize the factory.

The move reflects PepsiCo's continued and long-standing commitment to the Chinese market, according to the company.

"China is one of the top global markets driving PepsiCo's growth," said Ram Krishnan, president and CEO of PepsiCo Greater China Region.

Krishnan said that through active expansion, the company's foods business had achieved "remarkable results" over the past 20 years.

"This additional capital investment in our Songjiang plant reflects not only our 'In China, For China,

With China' commitment, but also represents PepsiCo's continuous investment that is based on the changing local needs," he added.

The Songjiang plant opened in 1998. In the past 20 plus years, the drinks manufacturer said the facility has contributed positively to the economic development of Songjiang district.

With this additional investment, PepsiCo will build a two-storied packaging workshop and a major warehouse.

The new warehouse will use advanced automatic packaging and warehousing technologies.

On completion, the Songjiang plant will boost PepsiCo's potato chips production capacity, to meet ever-increasing demand from Chinese consumers, the company said.

With its expansion and transformation, the plant is expected to create around 370 jobs directly as well as thousands of indirect job openings elsewhere, it added.

"PepsiCo will continue to make great efforts in its China operations, striving to contribute more to the sustainable development of China," Krishnan said.

As one of the first multinational companies to enter China, PepsiCo has been operating in the country for 37 years.

In 1981, PepsiCo established its first bottling plant in Shenzhen, Guangdong province, starting its investment journey in the country.

Together with its business partners, PepsiCo has invested over 48 billion yuan ($7 billion) in China over the last 10-plus years, creating more than 100,000 direct and indirect jobs.

In 1993, PepsiCo Foods entered the China market with the introduction of Lay's potato chips.

Since then, PepsiCo's food business has grown into seven foods plants, six large-scale modern potato farms and 10 cooperation farms in China.

The company said that at the same time, its food business has been providing support for he sustainable development of China's agricultural sector.

More than 10,000 farmers benefited from PepsiCo's agri-business in China over the past 10 years, the company added.

In September 2011, PepsiCo GCR signed a memorandum of understanding with the then Ministry of Agriculture — since renamed the Ministry of Agriculture and Rural Affairs — to promote sustainable agricultural projects and accelerate the development rural China.

As part of the joint initiative, the ministry and the company committed to building and operating sustainable demonstration farms, utilizing advanced irrigation, fertilization and crop management techniques.

Through the collaboration, both sides aim to promote best practice among potato plantations across China's farming system, to improve yields and increase income levels for farmers throughout the country.

From 2013 to 2016, the two parties jointly held training sessions on sustainable agricultural development of the potato and management of farms in the Inner Mongolia autonomous region.

Experts from PepsiCo offered training to nearly 100 agricultural professionals from over 10 provinces and regions in China to promote the sustainable development of potato cultivation.

PepsiCo also shared its best practice in global modern farm management — to help increase the quality and efficiency of potato production, accelerate agricultural modernization and improve management skills for agriculture in China.

Those attending the additional capital investment signing ceremony in Shanghai on Aug 2 included Chen Xiaofeng, deputy head of Shanghai Songjiang district and director of the Administrative Committee of the national-level Songjiang Economic and Technological Development Zone.

Others in attendance included Yuan Qiukun, secretary of the Party working committee of the zone's administrative committee and Gu Jun, deputy director of the administration committee, together with PepsiCo GCR President Ram Krishnan and Bob Shi, supply chain vice-president of PepsiCo GCR.

Source: China Daily

(CGTN) China on Friday unveiled the new sets of additional tariffs on 60 billion US dollars' worth of US goods in response to the US tariff threat of 200 billion US dollars' worth of Chinese imports.

The additional 25 percent tariffs cover the largest share of the overall list and are mainly imposed on vegetables, meat, metals and chemicals, which could bring harm to the US farming and mining industries.

China's tariff list unveiled on June 16 took effect earlier in July, some US food producers have already felt the punch from one of the largest export markets.

The list of 659 additional items, worth 50 billion US dollars and facing a 25 percent tariff, covers a wide range of products, among which agricultural products and foods are in the majority.

Pork variety meat and chicken feet

This July witnessed a bleak pork market in the US as both the spot and futures prices of hogs and the stocks of pork products kept falling.

