ITOCHU Announces Entry into Snacks in China Tingyi/Calbee New JV Set to Make a Significant Snacks Market Entry Early April 2012 saw the news that China’s leading instant noodles maker Tingyi is to establish a joint venture with leading Japanese snack foods manufacturer Calbee and food conglomerate Itochu, with initial total investment of US$20 million. Itochu is involved in developing reliable and safe food sources in China, and will supply raw ingredients to the new JV, including potatoes. Itochu will also be involved in establishing processing, manufacturing and distribution (including retailing) for the JV. Calbee will bring its strong experience as the snacks market leader in Japan, and Tingyi its dominant instant noodles market experience and hugely successful Master Kong brand in China. The significance and timing of this development is potentially very great for the snacks market in China. While that market remains highly fragmented, and current leading snack brands only having very small market shares (outside the potato chips sector), the entry of Tingyi and its Master Kong brand has the potential to greatly raise the pressure on the existing brands to accelerate their market share growth plans. In the potato chips sector, Master Kong, and Calbee’s Jagariko and Jagabee brand potato snacks, also have the potential to make a serious dent in the projected share growth plans of leading contenders PepsiCo, Liwayway and Orion. For Tingyi, which controls over a third of the instant noodles market in China by value (a market that competes as a snack food), extending the Master Kong brand into other snacks sectors makes sense. Tingyi can leverage its strong brand recognition and loyalty into sectors that fit very well with its instant noodles, baked products and soft drinks categories. There is huge potential in building marketing efficiencies via cross-category marketing, embracing all these core food sectors under the Master Kong brand. Something few existing snacks brands have been able to achieve. This news follows close on the heels of the announcement in March 31, 2012, that Tingyi and PepsiCo had completed a deal to create a strategic beverage alliance in China. The close relationship between Tingyi and PepsiCo in soft drinks whilst competing in snacks (particularly, potentially, potato chips) indicates that there might be further possible future collaboration between these two big companies in the snacks market. This is a real wake-up call for the snacks market in China. As Mintel argues in its forthcoming report on Snacks in China, the market’s highly fragmented nature, coupled with its continued strong growth rate, makes it ripe for the development of really outstanding, nationally significant brands amongst the mass of undifferentiated small brands and products. You might also be interested in: No related posts.