Voluntary Report - public distribution

**Date:** 2006/4/25

**GAIN Report Number:** TW6015

TW0000

**Taiwan**

**Retail Food Sector**

**Convenience Store**

**2006**

**Approved by:**

Hoa Van Huynh![](media/image1.wmf), Director, Agricultural Trade Office

American Institute in Taiwan

**Prepared by:**

Amy Chang-Chien Hsueh

**Report Highlights:**

The characteristics of Taiwan's convenience store sector:

\-- World's highest store density

\-- Continuation of the market growth

\-- Taiwan as a gateway to China

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Taipei ATO \[TW2\]

\[TW\]

####### Table of Contents

I. Market
Overview............................................................................
Page 3 of 7

II\. Company
Profile............................................................................
Page 5 of 7

III\. Market
Access...............................................................................
Page 6 of 7

IV\. Post Contact and Further
Information.................................................... Page 7
of 7

######## 

######## I. Market Overview

The characteristics of Taiwan's convenience store sector:

-   World's highest store density

-   Continuation of the market growth

-   Taiwan as a gateway to China

######### World's Highest Store Density

The number of convenience stores in Taiwan has greatly increased in
recent years. With nearly 9,000 stores on the island in 2006, Taiwan has
become world's most competitive market for convenience stores. According
to a 2005 AcNeilsen market research, Taiwan has the highest store
density, with 8,000 stores throughout the country or one store per 2,800
people.

######### Continuation of the Market Growth

The top three chains, including 7-Eleven, Family Mart and Hi-Life,
control about 82% of the total market shares and continue to grow at a
rate of over 100 stores annually. The upward market trend concentrates
on two or three chains. Mr. Pan Jin Tin, President of the Taiwan Family
Mart stated in a recent article that the market is unsaturated and will
continue to evolve into a new format of competition.

Number of New Stores

+----------+--------+--------+-------+--------+--------+-------------+
| Year     | **     | **     | **2   | **     | **     | #######     |
|          | 2001** | 2002** | 003** | 2004** | 2005** | ## Total \# |
|          |        |        |       |        |        |  of Stores  |
|          |        |        |       |        |        |             |
|          |        |        |       |        |        | **(April    |
|          |        |        |       |        |        | 2006)**     |
+----------+--------+--------+-------+--------+--------+-------------+
| 7-Eleven | 267    | 303    | 253   | 215    | 357    | 4,179       |
+----------+--------+--------+-------+--------+--------+-------------+
| **Family | 150    | 142    | 197   | 200    | 151    | 1,884       |
| Mart**   |        |        |       |        |        |             |
+----------+--------+--------+-------+--------+--------+-------------+
| **H      | 41     | 78     | 106   | 144    | 96     | 1,190       |
| i-Life** |        |        |       |        |        |             |
+----------+--------+--------+-------+--------+--------+-------------+
| **OK**   | 3      | 67     | 66    | 61     | 50     | 890         |
+----------+--------+--------+-------+--------+--------+-------------+
| **Nik    | 47     | 23     | 6     | 25     | 4      | 360         |
| o-Mart** |        |        |       |        |        |             |
+----------+--------+--------+-------+--------+--------+-------------+
| **       | -8     | -352   | -20   | -41    | -159   | 368         |
| Others** |        |        |       |        |        |             |
+----------+--------+--------+-------+--------+--------+-------------+

Source: Taiwan Chain Stores & Franchise Association Yearbook 2005

The chart below outlines the trends and development of Taiwan's food
retail market. Convenience stores have transcended other retail formats
since 2002 after a period of rapid expansion from 1988 throughout the
1990s.

![](media/image2.wmf)

**Taiwan As a Gateway to China**

Besides seeking new ways to increase market share at home, most of the
Taiwan convenience store chains are aggressively exploring the overseas
markets, especially the China market. Taiwan has been proven to be an
important gateway to China. Family Mart and Starbucks Coffee, for
instance, have followed the Taiwanese customary pattern of first
establishing a base in Taiwan and then stepping into China through their
Taiwan partners who hold first-hand knowledge and information about the
China market, its people, and its business practices. For now, Family
Mart is the only convenience store chain that has crossed the Strait.
Family Mart holds 10% stake in Shanghai Family Mart, a joint venture
with Family Mart Japan and other groups. It is anticipated that more
Taiwan/foreign joint ventures will follow this pattern of taking Taiwan
as a gateway to China.

