According to research from McKinsey & Company, approximately 76% of China's urban population will reach middle class status by 2022.
Considering the country's urban population is estimated to be around 730 million at present, by 2022 this would mean a middle class population of at least 550 million people.
Because of this it is no wonder that so many companies have their eyes firmly fixed on this incredibly lucrative market. Here are three that are aiming to profit from it:
a2 Milk Company Ltd (Australia) (ASX: A2M)
Despite the problems Bellamy's Australia Ltd (ASX: BAL) has had in China, demand for a2 Milk's infant formula continues to grow strongly in the country. In fact, in its half-year results the company reported a 348% increase in sales into China and Asia. This helped the company increase its infant formula market share to around 2.6%. As a premium product, I think a rising middle class can only be good news for a2 Milk.
BWX Ltd (ASX: BWX)
BWX is the company behind the Sukin skincare brand. After its huge success in the Australian market, the company has focused its attention on the China and U.K. markets. Whilst the company's expansion into the U.K. through the Boots pharmacy brand gets a lot of attention, I believe the recent launch of its Chinese online stores is equally noteworthy. In November BWX established Sukin flagship stores on both JD.com and Tmall.com, two of the world's largest online retailers.
TIANMEIBGC FPO (ASX: TB8)
Tianmei Beverage Group is a fast-moving consumer goods company that sells a range of premium bottled water products through a network of 941 retail stores and supermarkets throughout China. Due to concerns over pollution, demand for bottled water has been on a meteoric rise. Between 2010 and 2015 Euromonitor estimates that bottled water consumption rose from 19 billion to 37 billion litres. In FY 2016 the company posted sales of $66.41 million and net profit after tax of $25.1 million. A significant jump from a year earlier. Tianmei Beverage Group certainly looks like an exciting company, but I would suggest investors keep it on their watch list for now until it provides its next trading update.
