How to understand and benefit from future booming food markets.

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Marcos Fava Neves

This story came as output of an exercise in order to evaluate which countries in the world are showing the biggest opportunities in terms of food markets growth and what are the major characteristics that they share.

Before presenting the common characteristics of the booming food markets, I invite readers for a virtual trip in order to see some amazing numbers. I know that for the Chinese, numbers are always amazing, but lets see some regarding to food markets. Indonesia has around 252 million inhabitants, KFC opened the first outlet in 1979 and in 2013 they had around 470 restaurants. In 2011 Indonesia had 5.900 fast food restaurants and in 2017 they expect 9.000 units. Nigeria has 175 million inhabitants. KFC opened the first restaurant in 2009 and had around 25 units after 3 years, and fast food industry is growing more than 10% per year.

McDonalds started in China in 1990, and now has 2.000 restaurants, being the third largest market with US$ 2.8 billion in sales in 2013. Vietnam has almost 100 million inhabitants. Fast food market is growing 26%/year and the number of restaurants tripled in 5 years. KFC opened the first restaurant in 2011 and now has 140 restaurants offering 4.000 jobs. McDonalds opened the first restaurant in 2014 and had 20.000 customers in the first two days. Pakistan has almost 200 million inhabitants. It is a market of US$ 1 billion/year and growing 20%/year.

These booming fast food numbers happens because theses companies conquered reliability of the consumers due to more reliable food supply chains and awareness of health issues. We also see a westernization of younger generations with bigger use of mobile devices. After seen some of these incredible numbers of food markets growth, in order to predict which countries will offer the most attractive opportunities, lets see some characteristics they share.

The 12 factors we have to observe to identify booming food markets in the coming years:

 

  • Large populations (in amount of inhabitants);
  • Growing populations (rate of growth of the population);
  • Young populations (propensity for growth);
  • Fast urbanization (high % of people still in rural areas and moving to cities);
  • Income generation (GDP growth);
  • Income distribution (growing middle class);
  • Has resources of value being exported (oil/gas/minerals) generating capacity to pay for food imports;
  • Lack of producing resources (low land availability, low water availability, lack of other resources and capacity to invest and receive foreign direct investments in food production);
  • Regulations that favor food imports (openness to imports, low trade barriers like import taxes, quotas, sanitary barriers and lower sensitiveness bringing smaller efforts towards food security/local production) and stability of governments/ institutional environment;
  • – Adoptions of policies towards blending biofuels to petrol;
  • – Availability of import distribution channels and feasible logistics. Attractiveness for international retailers to enter using global sourcing strategies to bring food to these countries.
  • – Exchange rates favor food imports (valued local currency).

We will see a lot in these countries, and big surprises since these environments normally still have a lot of street markets, informality in food chains and lack of availability of some data. Suddenly we see a country starting to import a lot, and it was not predicted. These are some characteristics of “must have” markets for global consumer goods companies in the coming years and opportunities for food exporting countries.

The author is professor of strategic planning and food chains at the School of Economics and Business, University of Sao Paulo, Brazil (www.favaneves.org) and international speaker. Author of “The Future of Food Business” and other 50 books published in 8 countries and in China, “The World on the Tongue”.


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