Affected by the trade frictions, the export of US pork variety meat has decreased by about 33 percent from April to May this year, according to the US Department of Agriculture. Mexico also raised the tax rate on US pork to 20 percent as a way to fight against the US aluminum and steel import tariffs.

Chinese foodies enjoy pork by-products such as pig feet, pig ears and intestines, which are big sellers in the Chinese consumer market.

China has become the largest export destination for US pork variety meat. In June alone this year, China's import of US pork variety meat accounted for 53 percent of all its destination markets, according to the US Meat Export Federation.

Driven by the escalated trade war, China was forced to impose a 25 percent tariff on US agricultural products, forcing the booming pork by-products export business to a halt.

American meat producers like WH Group and Tyson Foods all reported a slump in both profit and stock caused by the trade dispute.

Another Chinese "snack" is chicken feet. China is the largest chicken feet importer of the US. China (Hong Kong and Taiwan are included in the business) imported 353,629 metric tons of chicken feet from the US in 2012, according to the USDA International Egg and Poultry, accounting for 93.8 percent of the total. The US poultry industry is cashing in as a whopping amount of the delicacy ships to China.

However, the snack is also on the list, which surely brings huge losses to the industry as almost no one consumes this part in the US or other countries.

Whiskey

A 25 percent tariff on US whiskies destined for China could halt 8.9 million US dollars in annual whiskey exports and harm both the interests of Chinese consumers and American farmers, according to the Distilled Spirits Council.

In 2017, bourbon whiskey contributed 8.5 billion US dollars to Kentucky, the main producer of whiskey, creating 17,500 jobs. Kentucky winemakers are also increasingly valuing the Chinese market as the growing middle-income population brings greater business opportunities.

In 2017, China's imports of whiskey from the United States increased by 15 percent year on year.

American spirits exports to China have grown by almost 1,200 percent, from 959,000 US dollars in 2001 to 12.8 million US dollars in 2017, according to the Distilled Spirits Council.

Moreover, the US Brewers Association has established cooperative relationships with dealers in first-tier cities in China.

The association this February said that China is a relatively open market as the tariff is only 10 percent, and last December, China lowered the tariff to 5 percent. The tariff hike is the least thing they want to see.

The growing number of Chinese consumers, however, will not be affected because of substitutes from Ireland, Scotland and Japan.

Source: CGTN

(China Daily) The 28th Qingdao International Beer Festival, one of the largest beer festivals in China, opened on July 20 in the coastal city of Qingdao in Shandong province in East China.

This year, the festival is expected to last 38 days and attract 200 brands from over 30 countries and regions, and offer more than 1,300 types of beer, said Mi Desheng, director of the tourism commission of the Xihai'an New Area, where the festival takes place.

However, the beer market in the country has seen a reduction in production volumes. In 2017, beer production dropped 0.7 percent to 44 million kiloliters, according to the Chinese Alcoholic Drinks Association, declining for its fourth consecutive year, according to data from ASKCI Consulting.

Data from Kantar Worldpanel show that at-home consumption of beer fell 1.9 percent between March 2016 and March 2017 and 0.1 percent between March 2017 and March 2018. The penetration－measured by percentage of consumers purchasing beer for home consumption－fell from 70 percent between 2016 and 2017 to 68 percent between 2017 and 2018.

A shrinking market has forced beer producers to respond to the challenges. In recent years, beer manufacturers in the country gradually shut down small and inefficient factories.

He Hong, deputy secretary-general of the China Alcoholic Drinks Association, said: "The shake-up of the Chinese beer industry could last two or three years, pushing beer manufacturers to upgrade their product portfolios.

He said future beer consumption is expected to be more fragmented and individualized.

Beer consumption in China has declined slightly since 2013 as more Chinese adults pursue healthier lifestyles, according to Jennifer Zegler, an associate of Food and Drink at Mintel, a UK-based consultancy firm.

When asked about their goals for 2017, Mintel research shows that four in five urban Chinese adults aged 20-49 plan to have a healthier diet, while three in four plan to exercise more. These lifestyle goals have contributed to the stagnation of beer sales as Chinese adults reduce the quantity of alcohol they consume.

