China — home to the world’s second-largest exporter and fastest-growing economy — wants to order in from Michigan.
Battle Creek-based Kellogg Co. announced a deal Monday that will keep the biggest Asian economy well-stocked with Tony the Tiger, as well as Pop-Tarts and Eggo waffles and other ready-to-eat exports.
Meanwhile, the director of the Michigan Department of Agriculture and Rural Development said a trade mission has reaffirmed China’s growing appetite for Michigan cherries — up from zero in 2007 to 150 metric tons last year — and other state agricultural exports.
“There’s a big appetite here for foreign products because they’re viewed as safe,” said Jamie Clover Adams, state agriculture director. “We have diversity and a really safe product, and that gives us an advantage.”
Kellogg says it formed a joint venture to expand the distribution of its cereals and snacks in the country as early as next year. The breakfast giant says the deal will tap the infrastructure and local expertise of Wilmar International, a Singapore-based agribusiness. Kellogg also plans to use the deal to sell Pringles chips, which it acquired this year.
“China’s snack-food market alone is expected to reach an estimated $12 billion by year-end, up 44 percent from 2008,” Kellogg President and CEO John Bryant said in a statement.
Kellogg gets most of its revenue from North America, where growth in the packaged food industry has been relatively weak. But like other companies, Kellogg is increasingly casting its sights on developing markets such as China and India, where the appetite for convenience foods is growing more quickly.
Kellogg notes that China is expected to be the largest food and beverage market within the next five years. As for cereal, the company says consumption is rising as milk becomes a more common part of the diet.
China’s past scandals with tainted milk nevertheless remain a major stumbling block for cereal makers, says Paul French, chief China market strategist for Mintel, a research firm. French said cereal companies are finding greater success selling breakfast bars, which don’t require milk.
Kellogg nevertheless sees potential for growth. The Chinese market for cereal is expected to reach $225.4 million this year, more than double what it was five years ago, according to Euromonitor International.
A representative for Kellogg said the company already sells brands such as Frosted Flakes and Special K in China. General Mills Inc., the maker of Cheerios and Wheaties, already has a joint venture with Nestle, called Cereal Partners Worldwide, to sell several of its cereals in China.
Meanwhile, a delegation of Michigan officials including Gov. Rick Snyder has two days remaining on its 10-day trade mission to the country.
Agriculture director Adams said Monday the Chinese are interested in some of Michigan’s biggest crops, but that the logistics of shipping and competition in fruit production from the western part of the United States makes it more difficult.
Michigan had about $23.4 million in agricultural-related trade with China in 2011. The aim is to at least double that by 2015. Adams said Michigan’s fruit exports have grown dramatically. In 2007, it exported no cherries or dried fruit to China. In 2011, Michigan sent 150 metric tons of cherries overseas and exported $300,000 worth of dried fruit.
The trip ends Wednesday. Before then, Adams — with Snyder and others — will attend a trade show and meet with the country’s Agriculture Trade Office.
Michael Martinez, The Detroit News