MARKET ACCESS SECRETARIAT Global Analysis Report

Grocery Retail Trends

in Taiwan

November 2013

EXECUTIVE SUMMARY CONTENTS

Taiwan has almost 24 million inhabitants and is considered to be Executive Summary ...... 1 one of the largest economies in the world. Over the past 50 years, the country’s economy has transitioned from one that was Socioeconomic Overview ...... 2 agriculture-based into that of an industrial nation. Planet Retail is predicting continued, strong gross domestic product (GDP) growth Demographics ...... 3 in the future. Grocery Retail Trends ...... 4 In comparison with the rest of the Asia-Pacific region, the Top Grocery Retailers and Taiwanese enjoy a high average gross annual income totalling Their Environment ...... 5 US$18,070 in 2011, and a total consumer spending per capita of US$12,504 in that same year. In 2017, predicted total consumer Retailer Characteristics spending per capita may reach US $16,481. Total grocery spending by Channel ...... 7 in Taiwan, has gone from 28% of total consumer spending in 2009 to nearly 30% in 2012. Consumer Trends ...... 9

Grocery retail sales growth in Taiwan has seen slower growth than Definitions ...... 12 overall retail sales, due in part to the maturation of the retail market. According to Planet Retail, food accounted for 47% of all retail sales Resources ...... 13 in 1995, compared to 52% in 2011. Food price inflation was more than 4% in 2012. Increases in the price of fuel and electricity are likely to blame. Taiwan’s Ministry of Economic Affairs has stated that a 22% increase in vegetable prices has been another reason for the high inflation of food prices.

Source: Planet Retail, 2012

EXECUTIVE SUMMARY (continued)

There are significant differences in terms of how international and domestic grocery retail have progressed in Taiwan. Taiwan has benefitted from the expansion of major international retailers that began in the late 1980s. In 1986, the Taiwanese government liberalized foreign investment, which brought many foreign operators into the market quickly and led to this grocery sector being one of the most developed and modernized in Asia. Foreign grocery retailers dominate in Taiwan, with few domestic players in direct competition with the big multinationals. These international retailers have taken advantage of Taiwan’s geographical location, high population density and high number of wealthy inhabitants. Prior to the liberalization, mom-and-pop shops were the dominant retailers. Initially, these shops managed to survive the influx and growth of modern and hypermarkets by focusing on shopping convenience and ongoing consumer relationships. However, with their emphasis on fresh produce, both traditional mom-and-pop shops and wet markets will suffer and decline in numbers, as they are squeezed by the growing popularity and numbers of convenience stores. Overall, the grocery sector is fragmented, with the top five players accounting for less than 20% of total market share. As competition increases, and foreign operators expand, consolidation will also increase.

SOCIOECONOMIC OVERVIEW

Taiwan is home to almost 24 million inhabitants (based on 2012 Planet Retail statistics), which gives the country one of the highest population densities in Asia, with over 600 persons per square kilometre. Taipei is Taiwan’s capital and is located in the north of the island. It is the most populated urban centre in the country. Other densely populated areas include Keelung City, Hsinchu City, Taichung City, Chiayi City and Tainan City.

Taiwan was one the original Asian tigers and, over the past fifty years, the economy has been transformed from one reliant on agriculture to one with an industrial and services orientation. More recently, the Taiwanese economy has been boosted by domestic demand, with services an increasingly important component of the economy. Taiwan is heavily reliant on exports and is therefore very exposed to any international economic crisis. In January 2001, Taiwan became a member of the World Trade Organization (WTO), forcing it to reduce tariffs on a range of imports.