**Convenience Stores Play a Role as "the Last Mile" in the On-Line
Shopping**

Taking advantage of its distribution network, Taiwan's leading
convenience store chain, 7-Eleven, states that "consumers are now able
to enjoy an on-line shopping heaven with bill-payment and convenient
pick-up at 7-Eleven stores island-wide."

To compete with their common rival, the other four top chains, Family
Mart, Hi-Life, OK, and Niko Mart, jointly launched a CVS.COM Co., Ltd.
in 2000. The company set up a platform to handle deals in e-commerce
goods and bill-payments. With a total of 4,300 stores jointly owned by
these four chains, the volume of EC goods handled by CVS.COM is
reportedly increasing significantly with double-digit growth in recent
years.

## Store Formats/Offerings Reflect the Change in Population Structure

To reflect the change in demand resulting from the change in population
structure, convenience stores will likely develop new store formats that
focus on certain groups of consumers, like elderly or working women, or
will adjust goods stocked to meet the demand of consumers. Taiwan's
population is aging. The elderly (age 65 and above) account for 9.77 %
of the total population, higher than the world average of 7%.
Single-person households and small size families are becoming more
common. The percentage of convenience foods, microwaveable foods,
vegetarian foods and healthy foods will continue to increase in these
convenience stores. In addition, these convenience stores are expected
to further extend their service items. The income from collecting public
utility fee has become one of the most important revenue earners for
these stores.

######## II. Company Profile

# 

# 7-Eleven Taiwan

7‑Eleven Taiwan, or the President Chain Store Corp., is an affiliate of
the Uni-President Enterprises Group, Taiwan's largest food company.
7-Eleven continues to lead other convenience stores in Taiwan in number
of stores, sales volume, and profits generated. Its total annual sales
reached over US\$2.9 billion in 2005, a 21% increase from the previous
year.

The first 7-Eleven store opened in 1980 and since then has grown to
cover 4,179 stores as of April 2006. 7-Eleven Taiwan had difficulty in
the beginning, because of weak acceptance by local consumers. With a
continuous 7-year loss, it then started turning out profits by 1987.
Today, Taiwan has become the 3^rd^ largest chain system of 7-Eleven in
the world, behind Japan and the United States. To secure the markt
competitiveness, the President Chain Store Corp. has been working toward
a diversified management module. It has developed more than ten related
enterprises, including Starbucks Coffee Taiwan (171 outlets), and Cosmed
drug stores (174 outlets). The company adopted an aggressive stance
towards internationalization. It established Shanghai President Coffee
Corp. (Starbucks Coffee), and invested in Philippines Seven Corp.,
holding a 57 percent stake in the operations of 7-Eleven's business in
the Philippines. Today it enjoys great growth with 270 stores in the
Philippines market. The President Chain Store Corporation and its parent
company, the Uni-Preisdent Group, have been active in exploring the
China market. Reportedly, negotiations and communications pertaining to
the franchise agreement for 7-Eleven Taiwan to oeprate 7-Eleven stores
in China are underway.

# 

# Family Mart Taiwan

Family Mart, Taiwan's 2^nd^ largest convenience store chain, was
established in August 1988 by

Family Mart Japan (38.8%), Itochu Corp. Japan (17%), Taisun Enterprise
Group Taiwan (11.7%), Kuang Chuan Dairy Taiwan (10%), and other Taiwan
groups (15%). Taiwan Family Mart has an aggressive expansion plan in
China. The first store was opened in Shanghai in 2004 and has grown to
nearly 100 stores in the area in two years. Family Mart Taiwan holds
10.6% stake in Shanghai Family Mart, a joint venture with Family Mart
Japan and other Taiwan/Japan groups. Currently, Family Mart Taiwan has
1,884 stores in Taiwan and is expected to expand to 2,000 stores by
2006. In 2005, Family Mart Taiwan generated US\$926 million in sales, a
13% increase from the previous years.

