Food companies in developed markets are increasingly looking to cash in on the potential offered by high-growth emerging markets. But as data published by just-food in partnership with Kantar Worldpanel suggests, multinationals are coming up against some stiff local competition.
It isn’t easy to carve out growth in developed markets.
A backdrop of largely flat consumption, weak population growth and an absence of demographic drivers, such as an expanding middle class, do not foster an environment of dynamic growth. Meanwhile, stiff competition and a consolidated retail sector make it harder still to win significant top line gains in established sectors of mature markets.
For this reason, food manufacturers are increasingly looking to emerging and frontier markets to fuel expansion and identify that next sales opportunity.
Speaking to just-food last week, Adam Couch – the CEO of UK pork group Cranswick – revealed that after a stellar set of sales figures for fiscal 2013/14, the company expects revenue growth to slow in the coming 12 months. However, Cranswick believes that it can develop long-term export opportunities in key markets across Asia.
Providing a useful barometer for how international food makers are fairing in key emerging markets, working with Kantar Worldpanel, just-food unveiled a data set showing the ten most-chosen food brands in the BRICs in 2013.
A key takeaway from the list of top food brands in Brazil, Russia, India and China was the strength of domestic brands across these markets.
The BRICs have long been viewed as offering the most potential of the emerging market set. Many multinationals have invested significant resources and spent many years developing a presence in these countries. However, in terms of the largest brands – with the exception of Brazil – local players are clearly ascendant.
In China and India, nine of the ten most-chosen food brands in 2013 were owned by domestic companies. Russia was more internationalised and brands owned by multinationals made up half the list. Of the BRICs, Brazil was the only market where multinationals had a stronger showing than their local peers, with European and Japanese firms well represented on the list.
Mizkan Group is one Japanese company that moved to expand its overseas footprint last week through the acquisition of Unilever’s Ragu and Bertolli sauce brands in North America.
Mizkan forked over a hefty deal multiple to win through in a hotly contested sale process and the company was upbeat on the prospects for growing sales in what it termed a “stable” category. The deal is in line with Mizkan’s strategy to bulk up with cash generative scale businesses in mature markets through M&A (as evidenced by last year’s UK acquisition spree).
However, in a slow- to no-growth category and with brands that are being squeezed by premium and private-label competitors, it remains to be seen if Mizkan will be able to breathe fresh life into these well-established businesses.