Taiwan’s per capita GDP is among the highest Asia and Oceania, ranking it only behind Japan, Hong Kong, Singapore, Australia and New Zealand. What is more, Taiwan is one of the more promising countries in terms of GDP growth projections for the future. Taiwan has one of the largest economies in the world and has witnessed strong economic growth over the past fifty years. With over two decades of continued economic growth, Taiwan saw its first negative real GDP growth since 1947 in 2001. The global economic downturn, combined with poor policy co-ordination by the new administration and increasing bad debts in the banking system, were to blame. Unemployment also reached close to 5%—a level not seen since the 1970’s oil crisis. Taiwan’s economy rebounded moderately in 2002, slightly in 2003, and strongly in 2004. Growth slipped in 2005, albeit to still relatively respectable levels, with similar figures also recorded in 2006.

The Taiwanese economy benefited from an upswing in the export of electronics, combined with a weaker Taiwanese dollar, and low unemployment which helped drive domestic demand. Between 2003 and 2007 Taiwan's GDP rose by almost a fifth (in local currency). However, as with most other markets, Taiwan was affected by the impact of the credit crunch and the global economic slowdown in 2008. As a result of slowing exports, tourism and consumer spending, real GDP growth slumped in 2008 and 2009, but has seen some improvement in 2010 onwards.

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For 2011-12 Euromonitor reports that year-on-year growth of total GDP in Taiwan was 2.4%, higher than Japan’s at 1.3%, lower than ’s at 9.4% and lower than the Asia-Pacific number of 5.9%. Euromonitor is predicting Taiwan will see strong, continuously rising year-on-year total GDP growth rates of 4.1% in 2013-14 and 5.8% in 2016-17. Comparatively, Japan will see 0.7% in 2012-14 and 1.3% in 2015-17, and China will see 11.3% in 2013-14 and 10.5% in 2016-17. The predicted year-on-year total GDP growth for the Asia-Pacific region is forecast to be 7.5% in 2013-14 and 8.0% in 2016-17.

Inflation in Taiwan has grown slowly since 2007, with the exception of 2008, when the country could not completely escape the global financial crisis that affected many of its trading partners. Taiwan’s inflation, in 2012 reached 2.2%, slightly higher than the 1.4% recorded in 2011. Globally, Euromonitor listed 4.0% inflation in 2012. In terms of regional comparison, the average inflation rate for the Asia-Pacific region for 2012 was 3.8%. By comparison, China’s inflation rate was 2.7%. Neighbouring Japan had 0.0% inflation for 2012.

The average gross annual income in Taiwan, in 2011, was US$18,070, much higher than the Asia-Pacific average of US$5,118. Euromonitor is also forecasting that the average income will rise to US$22,184 by 2017. Some 51% of households in Taiwan have an annual disposable income of over US$35,000, and 23.8% of the population enjoy an annual disposable income of over US$55,000.

DEMOGRAPHICS

In 2012, Taiwan’s Vice Minister of the Interior announced that a total of 234,599 babies were delivered in Taiwan that year, the highest number since 2002, when there were more than 240,000 births. He also predicted that the fertility rate will stay at 1.2 for 2013 and that the number of newborns will remain at over 200,000.

From 2007 to 2012, the greatest growth was seen in the 65+ age group at 10.5%, followed by the population aged 15-64, with a 4.6% growth rate. The urban population grew by 4.2% from 2007 to 2012, while the rural population fell by more than 11%.

Demographics in Taiwan — Historic/Forecast — in Thousands of People

Category 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0-14 years of age 4,145 4,030 3,905 3,778 3,624 3,501 3,383 3,309 3,215 3,098

15-64 years of age 16,443 16,584 16,729 16,884 17,049 17,194 17,329 17,370 17,392 17,419

65+ years of age 2,287 2,343 2,402 2,457 2,487 2,528 2,605 2,701 2,820 2,952

Source: Euromonitor, 2012

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GROCERY RETAIL TRENDS

 In a Euromonitor lifestyle report from April 2012, Taiwan was noted to have the highest per capita density of convenience stores, including notable players 7-Eleven, Hi-Life, and Family Mart. Many of these convenience stores offer value-added services by taking advantage of the latest digital technologies and sending their customers promotions via mobile handsets, laptops and home computers.