While beer sales by volume in China have dipped, value has increased slightly as adults opt for better-quality alcohol. The trend toward premium brands is spreading as beer companies have created new higher-tier brands and imported more upscale varieties, while craft breweries have expanded.

The growing interest in premium beer has driven an increase in the value of retail sales, according to Mintel's research on China's beer industry.

Beer brands are beefing up their prices. Since March, the price of six 500 ml bottles of Budweiser has increased from 57 yuan ($8.38) to 85 yuan, a 50 percent jump. Tsingtao Beer raised its prices twice within the first six months of this year.

Besides raising prices, beer producers have restructured their strategies by prioritizing high-end products.

The China Alcoholic Drinks Association forecast that within three to five years, craft beer market shares will expand three to five times from 1 percent now.

China Resource Snow Breweries and Budweiser have increased their investment in craft beer. Snow Breweries' high-end brand Lianpu contributed 22 percent of its sales or 6.61 billion yuan last year.

According to delivery platform Ele.me and Baidu Waimai, in June, craft beer sold through online delivery channels increased between 40 percent to 260 percent year-on-year.

China's beer drinking population accounted for 48.57 percent of the total population in 2017, down 3 percentage points from 2011, according to Euromonitor International.

Wheat and craft beer are among those products with the highest penetration rates among Chinese beer drinkers. In addition, some beer drinkers who have not tried wheat or craft beer would like to try them, according to Mintel.

More than a quarter of Chinese beer drinkers would like to try craft beer but have not done so yet.

Both wheat and craft beer reflect the trend toward premiumization and Chinese beer drinkers with high household incomes are most likely to have tried each type of beer and liked them, according to Zegler.

"The likelihood of consumption of wheat and craft beer among beer drinkers with higher household incomes gives companies an audience to target," she said.

Creating more beer recipes locally in China could help to tailor formulas to the preferences of China's beer drinkers by including influential factors related to quality such as mouthfeel, alcohol content, flavor and ingredients, said Zegler.

The development of more premium beers tailored to local taste preferences could attract more Chinese beer consumers, according to Mintel.

Source: By Wang Zhuoqiong | China Daily

(China Plus) Starting on Monday, McDonald's released more than one million MacCoins at 2,500 restaurants across the Chinese mainland to celebrate the 50th anniversary of its iconic Big Mac.

The collectible coin can be redeemed for one free Big Mac at participating McDonald's restaurants through 2018, the fast-food giant announced on its website.

McDonald says that more than 6.2 million commemorative coins will be distributed in more than 50 countries. There are five different designs for the coin, representing the decades since the launch of the Big Mac.

Customers in China can get a MacCoin by singing a birthday song for the Big Mac at any participating restaurant, although customers in Beijing and Tianjin have to reserve a spot in via WeChat first.

Beijing Youth Daily reported that people are selling single MacCoins online in China for up to 180 yuan (26 U.S. dollars), with a set of all five versions of the coin selling for prices ranging from 500 to 1,000 yuan.

Source: China Plus

(China Daily) US soda and beer lovers might want to start stocking up, as the price for a can of fizzy drink is increasing under US President Donald Trump's tariffs on imported aluminum beginning in March.

The Coca-Cola Company recently announced that it would be raising the prices of its carbonated offerings due to rising freight costs and metal tariffs.

"We had to take with our bottling partners an increase [in prices] in our sparkling beverage industry in the middle of the year, which is relatively uncommon," the company's CEO James Quincey told CNBC last month. He said he expects the company's bottlers and retailers to pass along the higher prices to consumers.

The company refused to comment on details of the price increases.

Coca-Cola is not the only large US beverage maker that's decided to increase prices. US soda and beer makers have been under pressure since the imported aluminum tariffs were announced in March.

And finally, it seems to be taking its toll on the manufacturers with production costs escalating.

Molson Coors Brewing Company, which owns Miller Coors, has also decided to hike prices of its beers for Chicago-area retailers. It is expected that beer drinkers in Chicago will now have to pay around $1 more for a case of Miller.

The Boston Beer Company recently said that it will be raising prices in the second half of the year, according to the Chicago Tribune.

Alcoa, the largest US aluminum maker that supplies metal used in everything from Coca-Cola cans to Boeing 747s, announced on Monday that it has asked the White House for an exemption from the 10 percent tariffs on imported aluminum.

