Blog: Carrefour calm; Wal-Mart ready
Dean Best | 29 September 2008
The promise and perils of investing in the world's emerging markets are two sides of the same coin.
The melamine scandal that has brought turmoil to China's dairy sector has also brought that dichotomy into sharp relief.
In recent years, international investors have seen a market develop that they dared not dream would emerge – a buoyant dairy sector in China. Dairy consumption had taken off and companies including Danone, Nestle and Fonterra flocked to China to milk that growth.
Now, however, in the wake of the milk contamination scare, investors are asking questions about with whom they should partner in what had appeared such a promising market. Last week, Fonterra announced that it had written down the value of its stake in Sanlu Group, the dairy at the centre of the melamine scare, by almost 70%. Fonterra boss Andrew Ferrier described Sanlu's conduct in the scandal as “frankly appalling” and said the New Zealand dairy giant would be “much, much more suspicious” of ensuring the safety of products made and distributed by its ventures throughout the world.
One company that appears to have no such qualms is retail titan Carrefour. The French group announced two separate moves last week to expand its business internationally. The company unveiled plans to expand in Colombia and, notably, said it had finalised plans to open its first stores in Russia. Growth in the latter market is forecast to explode over the next five years; just-food estimates growth in Russia's grocery retail sector will jump by over 80% by 2013, compared to 2006 figures. Carrefour's investment is a further sign of Russia's attractiveness to multinational retailers. So, whither Tesco or Wal-Mart?
The US retail giant is, for now, casting its eyes inwards and looking to shake up its domestic operations. Last week, Wal-Mart announced the opening date for its first Marketside stores, small-format outlets set to be launched in response to a similar move from Tesco last year. However, Tesco and Wal-Mart are not the only retailers to be thinking small in the US; the likes of Safeway and Supervalu have made similar moves in recent weeks.
Industry watchers are monitoring the trend with interest and, with the economic downturn continuing to bite, it will be fascinating to watch if the focus on better quality and prepared foods among the small-format retailers really will pay off.
Today (23 December) is just-food's last day before closing for Christmas. We'll return, raring to go on Tuesday 3 January - but of course there's been plenty of top-notch content that has gone live in...
The plethora of food manufacturing associations in the UK has been argued by some to be an impediment to the industry coming to a coherent position on the aftermath of Brexit and on what the sector sh...
- 2017: three major drivers of M&A strategy
- Comment: Premier has more to ponder than Brexit
- The food market in 2017 - consumer trends and M&A
- Food market in 2017: need-to-know US trends
- Trump seen as negative for global food trade
- Premier Foods issues profit warning
- Nestle mum on Mead Johnson takeover talk
- Mondelez sells Vegemite to Bega
- Kellogg to slash 250 jobs
- Lindt sees FY sales acceleration on Europe growth