 The Taiwanese consumer shops for food at least twice a week and, sometimes, daily. However, those who favour shopping at supermarkets and hypermarkets tend to do one big grocery shop per week. Top-up food shopping occurs on a daily basis in Taiwan and is carried out mostly in convenience stores.

 Demographics are playing a major role in determining shopping preferences, with many older Taiwanese buying their meat, fish, fruit and vegetables at specialist markets. In response, some supermarkets are trying to attract this consumer group by recreating the look of a more traditional market within their stores, and they have achieved some success, particularly in urban areas.

 Store loyalty cards are rather new to the Taiwanese market, being offered mostly by supermarkets. and ParknShop were the pioneers in terms of loyalty programs in Taiwan, although many convenience stores are now coming out with their own cards.

 In response to the recent demand by time-constrained consumers for quick meal solutions, big name grocery retailers President Chain Store Corp. and Family Mart have added fresh-cooked food menus to their chains.

 Taiwan opened to tourists from the Chinese mainland in 2011, causing grocery retailers to promote products that would appeal to these particular consumers. As an example, 7-Eleven stores offered travelling packages, which included a facial mask sheet, a beverage voucher and a prepaid phone card.

 Other grocery retailers comprised the largest grocery retail channel in Taiwan in 2011. This retailer category is made up mostly of wet markets, where consumers can buy fresh and affordable foods.

 Strong sales found in the convenience store sector are a result of the consumers’ need for fast transactions and one-stop shopping. New products (health and wellness foods) and services (photocopying, Wi-Fi) are being introduced, causing intense competition among these Taiwanese retailers.

 Hypermarket players, such as Carrefour, are taking steps to attract the price-sensitive consumer, by launching a value meal box targeted to the working class.

 The needs of Taiwanese consumers are evolving as they become more health conscious. In response, small grocery operators, hypermarkets and supermarkets are bringing in more health and wellness products.

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TOP GROCERY RETAILERS AND THEIR ENVIRONMENT

International and domestic grocery retail has progressed differently within Taiwan. In May 1986, the government passed the “Service Industry Foreign Investment Capital Liberalisation Measure,” meaning there were no longer any limits on the type of retailer, the number of outlets, scale or capital investment. This move by the government brought many foreign operators into Taiwan quickly, which led to this sector being one of the most developed and modernized in Asia.

While liberalization of the retailing sector occurred gradually in many East Asian countries, it transpired all at once in Taiwan. Many foreign operators, at first from Japan and Hong Kong, entered the Taiwanese market over a short period of time, starting in 1986. While many of the foreign retailers who entered the market early have since withdrawn, they nevertheless played an important role in modernizing and developing the Taiwanese retail sector.

Prior to 1986, mom-and-pop shops dominated the retail market. These shops survived in the face of competition with a growing number of supermarkets and hypermarkets by offering convenience and a trusted relationship with consumers. Such retailers are still found in smaller towns, however the growth in convenience stores is threatening their continued existence, with Planet Retail predicting that the number of mom-and-pop stores will decline in the coming years. Mom-and-pop shops will not be alone, as traditional wet markets will also be threatened by more modern retail formats. In particular, hypermarkets are positioning themselves as fresh food providers, so as to compete directly with wet markets. Planet Retail is forecasting that both hypermarkets and convenience stores will expand at the expense of supermarkets.

Foreign grocery retailers dominate in Taiwan, taking advantage of the country’s location, high population density and high number of wealthy inhabitants. The only domestic players that compete directly with the big multi nationals are PXMart, President Chain Store, Hi-Life and Far Eastern. The top five grocery retailers hail from Taiwan, France or Japan and are spread over the convenience store, hypermarket and formats. Both Dairy Farm and PXMart are the largest supermarket operators.

Overall, the grocery sector is fragmented, with the top five players accounting for less than 20% of the total market share. As competition increases, and foreign operators expand, consolidation will also increase. In fact, Carrefour acquired Taiwan hypermarkets in 2005, and Casino sold its stake in the local market to Far Eastern in 2006.