"It has been five months since the implementation of president Trump's aluminum tariffs," said Jim McGreevy, the CEO of the Beer Institute, a trade group that represents brewers, beer importers and others in the industry. "The tariffs could be a $347 million tax on US brewers per year."

McGreevy explained that imported primary aluminum and can sheet are critical to the beer industry as more than 60 percent of all beer produced and sold in the US is packaged in aluminum cans and aluminum bottles.

"There are about 6,000 breweries in this country which support more than 2.2 million American jobs," McGreevy said, adding that these breweries have already been affected by the tariffs in different ways.

"In 2017, brewers bought over 36 billion aluminum cans and bottles, and aluminum is the single largest input cost in American beer manufacturing," McGreevy added.

He explained that US brewers using can sheet purchase aluminum by paying a Midwest Transaction Price, which consists of two major components: an underlying base price for the aluminum metal as traded daily on the London Metal Exchange and an additional premium known as the Midwest Premium, initially intended to cover the logistical costs of moving metal into North America, essentially a shipping and handling fee.

"We see that the base price for aluminum has gone up about 14 percent based on the tariffs," McGreevy said. "And the Midwest Premium has increased 135 percent."

"The tariffs will cost more than 20,000 American jobs that depend on the beer industry," he said, adding that many large breweries have announced the decision to increase the prices, while some small breweries have had to lay off workers and downsize manufacturing.

"A tariff on these aluminum and steel products will harm our industry and put food and beverage cans at a disadvantage among competitive packages, such as plastic and glass, which are not subject to tariffs," said Can Manufacturers Institute president Robert Budway in a statement. "This would ultimately harm US consumers, who would pay more for canned food and beverage products."

"The steel and aluminum tariffs, as well as the first round of tariffs on Chinese goods, are still working their way through the economy," Kent Jones, an economics professor at Babson College, told China Daily. "The broader application of the steel and aluminum tariffs has already led to price increases for US steel-using companies, which will eventually lead to higher prices for US consumers."

Source: By Zhang Ruinan in New York | chinadaily.com.cn

(Reuters) - Dada-JD Daojia, a Chinese online grocery and delivery firm, said on Thursday it has raised $500 million from Walmart Inc and JD.com Inc in its latest round of financing.

The company comprises of two businesses and is partly owned by JD.com. Dada operates a network of 5 million delivery men, while JD Daojia partners with retail stores and provides one-hour delivery services of groceries and other items.

Walmart said it invested about $320 million in the latest fundraising. The Arkansas-based company’s partnership with Dada-JD Daojia dates back to 2016 when it invested $50 million, the company said, adding that at present, 200 Walmart stores in 30 major Chinese cities have a presence in JD Daojia.

“We are confident that this deeper collaboration with Dada-JD Daojia will enhance our omni-channel footprint and deliver a better O2O (online to offline) customer experience,” said Wern-Yuen Tan, president and CEO for Walmart China.

The global retail giant has been pushing to integrate its retail network in China with the country’s burgeoning “smart retail” movement, as retailers and tech giants such as Alibaba Group Holding Ltd and Tencent Holdings Ltd cut deals to combine shoppers’ online and offline experience.

Earlier this year, Walmart said it opened its first small-sized high-tech supermarket in the southern city of Shenzhen, which will stock products that customers will also be able to buy on the U.S. retailer’s store on JD Daojia. The stores are competing with Alibaba’s Hema to provide fast delivery of grocery to customers.

Alibaba is China’s top e-commerce player, while Tencent is strong in social media and gaming and has, along with Walmart, a considerable stake in number two online retailer JD.com.

Alibaba and Tencent have between them splashed over $10 billion on retail-focused deals, boosting their reach offline and meaning few brick-and-mortar sellers are left without an allegiance to one or the other.

Source: Reuters; Reporting by Pei Li, Brenda Goh and David Lin, Editing by Sherry Jacob-Phillips and Gopakumar Warrier

(Caixin) American coffee chains have been left with a bad taste in their mouths in recent weeks.

While the market has been shocked at the unexpected drop in Starbucks Corp.’s sales in its largest overseas market, they might not have noticed that another chain, The Coffee Bean & Tea Leaf, is quietly hitting the brakes in a market from which it has already retreated once.

