Blog: Dean BestEyeing emerging markets? Focus on cities, not countries

Dean Best | 20 November 2014

Cities are the way to go when looking at emerging markets

Cities are the way to go when looking at emerging markets

Food exporters targeting emerging markets should focus on cities instead of countries, management consultant McKinsey has said.

Richard Dobbs, director at the McKinsey Global Institute, said exporters eyeing the growth seen in emerging markets should think about individual cities, rather than a grouping like the BRIC nations.

Speaking at the Food Matters Live conference in London yesterday (19 November), Dobbs said economic development within Brazil, Russia, India and China -each- can vary, and a more useful strategy would be to compare growth in cities - not just within the four countries but also with cities in other emerging markets.

"BRICs is not a good way of thinking about the world. A right way thinking about it is around cities. A city like Jakarta is actually a lot more interesting than a city like Ürümqi up in Xinjiang province in China. If you look for the top cities in the world, you go to Jakarta."

Looking ahead, Dobbs suggested the best growth opportunities were in "middleweight cities", including those in the BRICs.

"If we look at where the GDP is coming from until 2025, the customers you are traditionally viewing as your core customer are only going to be a quarter of the world's growth. Three-quarters is going to come from emerging markets. Small cities are going to be 30% of that. Most of the mega cities are capping out at 8%. The real growth is going to come from these middleweight cities. The trouble with these middleweight cities is most of us don't know where they are."

He cited the northern Chinese city of Tianjin as an example. "This old port city of Beijing is not somewhere we could necessarily put on an map. At US$130bn, the GDP of Tianjin is about the same size of Stockholm. Play this forward and look at 2025, Stockholm, one of the fastest-growing cities in Europe, would have reached $210bn, Tianjin would have grown to $600bn. Stockholm is no longer a good comparator to Tianjin - the right one is Sweden."

Of course, forecasts are just that - forecasts - but it was an interesting point.

Sectors: Emerging markets

BLOG

Barilla puts sustainability centre stage

Barilla's 2016 results statement, published last week, makes interesting reading, not because of the Italian food group's commercial performance, but for the emphasis placed on sustainability achievem...

BLOG

UK M&A deal volumes slide in early months of 2017

Fresh data from Grant Thornton indicates the number of mergers and acquisitions in the UK food and drink sector fell to the lowest level for over two years in the first quarter of in 2017 - but the ac...

BLOG

Food policy returns to focus in Westminster

Amid the political turmoil in the UK caused by the EU Referendum, the resignation of a Prime Minister, subsequent burning debates over the Brexit “divorce” settlement and now by the surprise announcem...

BLOG

Danone closes WhiteWave, who will acquire Stonyfield?

Danone completed its US$12.5bn acquisition of WhiteWave Foods this week. The move will roughly double Danone's presence in North America, where WhiteWave is a top four dairy player. ...

just-food homepage



Forgot your password?