Grocery retail sales growth has been slower than overall retail sales growth, due in part to the maturation of the retail market. Food accounted for 47% of all retail sales in 1995, compared to 52% in 2011. Planet Retail reports that:

 The President Chain Store Corporation is a partner of Taiwan’s 7-Eleven convenience stores. The President Chain Store’s total grocery banner sales* in Taiwan for 2012 represented 53% of the company’s total product sales. Further, the 7-Eleven chain’s total sales accounted for 82.11% of the President Chain Store’s entire sales in 2012.

 President Chain store had 2.16% grocery market share in 1999 and 3.60% in 2012. This is a real growth of 1.44% from 1999 to 2012. The chain opened 52 additional outlets from 1999 to 2012. Market share is expected to decline to 2.92% in 2017, with total grocery banner sales of US$2.8 billion. Total banner sales are expected to continue growing, in small increments, over the next few years.

*Note: A definition of total grocery banner sales is available on page 12.

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 Taiwan’s PXmart stores target the bargain food customer. According to a United States Department of Agriculture (USDA) report published in November 2011, the PXmart chain supplies goods with prices as much as 15% below those of and 20% below those of other middle- tier supermarkets for identical products. Taiwan’s PXmart’s total grocery banner sales in 2012 represented 98.5% of the company’s total sales. The company went from a 0.31% grocery market share in 1999 to 3.19% in 2012. These figures show real growth of 2.88% from 1999 to 2012, and put the retailer in first place with the greatest amount of growth. The chain opened 670 additional outlets from 1999 to 2012. Market share is expected to continue its upward trend, reaching 3.27% in 2017. PXmart’s total grocery banner sales* are predicted to reach US$3.2 billion in 2017, at which point they would overtake President Chain Stores, as sector leader for the most grocery banner sales of the sector’s top five players. While PXmart’s total banner sales will continue to grow over the next few years, growth will be minimal.

 Carrefour in Taiwan grew from 1.76% grocery market share in 1997 to 2.07% in 2012, with real growth calculated at 0.31%. The chain opened 50 additional outlets from 1997 to 2012. Market share is expected to slow somewhat, reaching 2.05% in 2017, with total grocery banner sales of US$2.0 billion. The chain is forecasted to see continued growth in the near future, albeit with very small increases in value sales.

 The Tu Chen stores in Taiwan are Carrefour’s flagship stores. The company began changing its product mix in 2010, launching new initiatives to enhance their offerings and the visual presence of their stores, including innovative promotional campaigns, incorporating new pharmacies and reducing checkout times. The company’s total grocery banner sales in 2012 represented 72.7% of total banner sales.

 Costco entered the Taiwan market in 1997 through a joint-venture with the President Chain Store Corp. The organization’s strategy focused on giving their customers an authentic Costco experience, localising the offer to include regional consumer buying preferences. Costco reported to IGD Retail Analysis (IGD) that the outlets in Taiwan are among the company’s most profitable.

 Costco grew their grocery market share in Taiwan from 0.05% in 1998 to 1.37% in 2012. This is real growth of 1.32% from 1998 to 2012. The chain had a total of 8 outlets in Taiwan in 2011, and is planning to open one more in 2013 to bring the number to a total of 9 outlets.

Overall, Costco reports that Taiwan places sixth on their list of top markets, slightly behind Japan. In addition, the retailer is predicting that it will be the second-largest grocery retailer in Taiwan by 2016. Costco’s market share is expected to continue to grow to 2.44% in 2017, with total grocery banner sales of US$3.0 billion. By 2015, Costco is projecting to have 10-12 outlets in operation in Taiwan.