The U.S. companies have been challenged by young local startups reshaping the landscape by providing delivery services, generously offering coupons and discounts, and aggressively opening new branches in recent months.

The Coffee Bean & Tea Leaf’s franchisee in China, a unit of South Korean retailer E-Land Group, has announced it is withdrawing from a deal the two parties inked in 2015. E-Land said it will close the remaining local stores over the coming weeks.

According to the official WeChat account of The Coffee Bean & Tea Leaf, the chain has only 15 locations in eight Chinese cities — far from the goal of 700 stores the pair announced three years ago as part of a “long-term expansion plan.” A year later, their ambition swelled to 1,000.

But the American coffeehouse chain said it “remains firmly committed to developing the China market as a key part of its core growth strategy,” but it hasn’t responded to Caixin’s request for updates on potential new partners.

This is the second time that the chain’s China licensee has pulled out. Its presence in China dates back to as early as 2007, but in 2015, consumers complained that The Coffee Bean & Tea Leaf locations closed without explanation. The company secured its South Korean partner a few months later.

While The Coffee Bean & Tea Leaf situation may be a tempest in a teapot, the big jolt to China’s coffee industry recently has been the 2% drop in Starbucks China stores’ sales revenue in the latest fiscal quarter ended July 1. This has been the first quarterly drop since the coffee giant started to issue China earnings reports in the third quarter of fiscal 2016. Meanwhile, Starbucks’ global sales and those in the U.S. both increased 1% during the same period.

Starbucks Corp. President and CEO Kevin Johnson described the China sales figure as “disappointing” in an earnings call in late July.

Days later, Starbucks unveiled a major partnership with Chinese internet giant Alibaba Group Holding Ltd. that aims to deliver cups of joe in 30 cities by the end of this year.

The move imitates the model of two Chinese startups that feature online ordering and delivery.

Coffee Box was a pioneer in 2012, delivering coffee from Starbucks and Costa Coffee and later shifting to selling its own coffee, but remaining a smaller player.

Luckin Coffee, which just started to operate in January this year, has made headlines with its lightning-fast store construction: It had opened 800 shops by the end of July, and has vowed to operate 2,000 locations by year-end.

In comparison, Starbucks opened only 257 new stores from July 2017 to the same period this year in the entire Asia-Pacific region. As of May 15, it had 3,300 China locations. Coffee Box has started to run some offline cafes as well this year.

“The emerging ‘internet coffee’ trend has forced the rivals to innovate. That’s why Starbucks began delivery services as well, because it sensed that there is a demand,” said Zhu Danpeng, a food-and-beverage industry analyst with the China Brand Research Institute.

Starbucks China CEO Belinda Wong, in response to the latest quarterly results, said that “recent coffee market entrants have chosen to capitalize on delivery combined with heavily discounted offers, there’s significant compromises at play in terms of quality, experience, and business sustainability.”

The new market entrants “will prove to be short-lived,” Wong predicted.

Luckin and Coffee Box generally sell drinks that are 10% cheaper than Starbucks and they often roll out 50% discounts.

Zhu said that the new-generation coffee chains can be competitive on price, and make the mass market more stratified as Starbucks and Costa Coffee occupy the high end, followed by midlevel players like Luckin and fast-food chains McDonald’s and KFC.

But independent retail analyst Li Chengdong said that it could be hard for new brands to sustain themselves because most Chinese people don’t drink coffee, and they can’t afford a drink that’s even more expensive than it is abroad.

The smallest-size Mocha costs around 30 yuan ($4.40) in a Starbucks China store, roughly 30% more expensive than it is in the U.S.

Most of the cafes’ customers are young people in the big cities, Li said, adding that the coffee industry in big Chinese cities is increasingly saturated.

But the emerging startups might have a chance to survive if they keep offering discounts to attract part of Starbucks’ customers who are price-sensitive and not loyal to specific brands, Li said.

Source: Caixin by Coco Feng

(Xinhua) In the early 2000s, the eastern foothill of Helan Mountain in Northwest China was nothing but a vast expanse of Gobi Desert. Today, young people here are busy tasting a variety of wines in vineyards dotted throughout the Ningxia Hui autonomous region.

