A Global Perspective on the Food Industry
Euromonitor International Francisco Redruello – Senior Food Analyst
© Euromonitor International
What is happening to food regulation? Where is the food market going? Is it possible to be healthy in a recession? Will the cost of food increase? What are the choices facing manufacturers? Where are the opportunities for private Label?
Where are the opportunities for brands? Q&A
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Euromonitor International – Danish Food and Drink
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What is happening to food regulation?
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Euromonitor International – Danish Food and Drink
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Heavy Regulation in EU Food and Drink Market
EU food & drinks market is heavily regulated
Regulatory environment in emerging markets is more flexible
Convergence expected in the medium term
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Euromonitor International – Danish Food and Drink
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Stricter Food Regulation in Emerging Markets Could Open Door to International Manufacturers
Stricter food regulation
Market consolidation
Competitive edge for international manufacturers 5
Euromonitor International – Danish Food and Drink Federation
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Where is the food market going?
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Euromonitor International – Danish Food and Drink
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Emerging Regions Will Lead Food Sales Growth Packaged Food Sales by Region. Retail Value Growth (%)* 5 4
3 2 1 0 -1 -2
2009-10
2010-15 CAGR %
*Constant 2010 Prices – US$ Fixed 2010 Exchange Rate 7
Euromonitor International – Danish Food and Drink
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Maturing Consumer Demand Slows Food Growth in Denmark Packaged Food. Retail Volume Sales Growth by Sector (%) 8 6 4 2 0 -2 -4 -6 -8 2009-10
2010-15 CAGR % 8
Euromonitor International – Danish Food and Drink
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Is it possible to be healthy in a recession?
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Euromonitor International – Danish Food and Drink
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Dairy is Largest Functional Food Sector
Functional/Fortified Food Sales by Sector. Retail Value (2010). US$ Million. World Level. 70.000 60.000 50.000 40.000 30.000 20.000 10.000 0
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Euromonitor International – Danish Food and Drink
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Bakery Products Lead Functional Growth in 2010 Functional/Fortified Food Sales Retail Value Growth (%)* (2009-10). World Level.
3,5 3,0
2,5 2,0 1,5 1,0 0,5 0,0 Bakery Products
Confectionery
Dairy Products
Oils and Fats
Snack Bars
Other Food
*Constant 2009 Prices • Fixed 2009 US$ Exchange Rates 11
Euromonitor International – Danish Food and Drink
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Sports Drinks is Largest Functional Sports Drinks Sector
Functional Beverage Sales by Sector. Retail Value (2010). US$ Million. World Level. 18.000 16.000 14.000 12.000 10.000 8.000
6.000 4.000 2.000 0
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Euromonitor International – Danish Food and Drink
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Concentrates Lead Growth in 2010 Functional/Fortified Beverage Sales Retail Value Growth (%)* (2009-10). World Level
Sports Drinks RTD Tea Fruit/Vegetable Juice Energy Drinks Elixirs Carbonates Bottled Water Other Hot Drinks Chocolate-Based F P Drinks
-4
-2
0
2
4
6
8
10
*Constant 2009 Prices • Fixed 2009 US$ Exchange Rates 13
Euromonitor International – Danish Food and Drink
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Organic Certification Still Matters
• Organic outperforms
conventional formats • Recovery is more rapid
for organic food • Consumers still willing to
spend more for better quality
*US$ million at constant 2009 prices, fixed 2009 exchange rates 14
Euromonitor International – Danish Food and Drink
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Will the cost of food increase?
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Euromonitor International – Danish Food and Drink
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Food Commodity Prices Picking UP
Note: Commodity Food Price Index includes Cereal, Vegetable Oils, Meat, Seafood, Sugar, Bananas, and Oranges, 2005=100 16
Euromonitor International – Danish Food and Drink
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Moderate Increase in Labour and Energy Costs Expected
Source: Eurostat
Source: International Energy Agency 17
Euromonitor International – Danish Food and Drink
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What are the choices facing manufacturers?
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Euromonitor International – Danish Food and Drink
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Impact on Supply Chain
Distribution
• Raw materials suppliers in
stronger position to pass on higher costs
Processing
• Retail chains unlikely to fully
Raw Materials
• Pressure on manufacturers
take on price increases
to adapt to new business environment
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Euromonitor International – Danish Food and Drink
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The Two-Pronged Strategy
Upper • Added end of value is market king maker
Lower • Focus on price and end of value for market money
Specialisation into high growth niches
Diverting a larger share of production to private label 20
Euromonitor International – Danish Food and Drink
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Private Label Benefits for Suppliers
Economies of scale
Simplified logistics and supply chain
Sustainable Growth
No listing fees
No direct advertising investment required 21
Euromonitor International – Danish Food and Drink
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Private Label Benefits for Retailers
• 20-30% cost savings
Lower retail prices
for retailers relative to brands • Savings only partially
passed on to consumers
Strategic control Higher mark-ups
• Higher control of shelf-
space and delivery schedules 22
Euromonitor International – Danish Food and Drink
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Where are the opportunities for Private Label?
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Euromonitor International – Danish Food and Drink
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Private Label is Highest in Meal Solutions
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Euromonitor International – Danish Food and Drink
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Private Label in Developing Countries Still Minimal
• Western Europe, North
America and Japan claim 93% of total private label retail value sales • Private label negligible
in fragmented emerging markets
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Euromonitor International – Danish Food and Drink
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Key Trends in Private Label: Price
• Wal-Mart’s private label
offerings are simply designed • Lack the sophistication of
brands and target priceconscious consumers • Private label in US gained
retail share across most sectors in 2009
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Euromonitor International – Danish Food and Drink
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Key Trends in Private Label: Added Value Sainsbury’s Chocolate in UK
Edeka Bio Feta in Germany
El Corte Ingles Yoghurt in Spain
Auchan Rice in France
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Euromonitor International – Danish Food and Drink
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And The Latest Innovation Highlights Are…
• Private label taps into demand for
health properties • ‘Ethical’ private label is new
emerging trend 28
Euromonitor International – Danish Food and Drink
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Where are the opportunities for brands?
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Euromonitor International – Danish Food and Drink
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Brands Fighting Back in Developed Markets
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Euromonitor International – FIE Conference
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And The Latest Innovation Highlights Are…
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Euromonitor International – FIE Conference
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The Future of Food is Called Asia…
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Euromonitor International – Danish Food and Drink
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…And Brands Are Already There
• Middle-class consumers
drive demand for brands • Standards similar to
developed markets in some food categories 33
Euromonitor International – Danish Food and Drink
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Q&A
Q&A THANK YOU. Francisco Redruello Senior Packaged Food Analyst Euromonitor International
[email protected] www.euromonitor.com
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