Taiwan’s FamilyMart chain had 0.81% grocery market share in 1999 and grew to claim 1.80% in 2012. This is real growth of 0.99% from 1998 to 2012. FamilyMart opened an additional 2,055 stores from 1999 to 2012. The chain’s market share has been slowly but steadily increasing since 2007, when it claimed a 1.45% market share. Market share is expected to reach 1.60% by 2017, with total grocery banner sales reaching US$1.6 billion. In terms of the company’s total banner sales in 2012, 80.4% were attributed to grocery. Total banner sales are expected to continue growing in small increments over the next few years.

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Taiwan —Top Five Grocery Distribution Banners by Company, Format, Total Sales and Grocery Sales — 2002, 2006, and 2011

Total Grocery Total Grocery Banner Company Format Banner Sales ($US) Market Share 2002 President Chain Store President Group Convenience store 1,282,600,232 3.02 Carrefour groupecarrefour Hypermarket 946,341,301 2.23 FamilyMart FamilyMart Convenience store 515,876,800 1.21 PXmart PXmart Supermarket 305,484,256 0.72 Costco CostcoWholesale Wholesaler 146,989,600 0.28 2006 President Chain Store President Group Convenience store 1,918,780,344 3.54 Carrefour groupecarrefour Hypermarket 1,268,062,182 2.34 PXmart PXmart Supermarket 816,888,475 1.51 FamilyMart FamilyMart Convenience store 766,097,092 1.41 Costco CostcoWholesale Wholesaler 285,800,296 0.42 2011 President Chain Store President Group Convenience store 2,702,785,490 3.67 PXmart PXmart Supermarket 2,120,581,481 2.88 Carrefour groupecarrefour Hypermarket 1,516,246,895 2.06 FamilyMart FamilyMart Convenience store 1,312,641,927 1.78 Costco CostcoWholesale Wholesaler 1,037,641,016 1.13

Source: Planet Retail, 2013

RETAILER CHARACTERISTICS BY CHANNEL

Hypermarkets and Supermarkets

Hypermarket development in Taiwan has been rapid, propelled by domestic and international operators alike. The Taiwanese government has placed great importance on foreign investment and has been encouraging hypermarket development. Consequently, large-scale stores have been located in Taiwan for some time. Domestic players such RT Mart, as well as the France-based Carrefour, dominate the market. Many of these operators gained an edge by accessing a customer base that grew significantly in a short time. There are now well over 100 hypermarkets in Taiwan, and it is believed that there could be the potential for close to 300.

Hypermarkets in Taiwan have become popular by offering attractive pricing in a one-stop, modern, shopping destination. Since their launch in Taiwan, most operators have been busy fine-tuning their stores to local tastes. In particular, much effort has been made to offer fresh produce in hypermarkets that is comparable to that found in the wet markets.

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Carrefour is the hypermarket leader, present in Taiwan via Presicarre Corporation, which is jointly owned by Carrefour SA (59%) and Uni-President (30%). Auchan has been in Taiwan since it acquired a 67% stake in RT Mart (a subsidiary of the Ruentex group) in December 2000.

In recent years, competition within the hypermarket segment has intensified, with mounting losses and little prospect of gaining market share without additional heavy investment; many players have decided to withdraw.

Hence, in late 2005, Carrefour strengthened its position by acquiring Tesco's network. Casino was present in Taiwan but sold its stake in Far Eastern Enterprises, giving its partner 100% ownership in September 2006. This move was implemented due to increasing competitive pressures. Rumours of a merger between Far Eastern and RT Mart (co-owned by Auchan) have been prevalent for some time.

Supermarkets and Neighbourhood Stores

Supermarkets were common in Taiwan in the late 1980’s and early 90’s, however they have been in decline since the mid-1990s, as hypermarkets grew more popular and successful. Initial interest was shown by Japanese and Hong Kong-based supermarket operators, with most, however, pulling out by the mid-1990s. Japanese supermarket operators, with their emphasis on fresh produce, have been credited with leaving behind a much improved supermarket sector.

