global food trends: the opportunities in emerging...

Global Food Trends: The Opportunities in Emerging and Mature Markets

Janaina Roque Integration Consulting

The opportunity for growth… FMCGs present very different opportunities for

growth in developed and developing markets

IN RECENT YEARS, WE HAVE SEEN A VERY CLEAR GROWTH TREND IN THE FMCG FOOD MARKET…

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Data from Euromonitor (FMCG market size, including: soft drinks, alcoholic drinks and packaged food) and the World Bank (GDP)

GDP CAGR: 2008-2013

FMCG (FOOD) CAGR: 2008-2013

BUBBLE SIZE: SIZE OF THE FMCG FOOD

MARKET (ALCOHOLIC DRINKS, SOFT DRINKS AND PACKAGED FOOD) IN MM

USD

THE FMCG (FOOD) MARKET Developed v developing countries

China

Vietnam

1.7%

Nigeria

Bolivia

Brazil

Russia

India

South Africa

Mexico

USA Japan

Germany

UK France

Spain Italy

Canada

Australia

-3.0%

-1.0%

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

-8% -3% 2% 7% 12% 17%

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Data from Euromonitor (FMCG market size, including: soft drinks, alcoholic drinks and packaged food) and the World Bank (GDP)

THE FMCG (FOOD) MARKET Developed v developing countries

THERE IS A VERY CLEAR DIVIDE IN TERMS OF GROWTH OPPORTUNITIES:

MATURE MARKETS: Capture opportunities within the existing market

EMERGING MARKETS: Capture opportunities given by market growth

GDP CAGR: 2008-2013

FMCG (FOOD) CAGR: 2008-2013

BUBBLE SIZE: SIZE OF THE FMCG FOOD

MARKET (ALCOHOLIC DRINKS, SOFT DRINKS AND PACKAGED FOOD) IN MM

USD China

Vietnam

1.7%

Nigeria

Bolivia

Brazil

Russia

India

South Africa

Mexico

USA Japan

Germany

UK France

Spain Italy

Canada

Australia

-3.0%

-1.0%

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

-8% -3% 2% 7% 12% 17%





INNOVATION BRINGS DISRUPTION:

GROWTH OPPORTUNITIES FOR PLAYERS EXIST WITHIN THE CURRENT SIZE OF THE MARKET.

MATURE MARKETS ARE NOW “FULL”: THEY ARE

SATURATED AND THERE IS NO SPACE FOR

FURTHER MARKET GROWTH.

GROWTH COMES WITH THE GROWTH OF THE

MARKET: IT’S ALL ABOUT GETTING THE BASICS RIGHT TO REACH NEW CONSUMERS.

EMERGING MARKETS ARE STILL BEING FILLED:

THERE IS STILL MORE SPACE TO EXPAND THE

MARKET BEFORE IT BECOMES SATURATED.

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Two approaches for growth… Different strategies are required in

mature and developing markets.


INNOVATE to capture the opportunities within the current market


BUILD to capture the opportunities of market growth

VS

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INNOVATE

BUILD VS

Two approaches for growth…

Brand Role

Convenience

Local Reality

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LET’S SEE THREE PRACTICAL EXAMPLES OF WHAT THIS DIFFERENCE MEANS…

Two approaches for growth… Brand Role

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Brand Role

Source: 2013 Roger Report

% of people that agree 'it's better to buy well-known

brands because you can rely on their quality'

53%

28%

Emergingmarkets

Mature markets


EMERGING MARKETS

…by capitalising on brand reputation: Guinness in Nigeria, leveraging the brand while meeting local tastes:

Brand Role

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BRANDS TO GUARANTEE QUALITY STANDARD & ASPIRATIONS…

Brand Role




53%

28%

Emergingmarkets

Mature markets

This is also true for food chains: Subway & Yum! Brands fastest growth markets are all emerging economies…

Russia UAE

Brazil India

Two main international units: India & China


MATURE MARKETS

Brand Role

…for example by acquiring smaller players to improve their brand reputation as consumers’ perceptions change:

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LOCAL PLAYERS REINFORCING FEEL GOOD/TASTE FOOD/ DO GOOD

Brand Role




53%

28%

Emergingmarkets

Mature markets

Premium salsa and hummus

Organic baby food

Natural and organic food

Healthy juices

Organic tea

Two approaches for

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Convenience

Source: Euromonitor

Change in sales volume of ready meals

(CAGR 2010-2015)

5.4%

1.2%

Emerging Mature


EMERGING MARKETS

Convenience

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BRANDS HAVE TO BUILD…

Convenience

Source: Euromonitor


(CAGR 2010-2015)

5.4%

1.2%

Emerging Mature

…to meet the growing demand for convenience:

Maggi in India capitalising on its name for noodles and adding convenience-oriented products for home-cooking of traditional recipes (e.g. Maggi Bhuna Masala range)

General Mills introducing its Pillsbury cake mixes into India with a mission to make consumers’ life “easier”:

“With Pillsbury, anyone can make delicious cakes at home using an

over on a pressure cooker. (…) All you have to do is blend, then bake or

steam”. (GM India Website)


MATURE MARKETS

Convenience

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Convenience BRANDS HAVE TO INNOVATE…

Source: Euromonitor


(CAGR 2010-2015)

5.4%

1.2%

Emerging Mature

…to meet the growing demand for differentiated convenience (be good, feel good, taste good):

Marks and Spencer 9.8% to 11.5% focus on “taste good” and “feel good”

Chicago Town 2.6% to 2.5% Heinz 2.5% to 2.3% Perceived as “industrial products”

Changes in UK Ready Meal Market Share by Brand, 2009-2014

Growth of local farmers markets in countries like UK and Germany

M&S source all beef from family-owned slaughterers in Scotland

Two approaches for growth… Local Reality

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Local reality


Packaged food: % sales by channel, 2015

Modern Grocery Retailers, 41%


Traditional

Grocery Retailers, 55%

Traditional


Others, 4%

Others, 6%

Emerging Mature


EMERGING MARKETS

Local Reality

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BRANDS HAVE TO LEVERAGE LOCAL INFRASTRUCTURE…

Local reality



…to tackle the challenges related to the lack of infrastructure and limited consumers’ mobility:

Danone (Fan Milk) in Nigeria creating their own distribution network of 30,000 vendors to tackle the lack of cooling facilities in stores around the country:



Traditional


Traditional


Others, 4%

Others, 6%

Emerging Mature

Chicken producer in Angola creating a constant distribution system to provide frozen meat in open air markets:


MATURE MARKETS

Local Reality

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Local reality BRANDS TO LEVERAGE CHANNELS SOFISTICATION



…to on the needs for convenience and new consumption habits of the consumers…



Traditional


Traditional


Others, 4%

Others, 6%

Emerging Mature

• Cheaper delivery & free Click&Collect

• Leverage online channels to promote products

• The internet of things…

INNOVATE

BUILD VS


Brand Role

Convenience

Local Reality

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WHAT CAN WE CONCLUDE FROM THESE THREE EXAMPLES?

EMERGING MARKETS ARE NOT A LESS SOPHISTICATED VERSION OF MATURE MARKETS. THEY ARE DIFFERENT NOW AND WILL BECOME MORE AND MORE DIFFERENT AS THEY MATURE. WE

HAVE TO CONTINUOUSLY UNDERSTAND AND ADAPT TO THE RULES OF EACH IF WE WANT TO PLAY IN BOTH REALITIES.

Janaina Roque Integration Consulting

THANK YOU Questions?

Global Food Trends: The Opportunities in Emerging and Mature Markets

global food trends: the opportunities in emerging...

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