"I insisted on studying for a Master's degree in winemaking in 2007, though my parents worried it would be hard for me to find a job. But they were wrong," said Liang Hong, 33, a winner of several international wine medals.

Ningxia's abundant sunshine, irrigation from the Yellow River, the right temperatures and good air circulation, reminded Liang of what he learned in college about the ideal climate for growing wine grapes.

The secret to great wine starts in the vineyard, and it takes over a decade from planting the grapes to making the wine.

For Liang, a decade of wine production has shown how the wine industry in Ningxia has developed, and it has made his dream come true.

As China is becoming a large consumer and producer of wine, at the turn of the century the local authorities in Ningxia began to transform the rocky Gobi into an oasis by carting away rocks and leveling the ground.

After years of hard work, the vineyards at the foothills of the mountain, often referred to as China's Bordeaux, now cover 200,000 hectares, accounting for one-fourth of China's grape planting area.

Around 120 million bottles of wine are produced in the area annually, attracting wine lovers from around the world, according to Li Wenchao, an official with the region's grape industry bureau.

In the new winemaking schools in Ningxia, more than 1,500 students take three to four-year courses, learning through practice and experience. Such courses provided Liang with a broad expertise in grape planting and wine production.

From 2007 to 2009, Liang was sent to Ohio State University as a visiting scholar. He also worked briefly in New Zealand as a winemaker. The mechanization of wine production abroad impressed him.

"We made all our wines by hand, but the wineries in New Zealand mainly use machines to harvest and ferment white grapes, and they still produce premium wines," he said.

Li Wenchao was once a winemaker as well, and he speaks highly of the career. "A young winemaker who has two to three years of experience can earn 150,000-200,000 yuan ($22,000-$29,000) a year.

And they are highly respected in the industry."

The winemaking industry in the Gobi has attracted about 200 winemakers, mostly young people like Liang.

"To me, winemakers do not really 'produce' wines, but try their best to restore the original flavor of the grapes. We need to highlight the unique advantages of our grapes. That is the standard of a qualified winemaker," Liang said.

"Ten years ago, Chinese wine brands found little success in international contests. Not anymore. I expect to improve the quality of our wines and help our winery strengthen its competitiveness on the global arena."

Source: Xinhua

(China Daily) Logistics companies are racing to expand their cold-chain delivery services in China as the market heats up thanks to continuing consumption upgrades.

SF Holding, the listed arm of delivery service provider SF Express Co Ltd, and Havi Logistics Services established a cold-chain joint venture called New Havi in Shenzhen, Guangdong province, on Friday.

Shenzhen-listed SF Holding is the majority shareholder of the joint venture.

New Havi will manage part of Havi's existing logistics business in China. United States-based Havi launched its business in China 40 years ago, providing delivery services for McDonald's.

"Cold-chain delivery is one of SF's key strategies and I value the international standard of Havi's service very much. One of the new firm's missions is to provide this standard to more clients and upgrade the overall domestic service level," said SF Express Chairman Wang Wei.

SF's cold-chain transportation revenue grew close to 60 percent year-on-year in 2017, driven by the rapid growth of fresh food and medicine delivery, according to its annual financial reports.

Yang Daqing, contributing researcher at the China Society of Logistics, said, "SF's advantage is its customer network and Havi has rich resources in company clients."

But, he said, efforts should also be made to achieve a balance between warehouse capacity and demand volume, otherwise growth will not remain stable and sustainable.

"The nation's cold-chain industry is still at an early stage of development, though it has been growing at a speed of 20 percent annually in recent years, driven by consumption upgrades," he said.

According to the China Federation of Logistics and Purchasing, China's cold-chain logistics market scale was about 250 billion yuan ($36.5 billion) last year and is expected to reach 470 billion yuan by 2020.

"The total revenue of the top 100 cold-chain logistics firms in China increased by 30 percent in 2016, but 90 percent of them are regional, or focusing on transportation only," said Chen Wen, an analyst at Ping An Securities, adding that no "super big player" has emerged in the industry yet.

Many traditional express companies, such as STO and YTO, have included the cold-chain sector in their key business strategies, and are setting up subsidiaries, new warehouse centers and related services.