Since the mid-1990s supermarkets have been increasingly squeezed by large-scale hypermarkets and warehouse clubs, as well as the proliferation of convenience stores. As a result, many of the weaker supermarket operators have either withdrawn or are re-strategizing. The latest Japanese retailer to pull out was Inageya, which announced it was cancelling its supermarket joint venture agreement with Taiwan’s Yuyuan Oiye in December 2002.

Market leaders in Taiwan, however, are still opening new supermarkets, focusing on areas with low hypermarket penetration. In addition, there has also been a focus on expanding the fresh food areas of stores as a way of competing with the hypermarkets and traditional wet markets. Supermarket operators realize that they have to compete against the emergent convenience stores and, as a result, some supermarket chains are now open 24 hours. It seems likely that only those supermarket operators who are willing to adopt these types of changes will prosper in the future.

PXmart is a key, local player that has expanded its long-standing, small supermarket format. Traditionally the store was not known for offering fresh produce; however, the retailer has been introducing new, fresh product ranges into stores since 2007, so as to rival the larger supermarket and hypermarket players.

Another local player, Matsusei, is expanding more cautiously, focusing on an upmarket supermarket format (higher priced and more luxury item choices), to appeal to the growing number of Japanese consumers in the country.

AS Watson of Hong Kong had invested in the Taiwanese market by introducing its PARKnSHOP chain, but unfortunately it pulled out in 1995. In addition, a number of Japanese investors also tested the water, but then pulled back as well. It appears that the only foreign investor able to compete was Dairy Farm of Hong Kong, who cautiously positioned its brand closer to the convenience store end of the market. Now Dairy Farm has expanded its supermarket operations, acquiring the 22-store Kayo chain, followed by eight Sunmart stores acquired in January 2004.

Discount Stores

There are no major discount chains in Taiwan. However, it is likely that this sector will develop in the future, once the hypermarket and convenience store markets become more saturated. Carrefour in particular has a track record of introducing its Dia discount format into markets where it already has a strong hypermarket base.

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Convenience and Forecourt Stores

Planet Retail data shows that the convenience store sector has exploded in Taiwan over the past decade-and-a-half. It is well known that Taiwan has more convenience stores per capita than any other country in the world. The convenience store’s format owes its success to the changing needs of Taiwanese consumers, who are increasingly demanding longer opening hours, greater convenience and more diverse product and service offerings. Traditionally, convenience stores have sold general food products, such as snack foods and noodles, but as convenience stores became more popular, these stores grew their ranges and sales volumes, with particular emphasis on growing cooked product lines offering meal solutions. Between 2000 and 2010, the number of convenience stores in Taiwan rose from 5,674 to 9,483.

The sector is dominated by a handful of major chains, namely 7-Eleven, FamilyMart, Hi-Life and OK, with a number of smaller chains below them. The top four chains account for around 90% of the entire channel in terms of store numbers and sales. In fact, the number of outlets for some of the smaller chains has actually declined in recent years as the competitive environment has intensified.

The convenience store sector is led by President Chain Store Corp. This is a public company and an area franchisee of 7-Eleven, contracted with 7-Eleven Inc. President Chain Store Corp. is under the President Group umbrella of companies. Uni-President Group also bought a 31.25% stake in its rival convenience store operator, Hi-Life International Co. Ltd., in mid-2004. Taiwan’s FamilyMart is preparing to aggressively expand its franchised convenience stores in Taiwan.

Cash and Carry and Warehouse Clubs

Warehouse clubs have been highlighted as a key area for future growth in Taiwan. However, the only foreign player present, Costco, experienced delays in building its stores due to disputes with both Hsichih County Hall and the Taipei County Government. This, coupled with the recession, has slowed the company’s initial growth plans.

SHV Makro was present in Taiwan, but has experienced several problems since establishing operations in 1989. Problems with local authorities led to several stores being closed down in 1994 for conducting commercial operations on land that was zoned for industrial use. As a result, the remaining stores were also closed in February 2003.

