Insight yields opportunity in emerging markets

05/24/2013 10:41:00 AM
Richard Owen

Richard Owen, Produce Marketing AssociationRichard Owen, Produce Marketing AssociationIt didn’t matter whether they shopped in North America, Latin America, Europe, Africa, the Middle East or Asia-Pacific — consumers around the world taking part in Nielsen Fresh Food Insight’s third-quarter 2012 research repeatedly placed “fresh products” as a top driver for choosing food retailers.

More specifically, the quality of fruits and vegetables was found across the globe to be among the top 10 drivers for store selection.

No wonder fresh produce is increasingly realizing opportunities to grow business internationally.

If you’re wondering where in the world to start expanding business overseas, begin by educating yourself on emerging markets.

Euromonitor International reports developing markets are eyeing 10% to 48% growth in fresh foods by 2015, compared to the 3% to 7% growth in developed markets. China alone will represent 25% of total global consumption of fresh foods during this same time period.

In her recently released market research report, Produce Marketing Association China consultant Mabel Zhuang indicates China is the third-largest agricultural importer and quickly rising in rank, for good reason.

China represents 22% of the world’s population relying on 7% of the world’s arable land.

More than 200 cities in China have populations over 1 million, whereas only 35 cities in all of Europe can make this claim. The country needs the world’s help to feed its people.

Food safety scandals have also led to increased demand for imported foods in China and in other emerging markets.

Helping make India an attractive market for fresh fruits and vegetables are sophisticated, organized retailers and hotel and foodservice operators in urban areas who are under pressure to improve safety standards.

India also has a large and growing middle class with rising disposable income.

In 2011, Sumit Saran from the SCS Group in India explained to PMA Fresh Connections: Southern Africa attendees that India is one-third the size of the U.S. with three times the U.S. population — 1.16 billion people with 300 million representing the middle class.

In short, India’s middle class population is equal to the entire U.S. population.

A rising middle class is common among emerging markets. Such is also the case in Brazil, where economic growth has created a growing middle class willing to spend their disposable income on higher-quality products.

According to a market analysis report on Brazil published by Agriculture and Agri-Food Canada, “as incomes have increased, the consumption of food has risen among all income groups.”

Brazilians also tend to have a healthy diet consisting largely of fresh food.

Research on Brazil completed for PMA by Euromonitor International in September found that “buying fresh foods is extremely important to households because this means they can ensure they are eating healthy. Vegetables and fruit are priorities when purchasing fresh food.”

Healthy eating with fruits and vegetables is becoming a priority the world over in response to obesity and diet-related diseases.

Another market research report on China completed for PMA by Thunderbird School of Global Management shows a rising level of disposable income has shifted Chinese food habits toward fast food, putting China at future risk of the same lifestyle-related diseases found globally.

Surfacing in tandem are government-backed public education programs to promote healthy eating habits.

Health care in China is also adding to the spotlight on healthful fruits and vegetables. Health care costs are shifting away from the state toward individuals, placing greater motivation to improve Chinese consumers’ diets.

But along with the many forces driving global consumption of fresh foods, it’s no secret that expansion into international markets comes with its share of challenges.

Regulatory issues and logistical challenges of working with countries lacking sophisticated technology, long lead times for shipping and delivery, overseas certifications and inspections are just a few examples.

Regardless, global expansion is hard to ignore and increasingly becoming important to sustainability in the modern marketplace.

The way forward is with a well-defined strategy based on detailed research that enables the informed development of profitable, global business models. Get an overview of current retail and consumer trends in key regions right for your business.

Educate yourself on permissible imports, food safety regulations and local production and logistics. Build connections to global supply chain partners, government officials and local experts — strategic partnerships that will prove critical to overcoming international challenges, differentiating from competition and opening the door to sales opportunities, talent, innovations and exclusivity.

The benefits of revenue diversification through overseas markets offer a lifeline amid today’s choppy waters of increased competition and economic uncertainty.

Working now to assess whether international markets are right for your products or services can ensure you don’t miss the boat on opportunities of the modern marketplace that can sustain your produce business for the future.

Richard Owen is the senior director of global business development for the Newark, Del.-based Produce Marketing Association.

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