General Mills targets China

General Mills, the food manufacturer, is seeking to almost treble its Chinese revenues during the coming five years, primarily by boosting product penetration and rolling out new lines.

It recorded Chinese sales of $350m (€254m; £216m) in 2010, and aims to generate $900m through its wholly-owned local businesses by 2015.

The US multinational predicted the number of Chinese households boasting an annual disposable income surpassing $10,000 should surge by 77% between 2010 and 2015.

More specifically, the amount of "upper affluent" residences is anticipated to rise from 1m to 12m in this period, standing at 13m and 53m regarding the "lower affluent" audience.

Similarly, 69m homes are due to fit within the "middle class" segment, doubling prior figures, and the "emerging middle" group is forecast to hit 66m, a 5m improvement.

Overall, General Mills is targeting 200m families, in what has become its "fastest-growing market".

"There are clear reasons why we, and other consumer products companies, are excited about China," said Don Mulligan, the firm's chief financial officer.

"Over the last four years, China's GDP has increased at double-digit rates, creating a rapidly-growing middle class."

"Strong growth is expected to continue … creating a growing market of potential General Mills' consumers."

To date, Häagen-Dazs has prioritised standalone stores, and now operates 162 branches across 30 cities, and hopes to enhance this network going forward.

"These locations are not your typical ice-cream scoop shops," Mulligan argued. "They are upscale dining destinations, where consumers come to sit, relax and enjoy their favourite Häagen-Dazs treat.

"From $5 for a simple scoop to $40 for an elaborate dining creation, these products represent an affordable luxury for China's growing urban consumer segment."

He added: "The combination of large population centres and rapid growth in household income presents a great opportunity to expand."

New formats form part of General Mills' plans for Häagen-Dazs, opening mini-cafes in shopping malls alongside flagship outlets and smaller venues.

It has also built an online "e-shop" for the brand, and sold 1.3m gift boxes containing moon cakes in two weeks during the 2010 autumn festival, carrying prices starting at $25, and reaching $100.

"The growth in our shops business has increased demand for HD products in other channels," Mulligan continued. "With this rapid growth, more consumers can now find HD at their local grocery store."

Research provider ACNielsen recently reported the number of supermarkets and convenience stores stocking Häagen-Dazs rose 18% in just 12 months alone, fuelling annual 30% upticks for five successive years.

Elsewhere, Wanchai Ferry, a brand of dumplings General Mills acquired when taking over Pillsbury in 2001, has extended its reach from 11 cities in 2007 to more than 100 today.

"Once again, the rising Chinese middle class and developing frozen food distribution channel allowed us to bring Wanchai Ferry to new markets," Mulligan asserted.

"Frozen dumplings are still our biggest business, but they represent only 36% of frozen dim sum category sales, so we expanded into additional high-growth segments like Wonton, Tangyuan, Baozi and Mantou."

"We've also moved beyond dim sum, with the launch of frozen noodles in Shanghai last year."

Snacks constitute a third component of its Chinese portfolio, and have regularly seen 20% sales increases per year.

Products such as seaweed-flavoured Bugles and Trix milk rolls are available in 300 cities, and many retailers are served by bicycle.

"Our snacks are sold in small pouches at prices affordable to a broad base of Chinese consumers," said Mulligan.