CONSUMER TRENDS

 The average Taiwanese consumer prefers to dine out, and dining-in is most commonly carried out by older people or young families co-habiting with their parents. There is a tide of fashionable, urban, singles, couples and young families turning that notion around, viewing cooking as a recreational activity. While cooking habits varying greatly, most meals that are prepared at home are prepared by women. This is an important indicator, as the growth in the number of full-time female workers in Taiwan is outpacing the growth in the number of full-time male employees. Young Taiwanese often opt for ready meals they can eat at home, while prepared foods are increasingly popular, especially since product choices now include greater variety and healthier options.

 Foreign cuisine is influencing the Taiwanese consumer, with a trend towards mixing foreign and traditional ingredients and cooking methods when preparing meals at home. In the home setting, you can find young parents and singles preparing easy-to-make meals, such as cheeseburgers, meatballs, and other Western-inspired dishes.

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 Foods such as rice, soya, seafood and pork are mainstays in the Taiwanese diet. In addition, Taiwanese consumers have the highest per capita consumption rate of fruit in the world, with favorites being starfruit, papaya and watermelon. Foods like mustard greens, black beans, tofu, dumplings and noodles are also commonly found in Taiwanese dishes.

 Euromonitor cites a 2011 survey conducted by MasterCard as finding, 64% of Taiwanese respondents who said they preferred eating out over any other leisure activity. The same survey revealed that the Taiwanese dine out more often than consumers in the 14 other markets in the Asia-Pacific1 region that were included in the study (Euromonitor, 2011).

 Taiwanese consumers are still wary of the consumption of genetically modified (GM) food products. The labelling of GM foods is a legal obligation in Taiwan but there remains a gap in trust between consumers and the authorities regarding the true extent of GM elements in food and beverages available on store shelves.

 Planet Retail estimates that there has been an increase of 30% to 40% in sales of seafood in major Taiwanese supermarkets. This increase has been attributed to public concern over the use of ractopamine (a drug used as a feed additive to promote leanness in animals raised for meat) in the livestock industry and other food safety issues.

 Taiwanese consumers are becoming more aware of the benefits of healthy eating. Not surprisingly, this has led to increased demand from consumers for organic foods.

 Rice consumption in Taiwan has fallen by 50% in the past three decades, possibly due to the perception that consuming less rice can help people lose weight, according to Taiwan’s Agriculture and Food Agency. Taiwan's annual per capita rice consumption was only 45 kilograms in 2011, compared to 98 kg recorded in 1981, the agency said in a recent statement.

 Food price inflation was 4.16% in 2012, with increases in the price of fuel and electricity being blamed as the cause. Taiwan’s Ministry of Economic Affairs is pointing to the 22.18% increase in vegetables prices as the principle cause of the high inflation in food prices.

 Total grocery spending per capita, in Taiwan, has grown from US$2,480 (approximately 28% of total consumer spending) in 2009 to US$3,218 (approximately 29.5% of total consumer spending) in 2012. Planet Retail is forecasting total grocery spending, per capita, in 2017, will be US$3,963 (approximately 30% of total consumer spending per capita).

 Taiwanese on the west coast of the island generally spend more on food than people living on the east coast. Official figures also show that Taipei and Kaohsiung have the highest expenditures for food. The majority of all retail stores are located on the northern portion of the island.

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Consumer Food Expenditures — Historic Comparative — US$ Per Capita

2010 2011 2012 Category Asia-Pacific Taiwan Asia-Pacific Taiwan Asia-Pacific Taiwan Bread and cereals 90.3 179.3 96 181.2 101.5 180 Meat 93.7 418.5 100.4 446.3 106.8 464.1 Fish and seafood 47.3 206.3 49.9 217.1 52.7 222.1 Milk, cheese and eggs 49 65.8 53.4 69.1 57.9 70.7 Oils and fats 18.8 78.5 20.6 85.2 22.4 87.4 Fruit 38.4 155.8 41 163.2 43.9 165.9 Vegetables 67.3 186.3 71.3 193.1 75.8 197.9 Sugar and confectionery 29.7 51.6 30.9 52.7 32.2 52.7 Other food 20.3 52.8 21.1 55.3 21.8 56.2 Source: Euromonitor, 2013