**Hi-Life**

Hi-Life Convenience Store Chain, or the Life International Co., Ltd.,
was established in 1989 by the Kuang Chuan Dairy Co., Ltd. Hi-Life is a
100% local convenience store chain with currently 1,190 stores
island-wide. In 2004, the Uni-President Group, Taiwan's largest food
company, bought a 31.25 percent stake in Hi-Life International Co. Ltd.
Reportedly, Hi-Life generated US\$515 million in sales in 2005, a 12
percent increase from the previous year.

######### 

######### OK Convenience Stores

In September 1988, the OK Convenience Stores, a joint venture of the
Feng Chun Enterprise Group Taiwan and Circle K of the United States
launched three "OK" convenience stores at the same time in Taipei. It
has grown to 890 stores island-wide by April 2006. OK Convenience Stores
terminated the franchise agreement with the Circle K in late 2005 and
became the Lai Lai OK Convenience Stores. The new company continues to
operate "OK" stores in Taiwan. Reportedly, Lai Lai OK Convenience Stores
generated US\$345 millions in sales in 2005, a 7 percent increase from
the previous year.

**Niko Mart**

Established in June 1990, Taiwan Niko Mart is a joint venture of the
Taisun Enterprise Group Taiwan and Niko Mart Japan. Niko Mart's partent
company, the Taisun Group is one of Taiwan's top food and beverage
manufacturers. In 2005, Niko Mart generated US\$156 million in sales, a
7 percent increase from the previous year.

**CVS.COM Co., Ltd.**

In 2000, Taiwan's top four convenience store chains, Family Mart,
Hi-Life, Circle K and Niko

Mart, jointly formed a company, CVS.COM Co., Ltd., a joint venture
company to operate a network for the four chains in offering e-commerce
services. CVS.COM.TW is an open e-commerce platform and window for the
four convenience stores. The company offers on-line shopping and
logistics services including joint procurement and marketing to the four
chains. The objective is to minimize the operating costs of the four
chains and thereby enhance their market competition.

###### **III. Market Access**

Taiwan convenience store chains import directly. They also rely on
importers, agents, and distributors for products. Managers of these
chains plan to increase the number and variety of imported goods
stocked. U.S. exporters can sell directly to these stores by contacting
their purchasing departments. Major Taiwan convenience store chains have
their own distribution centers to distribute products, both dry and
chilled/frozen goods, to each outlet. The other convenience stores have
ties with other distribution centers.

[The President Chain Store Corporation and 7-Eleven]{.underline} stores
use a wide variety of goods and services and are always looking for new
products that will better serve their customers. 7-Eleven Taiwan states
that they welcome offers from any competitive and dependable suppliers
for the following food products: Beverage, snacks, candy, canned food,
condiments, cooking, and others. U.S. suppliers are encouraged to
contact them directly:

International Procurement Team

President Chain Store Corp.

Email: <weng6491@mail.7-11.com.tw>

Fax: 886-2-2747-8009

[CVS.COM Co., Ltd.]{.underline} serves as a joint purchasing team for
Family Mart, Hi-Life, OK, and Niko Mart. One of the objectives of this
company is to jointly seek, purchase, and market new products to be sold
in the four convenience store chains. U.S. exporters who are interested
to market their products at these convenience stores should contact
CVS.COM directly:

CVS.COM Co., Ltd.

<charles@ultimate-accessories.com.tw>

Fax (886-2) 2547-1590

######## VI. Post Contact and Further Information

Agricu ltural Trade Office Taipei

American Institute in Taiwan

Room 704, 136 Renai Road, Section 3

Taipei, Taiwan

Tel: (886-2) 2705-6536

Fax: (886-2) 2706-4885

Email: atotaipei@usda.gov

Web Site: [http://www.fas.usda.gov](http://www.fas.usda.gov/)

<http://www.ait.org.tw/en/agriculture/ato/>