Consumption is playing an increasingly important role in driving economic growth. In 2023, the total retail sales of consumer goods in Guangdong reached 4.75 trillion yuan, a year-on-year increase of 5.8%. Due to optimism about China's vast consumer market and strong consumption potential in the Greater Bay Area, more and more multinational enterprises are keenly seizing opportunities in the Chinese market and continuously increasing investment in China.
Kraft Heinz Corporation (hereinafter referred to as "Kraft Heinz") is one of the world's leading food and beverage companies, specializing in Chinese and Western sauces and seasonings, as well as infant and toddler snacks, snacks, and beverages. Its over 200 brands are sold in more than 200 countries and regions worldwide. In 1984, Heinz founded China's first joint venture in infant supplement food in Guangzhou. By this year, Kraft Heinz has been developing in China for 40 years.
Regarding the new progress of Kraft Heinz's investment layout in China, its views on the Greater Bay Area market, and new trends in Chinese seasoning consumption, Southern Finance's full media reporter interviewed Cai Hong, Chief Marketing Officer of Kraft Heinz in China.
In his view, China has a huge market size, diversified demand, rapid technological development, stable business environment, and other factors, which have given Kraft Heinz great confidence in its development in China. Looking ahead to the future, they will continue to invest in China, carry out more investment and cooperation in Guangdong region, and create more value for society.
The picture shows Cai Hong, Chief Marketing Officer of Kraft Heinz China
According to statistics, the total retail sales of consumer goods in China in 2023 exceeded 47 trillion yuan, reaching 47149.5 billion yuan, an increase of 7.2% compared to the previous year. How does Kraft Heinz feel about the Chinese consumer market last year? What are your views and feelings, especially regarding the market recovery in the Guangdong Hong Kong Macao Greater Bay Area?
Cai Hong: Since its establishment in China, Kraft Heinz has formed an inseparable bond with Guangzhou. Heinz's first year and first stop in the Chinese market in 1984 was Guangzhou, Guangdong. In Guangzhou, we first established China's first joint venture enterprise for infant complementary foods. In April 2002, Heinz (China) Investment Co., Ltd. was officially established and continues to be rooted in Guangzhou. In June of the same year, we successfully acquired three state-owned enterprises, including Guangzhou Meiweiyuan Food Co., Ltd., and began to enter the seasoning industry. In 2010, by acquiring Fuda (China) Investment Co., Ltd., Heinz also acquired the two major brands "Weishida" and "Guanghe". This year marks the 40th anniversary of Heinz's entry into China. For the past 40 years, Kraft Heinz's China headquarters has been located in Guangzhou and has maintained full contact with the entire Greater Bay Area market. In terms of market performance, according to third-party research results, whether Weishida soy sauce or Guanghe Fermented bean curd, the market share of Chinese soy sauce and condiments in Guangdong has always maintained a leading position.
At the beginning of 2023, Guangdong held a high-quality development conference, emphasizing the focus on the real economy and adhering to the principle of "manufacturing as the mainstay", clearly indicating the development direction of Guangdong's construction of a high-quality modern industrial system. As one of the regions with a high degree of openness and strong economic vitality in China, the Guangdong Hong Kong Macao Greater Bay Area has encountered challenges from both internal and external situations, but its development momentum is still strong and the recovery trend is obvious. In 2023, Kraft Heinz also achieved good performance. Combined with the government's clear "manufacturing leadership" strategy, it has strengthened our confidence and determination to continue developing in the Greater Bay Area.
"A Hundred Multinational Companies Looking at China": Since entering China in 1984, Kraft Heinz has been rooted in China for 40 years. What is the significance of the Chinese market for Kraft Heinz? What is Kraft Heinz's future plan for the Chinese market?
Cai Hong: The Chinese market has several aspects of significance for Kraft Heinz. Firstly, China has a huge market size and a large consumer base. In the development of the Chinese economy, the steady growth of the middle class has made the Chinese market highly attractive and promising. And seasoning itself is an industry that relies on population and economic development, so I think China has provided us with a huge market size and a driving force for growth.
Secondly, the Chinese consumer market is becoming increasingly segmented, and consumer diversification has become a trend, which coincides with Kraft Heinz's diversified development strategy. With the continuous improvement of residents' income levels and the growth of the middle class, diversified consumption is a very important opportunity. Diversification of consumption brings more possibilities for Kraft Heinz to provide consumers with seasonings that not only meet their daily needs but also enhance their taste buds.
Thirdly, the development of technology provides us with more convenience and opportunities. China's Internet of Things and the Internet are widely spread, and 5G base stations and infrastructure are developing rapidly, including the latest popular AI. These have provided us with a solid foundation for our development in the Chinese market, as well as new opportunities and challenges. They have also provided us with more opportunities for international enterprises to cooperate with local industries.
Finally, a good and stable business environment has given Kraft Heinz great confidence, providing us with more opportunities and guarantees for our development.
So, whether it's market size, diversified demand, technological development, or a favorable business environment, all give us great confidence. From a global perspective, China is an important engine for Kraft Heinz's global development, which is included in its 10-year development plan. Looking ahead to the future, we believe that China has great potential and will firmly cultivate the Chinese market. We will do more things that are suitable for the local market in China.
In recent years, cross-border collaborations and integrated innovation have been important promotional methods for Kraft Heinz. What are the collaborations between Kraft Heinz and local enterprises in Guangzhou or the Greater Bay Area? What are the main forms and stages involved?
Cai Hong: When it comes to cross-border collaboration and integrated innovation, I can give a few examples. Guanghe Fermented bean curd, founded in Kaiping, Guangdong, has been one of the oldest seasoning brands in China for 130 years. Guanghe Fermented bean curd joined Kraft Heinz in 2010. Guanghe is a brand that has been around for a century. We hope to keep this brand alive, make it younger, and cooperate with more local brands.