Taiwan Retail Food Sales — Historic/Forecast Market Sizes — by Value in US$ Millions

Category 2008 2009 2010 2011 2012 2013 2015 2017 Baby food 364.2 372.9 394.7 412.1 433.5 451.3 481.9 507.0 Bakery 1,100.0 1,103.1 1,140.8 1,193.0 1,250.3 1,305.2 1,406.9 1,496.0 Canned/preserved food 136.5 139.3 142.1 146.2 149.5 152.4 158.0 162.6 Chilled processed food 721.7 782.2 839.8 908.2 984.2 1,060.7 1,180.2 1,260.3 Confectionery 550.7 547.7 551.8 562.4 576.9 592.1 625.2 662.5 Dairy 1,164.0 1,152.1 1,168.7 1,200.2 1,230.0 1,260.8 1,325.7 1,395.4 Dried processed food 771.4 784.3 808.5 848.8 872.1 892.7 931.2 965.8 Frozen processed food 252.6 259.5 269.0 284.5 298.4 311.8 334.5 354.6 Ice cream 100.0 97.0 96.2 97.5 101.8 106.0 113.7 120.6 Meal replacement 136.2 170.2 167.6 154.2 156.5 159.8 167.5 176.1 Oils and fats 388.9 388.9 395.8 408.5 417.7 426.3 442.4 456.0 Pasta 3.8 3.8 3.9 3.9 3.9 3.9 4.0 4.1 Ready meals 629.7 691.5 751.0 819.8 898.9 978.6 1,104.6 1,191.1 Sauces, dressings and 325.0 328.1 333.0 340.2 346.6 352.5 363.1 372.2 condiments Snack bars 0.5 0.6 0.7 0.9 1.0 1.0 1.2 1.3 Soup 32.9 34.1 35.2 36.7 37.9 38.9 40.8 42.4 Spreads 49.1 49.9 50.6 51.2 52.3 53.3 55.0 56.4 Sweet and savoury 666.5 681.7 696.9 716.3 733.5 749.0 777.0 800.5 snacks Source: Euromonitor, 2013

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DEFINITIONS

Definitions source: Planet Retail.

Total Grocery Banner Sales Total sales of edible grocery, household and pet care, and health and beauty products. Foodservice sales are excluded.

Total Banner Sales Total sales include all store products and services, such as banking services, foodservice sales, electronics, etc.

Total Grocery Spending Per Capita Total consumer spending on edible groceries (food, drink and tobacco), household and pet care, and health and beauty products per capita.

Total Consumer Spending Per Capita Total annual private household spending (including value added tax or sales tax), including spend in non-profit organizations, such as charity shops per capita. Excludes expenditure on: property, flats; household operations; utilities; vehicle purchases; health insurance and other insurance; pension schemes; financial services; public services. Includes expenditure on total grocery and non-grocery product categories, as well as the following categories that are summarised under “others”: vehicle rental and leases; public transport; medical services; fees and admissions; education; and holidays.

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RESOURCES

CIA World Fact Book. Taiwan. Retrieved January 2013. https://www.cia.gov/library/publications/the-world- factbook/rankorder/2092rank.html?countryName=Taiwan&countryCode=tw®ionCode=eas&rank=1 7#tw

Euromonitor International. “Countries and consumers Annual Data.” January 2012, and “Consumer Lifestyles in Taiwan.” April 2012, and Disposable Income Statistics, “Consumption Pattern in Major Markets, 2011”. February 27, 2012, and Fresh Food Consumption. 2009, and Fresh Food Consumption. 2010.

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Grocery Retail Trends in Taiwan © Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2013). ISSN 1920-6615 AAFC No. 12088E

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Aussi disponible en français sous le titre : Tendances du commerce de détail en alimentation à Taïwan

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