E-commerce platforms are also entering the cold-chain market. China's second-biggest e-commerce firm, JD, teamed up with Japanese logistics giant Yamato Transport Co Ltd last year, in a bid to strengthen its cold-chain and cross-border services.

Offline-to-online retailer Suning.com Co Ltd had opened 17 cold-chain warehouses by the end of July, 2018.

Source: by Chai Hua in Shenzhen | China Daily

(China Daily) After taking the lion's share of China's e-commerce sector, Alibaba Group Holding Ltd is looking to revamp the food sector by addressing the imbalance between supply and demand.

Hema Fresh, its iconic fresh food chain that employs technologies to dispatch goods and manage inventory, plans to open stores across all first and second-tier cities in China and aims to reach at least 300 million consumers.

The goal was announced at last week's vendor conference in Shanghai, where Hema forged partnerships with over 500 merchants including agriculture produce bases, and pledged not to charge any fees as prerequisites for brands to access Hema.

Chief Executive Officer Hou Yi said the company was making more efforts in product development with merchants and targeting sales of tailor-made goods to account for half of Hema's overall sales in three years.

New Zealand-based diary giant Fonterra Co-op Group Ltd was among the early adopters of such a model. For instance, the pair are shortening the shelf life of milk sold in stores down to less than 24 hours from the usual seven to 10 days. The milk is produced and collected each day at Fonterra's dairy hub in Hebei province, one of the two the company operates in China.

Such a tie-up is part of Hema's "Daily Fresh" program, which sees a host of fresh produce and meat removed from store shelves at the end of the day and replaced with fresh products the following morning.

The model is likely to be extended to a wider variety of goods, with Hema signing direct procurement contracts with agricultural produce bases in Yunnan, Hubei and Shandong provinces.

"Under the project, consumers can buy the most comprehensive and fresh local produce at the lowest possible prices," said Wang Minzheng, head of the department of agriculture of Yunnan province.

"Eliminating middlemen can effectively trim costs and boost retail efficiency," said Gu Guojian, head of Shanghai Chain-Store & Franchise Institute. "The model is especially meaningful as China moves to increase imports and enhance circulation efficiency."

"They can totally leverage big data instead of third-party market research firms to get more precise customer insights and estimates of market size, therefore deciding what and how much (of the goods) to keep stock of," said Shi Jialong, head of China internet equity research at Nomura Securities Co Ltd.

The move aims to meet the evolving preferences of Chinese consumers who shun preservatives in their quest for a healthier lifestyle. According to Hou, Hema's typical consumers are middle-to-upper income earners who are willing to experience new things and shop on a daily basis rather than weekly.

Unlike conventional supermarkets that introduce a wide range of products for shoppers to compare, Hema has adopted the buyer model, where professional procurers are responsible for sourcing and hand-picking the right goods to sell.

"This model is 'win-win' as it revolutionizes the producer end by using customer data to predict their preferences and can tailor manufacturing to meet their needs," said Lao Guoling, a professor at Shanghai University of Finance and Economics.

New Manufacturing is one of the five "New"s that Alibaba founder Jack Ma proposed two years ago to reshape commercial technologies.

Ele.me, Alibaba's newly acquired food delivery arm, has integrated its membership system with Alibaba's e-commerce sites to tap into at least 500 million active users who could order food as they shop via their mobile devices.

Koubei, its offline local services platform, has also branched out by offering breakfast pre-ordering services via smart phones in a number of café and bakery chains in Shanghai.

Source: By He Wei in Shanghai | China Daily

(Bloomberg) China Investment Corp. is backing a potential takeover of Yum China Holdings Inc., which runs KFC and Pizza Hut outlets in the world’s most populous nation, people with knowledge of the matter said.

The sovereign fund and DCP Capital, the investment firm run by former KKR & Co. senior executives, are part of a consortium with Hillhouse Capital that’s considering a buyout of Yum China, according to the people. Baring Private Equity Asia is also joining the investor group, which already includes KKR, the people said, asking not to be identified because the information is private.

Yum China shares had fallen 14.5 percent this year before Tuesday. The consortium is considering taking Yum China private with an eye to potentially relisting the business in Hong Kong at a later date, one of the people said. Yum China gained as much as 7.5 percent to $36.77 in New York on Tuesday morning, pushing its market value to almost $14 billion.

