Blog: Katy AskewEmerging market talk dominates CAGNY

Katy Askew | 25 February 2011

As ever, this year's CAGNY conference threw up some interesting commentary from the US food industry's top brass.

Over the past four days we have heard an awful lot about how food makers intend to drive profits and safeguard margins in the face of ever rising costs. A popular answer to this problem seems to be the magic formula of improved efficiency and sales expansion.

Easy right? We've all heard it before: drive sales by investing in marketing, brand building and NPD. Cash in on big consumer trends like health and wellness or convenience. Know your consumer and target your audience wisely (baby boomers, moms and Hispanics seem to be the most sort-after US shoppers these days). Push through price increases while also remaining competitive: after all, often protecting the value of your brand means NOT being the cheapest option on the shelf because you have spent a lot of time and money telling consumers why they should pay more for your products.

But then add to the pot a fiercely competitive landscape where all your peers are attempting the same thing and, in doing so, blocking your moves to increase market share. Your categories are not showing significant growth, your domestic market is stagnating and consumer purse strings remain tight. Suddenly the goal of increasing sales doesn't sound so simple.

This is why one of the main themes running through CAGNY this year has been the need to expand in emerging markets. The likes of General Mills, Hershey and McCormick were all eager to detail this ambition.

Some of the most colourful comments on the subject, however, came from Heinz boss William Johnson. The opportunity in emerging markets "clearly stands above the rest", he told his audience yesterday (24 February).

However, rather than emphasising the differences between established and emerging markets, Johnson highlighted some of the – perhaps unexpected – similarities. Many of the same trends are driving sales in emerging and developed markets, where Johnson said Heinz has benefited from a growing demand for western brands and flavours.

Interestingly, Johnson said, the ways that Heinz communicated to potential consumers are also broadly the same. The emergence of social networking and wireless technologies may be the marketing story of the day in North America and Europe, but – according to Johnson – it is also a huge issue impacting Heinz in developing markets. "Digital wireless technology has exploded in emerging markets," Johnson observed.

And, quipping that there are "more cell phones that toilets" in India, Johnson even provided his audience with a whole new metric to measure economic development.


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