So, we have collaborated with many young brands to try more fresh ways of eating. In August 2023, we cooperated with many online red tide brands in Dongshankou to produce a variety of innovative Fermented bean curd dishes, which attracted more than 3000 consumers to punch cards online and offline. At the same time, we also innovatively launched Fermented bean curd chicken meal package, Fermented bean curd ice cream, matcha Fermented bean curd frozen soup (a cocktail). We are working with the local online red tide brand in Guangdong to create a new consumption scene, so that "new" and "old" have a good combination, so that Guanghe Fermented bean curd permeates into the lives of many young people, becoming a new way of communication and product experience.
"A Hundred Multinational Companies Looking at China": In recent years, what have been the deep adjustments in the domestic seasoning market and what have been the changes in consumer logic? How is the development of China's seasoning market?
Cai Hong: In recent years, the competition in the domestic seasoning market has been very fierce, and we have been seeking the possibility of providing consumers with more and better products. From the perspective of food consumption logic, the essential needs of consumers have not changed, and there is still a strong demand for very healthy and delicious food. But some details have changed, such as a greater emphasis on health and rationality.
With the increasing awareness of public health, a large number of zero additive products have emerged in the market and occupy an important share. We have also launched multiple series of zero additive products in different seasoning categories. At the same time, consumers pay more attention to cost-effectiveness and will do more homework and budget carefully before making a purchase. And they will pay attention to whether the ingredients meet the standards, and pay more attention to the values of certain nutrients.
Finally, whether it meets the taste of consumers remains crucial. In seasoning, the taste of the product is one of the most important elements. The demand for freshness and deliciousness among consumers has never changed, but their demands are constantly increasing. While ensuring health, it is still important to maintain freshness and flavor. Overall, we believe that the fundamental logic of the food consumption market has not changed, but consumer demands will continue to rise. Kraft Heinz will continue to meet the needs of consumers and provide them with a more delicious and healthy range of products.
What contributions has Kraft Heinz made to building a sustainable value chain in environmental protection? What experiences can be shared?
Cai Hong: We believe that as a responsible enterprise, we should not only focus on commercial success, but also take on social responsibility. In terms of ESG, our group has invested a lot of time and effort, and we are fulfilling our environmental protection responsibilities from China to the whole world.
In 2022, the Heinz brand under Kraft Heinz collaborated with Pulpex to develop a recyclable bottle made from 100% sustainable wood pulp paper. In China, the Weishida brand upgraded its packaging materials last year, gradually phasing out low recycling polyvinyl chloride (PVC) materials and adopting more recyclable and low pollution packaging materials. Taking the classic 760ml glass bottle packaging as an example, the upgraded glass raw material usage has been reduced by up to 33%; In the 380ml glass bottle weight reduction plan launched in 2023, it is expected that the annual glass consumption can be reduced by about 6591 tons. In addition, Kraft Heinz has also upgraded the structural design of cardboard boxes, resulting in an annual savings of up to 627 tons of paper usage.
In 2020, Kraft Heinz officially launched one of its largest single investment projects in the world, the Yangjiang factory, in Yangjiang, Guangdong. In recent years, what have been the changes in investment layout and key development nodes of Kraft Heinz in Guangdong/Greater Bay Area?
Cai Hong: Guangdong is located in the southern coastal region and is a very important hub connecting Southeast Asia. The natural geographical advantages enable Guangdong to fully utilize its natural port and transportation advantages, absorb investment and capital from both domestic and foreign sources, and promote economic development. At the same time, Guangdong's degree of openness to the outside world is very high, and the food processing industry chain is very complete, forming a good industrial cluster effect.
Based on our confidence in the economy and market of Guangdong, we invested 700 million yuan in 2017 to build the Yangjiang factory, which was officially put into operation in August 2020. As one of the largest single investment projects of Kraft Heinz in the world, the Yangjiang factory mainly produces our star product - the well-known Weishida Weijixian series in Guangdong. The first phase of the design has a production capacity of 200000 tons of finished soy sauce per year.
In 2023, based on market performance and confidence in Guangdong/Greater Bay Area, Kraft Heinz invested an additional 56 million RMB to expand the production line of its Yangjiang factory and improve production efficiency. Our investment in Guangdong has never stopped, so we are particularly looking forward to strengthening cooperation with governments at all levels in Guangdong Province to achieve mutual benefit and greater development.
What are the most attractive factors for companies to land in Guangzhou's investment environment? Has the business environment in Guangzhou been continuously improving in recent years? What are the development prospects of foreign-funded enterprises in Guangzhou/Greater Bay Area?
Cai Hong: We believe that the Guangdong Hong Kong Macao Greater Bay Area is an economically dynamic and highly open region. During the 40 year development process of Kraft Heinz in China, various levels of government departments in Guangdong Province have provided us with a lot of help and care. From investment negotiations, factory construction and operation to various difficulties in daily operations, government departments at all levels spare no effort to help us negotiate and solve them, escort and help enterprises overcome various difficulties, and help us achieve many impressive results.
In the past five years, Kraft Heinz has paid approximately 1.8 billion yuan in taxes in Guangdong, making certain positive contributions to local economic development, taxation, and employment. The year 2024 coincides with the 40th anniversary of Kraft Heinz's entry into the Chinese market, which is an important milestone for our development in China. Previously, we have achieved many fruitful results. In the future, with a favorable business environment and strong government support, we are willing to continue to rooted in Guangdong and Guangzhou, and work together to create a more brilliant future!