A takeover of the company, which was spun off from Yum! Brands Inc. in 2016, would be the biggest-ever Chinese takeover of a consumer firm, data compiled by Bloomberg show. Private equity firm Primavera Capital, which owned 4.3 percent of Yum China as of June, has been weighing options for its stake in the company and could consider joining a bidding group, according to the people.

KKR Veteran

No final decisions have been made, and the makeup of the bidding group could still change, the people said. There’s no certainty the deliberations will lead to a transaction, they said.

CIC’s press office didn’t immediately reply to an email seeking comment, and an official at Primavera didn’t immediately respond to requests for comment. A representative for Hillhouse said she couldn’t immediately comment. Representatives for Baring, DCP Capital, KKR and Yum China declined to comment.

DCP Capital was started last year by buyout veterans including David Liu, the former China head and co-head of Asia private equity at KKR. In May, it agreed to invest in Venus Medtech, a Hangzhou-based developer of heart valve replacements that’s backed by Goldman Sachs Group Inc.

Biggest Footprint

Yum China operates the country’s biggest network of fast-food restaurants, with about 8,200 outlets spread across more than 1,200 cities at the end of June, according to its latest results. The company is struggling to attract younger Chinese diners to its Pizza Hut restaurants in the face of increasing local competition and changing eating habits that favor healthier fare.

A potential takeover comes as the escalating trade war fuels speculation China could turn to consumer boycotts as part of its pushback against U.S. President Donald Trump’s tariffs.

Yum China’s same-store sales fell 1 percent in the most recent quarter, and the company said its large scale is a factor holding back growth. Still, Yum China has said it’s not backing off its expansion plan and is targeting 20,000 stores long-term.

“It’s the right thing to do, given our leadership in the market, and our ambition to maintain the leadership and market share in the long run,” Chief Executive Officer Joey Wat said on a call with analysts earlier this month. “The China market is still a growing market. It still has a lot of opportunities.”

Yum China was spun off from Yum! Brands Inc. in 2016 after the U.S.-based company faced pressure from an activist investor. Yum Brands shares climbed as much as 0.9 percent to $83.11 on Tuesday in New York.

Source: Bloomberg By Vinicy Chan, Cathy Chan, Carol Zhong and Manuel Baigorri

(China Daily) Hema Fresh, the prototype supermarket of Alibaba Group Holding Ltd's New Retail concept, is teaming up with 13 commercial property developers in China to boost its presence in local neighborhoods and communities.

The data-driven food chain pledged to help digitalize the commercial infrastructure for leading developers, such as Evergrande Group, Country Garden and Intime.

The deal will include synchronizing membership systems, hosting local community activities and providing other real estate-related, value-added services, the parties announced at an event in Shanghai, without disclosing details.

The move will provide the momentum to reach the target of having 100 stores by the end of 2018, according to Hema's CEO Hou Yi.

Hou said by deepening its push into more cities and neighborhoods, Hema is aiming to become a social hub encompassing all local services.

"New Retail is not a one-man show," he said. "Hema will be working together with the commercial real estate industry to develop a new retail ecosystem through cooperation and mutual benefits."

Hema, which features fresh seafood and prepared groceries, provides customers with the option to either go into the store and choose their goods in person, or order online through a proprietary app.

The stores also double as warehouses for delivery in 30 minutes within a radius of 3 kilometers.

Real estate properties stand to benefit from the huge online traffic derived from Alibaba's 500 million-plus monthly active users, as well as the data analytics capabilities that can depict customers' shopping preferences, making marketing more precise and effective.

"After the introduction of Hema, we have added an average of 3,000 to 4,000 young customers per month," said Fanny Leung, vice-president of commercial property developer Chongbang Group.

Customer flow doubled in the six months after Hema opened its outlet in Beijing Cuiwei Department Store's Dacheng Road branch last July, said Huang Zhenwang, general manager of the shopping center.

Source: By He Wei in Shanghai | China Daily

Luckin Coffee to have 2,000 stores by end of year

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KKR Veteran

Biggest Footprint

Hema grocery stores team up with property operators