International Marketing Write- Up 8.docx

7/31/2019 International Marketing Write- Up 8.docx

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Diana DavisArticle Write-Up Number: 8

Title of Article: Chinese Food Company Eats English BreakfastSource: Wall Street Journal Online

May 3, 2012, WSJ.comClass Time: 8 AM

Summary:


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This past week in Beijing, China Weetabix Cereal has made a deal with Bright

Food Group Company of China to acquire majority of the stake. Weetabix is a cereal

that has been extremely popular in the United Kingdom and has been known to be a

strictly British cereal. This new deal is Chinas way of once again extending their

influences in the global markets. 60% of the Weetabix brand will be owned by Bright

Food Group Company of China and the other 40% will be held by the London bases

company, Lion Capital. It is estimated that Weetabix is worth over $1.9 billion.

This new deal has not been closed yet but is expected to around the second

half of the year 2012. This deal with have a huge involvement in the Chinese markets

because of their recent attempts to become large and powerful global companies. In

addition, by closing this deal China will now have full access to many retail

distribution channels in Western markets. Some of these Western markets include

United States, Canada, Italy, and Israel. One of the main goals that will steam from

this deal is Bright Foods hope to spread the Weetabix show across Asia.

Weetabix Chief Executive Giles Turrell said he expects the agreement to spur

growth at the U.K. company beyond its domestic market. "I believe there are also

substantial opportunities to further grow the business internationally, in North

America, Asia and beyond.

In recent years, cereal has not been a huge item in China and if the Chinese

were to eat cereal it would be your typical rice-based porridge. However, since 2006,

cereal sales in China have jumped to over $191 million or 70%, according to market-

research firm Euromonitor International.

The Weetabix cereal brand is not very common in Chinese markets, it was

mostly dominated by General Mills and Nestle. Their idea to aim their marketing to

Chinas middle class, which is the most common class in China. Bright Food is sold in

over 3,300 retail stores in China and has many goals with their new deal with

Weetabix. They are looking to almost double their revenue to about $14 billion by

2012.In previous years Bright Foods has not actually had many of their deals go

through with global companies. For example, last year Bright Foods lost in a bidding

war with General Mills in order to gain a 50% stake in the French yogurt, Yoplait.

Bright Foods is not willing to let this deal with Weetabix go easily so they will do

everything in their power to make sure this deal closes.


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Related Information From Other Sources:

Bright Food is hoping to take a 60% stake in Weetabix cereal. Weetabix was afamily owned company until 2004, when it was finally bought out by Lion Capital.

Weetabix is mainly a brand from the United Kingdom and is said to account for more

than 7% of the United Kingdoms total cereal sales.

Bright Food chairman Zongnan Wang said: "With Bright Food's strong

resources and our expertise in both the Chinese and broader international markets,

we are excellently placed to develop the Weetabix business."

"Weetabix Bought by China's Bright Food." BBC News. BBC, 05 Mar.2012. Web. 03 May 2012. .

Chicken feet has been known as a delicacy thoughout China, so your typical

Western cereals were not considered very tasteful in the minds of the Chinese people.

In the past the breakfast cereal aisle was much of nothing, in order to get cereals

similar to what was found in the United States, people would have to travel toexpensive import stores and pay extra.

A typical Chinese breakfast would consist of salty congee, soy milk, and deep

fried dough sticks. To anyone traveling to China for the first time these breakfast

foods were notvery appetizing. However, within the last 5 years cereal sales have

drastically increased in China. Today, the Chinese middle class is consuming more

Western foods like those found in the United States, then ever.

In addition to cereal, chocolate sales are rising 20% every year, which is ahuge jump considering chocolate was a extremely rare treat 20 years ago. Even

though all these Western food distributors are expanding to China they still have to

find a way to conform to the Chinese markets because no matter how much they are

starting to like some Western food they will never be exactly like any other market.


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Davison, Nicola. "Weetabix Deal Highlights China's Shifting Tastes."

The Guardian. Guardian News and Media, 03 May 2012. Web. 03 May 2012.

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elationship to Class Content:

In relation to in class material we are discussing moving and living abroad and

what you will experience when you get to your new destination. I would say one of

the biggest culture shocks people will experience when they are abroad is what they

eat. Eating can put a person in a good mood or a bad mood in the blink of an eye. In

the Chinese culture they are one of the most different you can come across then the

United States and Great Britain when it comes to food. Chinese find chicken feet to be

a delicacy where as in the United States that would be an absolutely disgusting thing

to eat. The Chinese are used to eating rice porridge for breakfast as in America we

are used to ham and biscuits. You couldnt be more different than that. That is why

articles like the one I have found are so important, because the Chinese culture is

finally becoming more Western when it comes to food thus will eventually allow

more people to travel there and find more products that they are used to and in the

end making you feel more at home. Also, considering how much Americans love our

comfort food, having a good American meal could be any expatriates mind at ease for

a little bit. We have discussed China a lot this semester and if a person is going to

experience culture shock it would definitely be in China. Especially if you are bringing

American children over to China the family adjustments you will have to make would

be extensive. But as the article said in the last five years China has grown to love

Western food which could make living abroad much easier for some families who are

looking to relocate. However, what is really amazing is that this increase in sales is

not due to all the expatriates moving to China and increasing the sales, the Chinese

people are actually starting to like this Westernized food. Primarily, the middle class

in China is the ones that have been growing this number. It incredible to see how

companies are organized and how they expand abroad. Weetabix is just one example

of many that show how the right advertising and the changing times can make a

company flourish.


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In the article it said in order to get and kind of typical Western cereal you had

to go to a special store and pay a ridiculous price for it. Which this also directly

relates to what we are talking about, because there was no real demand for cereal in

China you can change your pricing philosophies around and charge different prices.

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International Marketing Write- Up 8.docx