Food companies are seeing potential for growth in international markets as food trends expand to different countries. Grocery giant Kroger seems to be taking the leap overseas to a new market that was not explored by the company before. On Tuesday, the largest grocer in America announced a partnership with e-commerce company Alibaba to sell select private label products to Chinese consumers.
This online store pilot allows the grocer to have access to Alibaba’s half a billion Chinese consumers. Kroger will initially start selling products under their Simple Truth brand and then after testing its success the retailer will likely introduce more products under their Our Brands portfolio. In turn, Alibaba will become the only Chinese e-commerce retailer that has access to America’s largest natural and organic brand.
“E-commerce enables Kroger to quickly scale to reach new customers and markets where we don’t operate physical stores, starting with China,” said Yael Cosset, Kroger’s chief digital officer. “We anticipate Chinese consumers will love Our Brands – starting with Simple Truth® products – just like our American customers do. Kroger is proud to continue to lead the way in making natural, organic and free-from products more mainstream and accessible. Sharing Kroger’s exclusive brands and status as a food authority the world over is exciting.”
This move is part of the “Restock Kroger” initiative that the grocery chain announced last year. According to the company, this initiative involves a series of strategic moves that will allow the grocer to improve their private brand growth through online grocery and meal solutions. The Alibaba partnership allows Kroger to support two key pillars in their Restock Kroger initiative – elevating their Our Brands products and developing alternate revenue streams through retail partnerships.
Kroger seems to be thinking quite strategically with the international debut of their Our Brands products. With China having the largest population in the world and Alibaba accounting for over 80 percent of all online purchases in China, Kroger now has access to a huge consumer demographic. In fact, the Chinese e-commerce market is pegged to outgrow the value of the US e-commerce market by over twice as much to reach $1.7 trillion by 2020.
Since Simple Truth is already popular in America because of its wide selection of organic and natural food products, the opportunity in China is quite promising. The healthy eating trend is also sparking international interest as consumers around the world are learning about the benefits of living a healthy lifestyle. In fact, the Chinese consumer demographic is on its way to becoming the largest market for healthy eating, according to Forbes.
This means that if Kroger has as much success in selling Simple Truth products in China as they do in America, the grocer has the chance to make billions in profits.
“Kroger is the world’s third largest retailer by revenue – $122.7 billion in sales in 2017. We are creating the grocery retail model of the future by focusing on digital and technology,” added Cosset.