Blog: Katy AskewIndia ascendant as outlook for global food sector dims

Katy Askew | 17 March 2016

Growth prospects for the global packaged food sector were negatively revised today (17 March) on faltering emerging market demand - but India looks increasingly set to be a bright spot for the industry.

Researchers at Euromonitor International cut their prediction for 2016 annual average growth in global packaged food sales to 2.3% from 2.5% this morning. In particular, the research group flagged concerns over emerging markets.

For some time, food multinationals have felt the negative impact in China's consumption slowdown. And it now appears a fresh threat has emerged for companies exposed to high growth but volatile emerging economies. Latin American markets in general – and Brazil in particular – are set to become increasingly problematic for food makers.

"Whilst China has previously been the cause of much distress, recent data clearly indicates that the wider Latin American market is going through a period of disruption, with Brazil’s downgrade being the most alarming event," the researchers wrote.

The likes of Nestle and Lactalis, which boast a strong Brazilian presence, could be in for a bumpy ride.

However, it is not all bad news on the emerging market front. Euromonitor suggests India is emerging from China's shadow as a market offering potential for packaged food makers. "India has lagged behind China in terms of economic performance as well as attractiveness for the food industry. However, with China’s current slowdown and considerable potential yet to be realised in India, some are starting to predict that it will be India, rather than China, driving future growth in the packaged food market.”

Here at just-food, the Indian food sector regularly crops up on our insight pages. While the country is notorious for its red tape and import tariffs, recent moves toward a more liberal trade policy point to a potentially brighter future for food importers. Another key challenge for international food makers with India in their sights is the need to adapt to local tastes. However, the growing importance of millennial consumers in the country has resulted in a rise in demand for international cuisine. New routes to market - such as e-commerce - and a growth in channels stocking high-end international foods are also positive notes.

Earlier this month, we published a six in-depth articles examining how to succeed in India. Click here to view the series in full.

Sectors: Emerging markets

Companies: Lactalis, Nestle

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