Pathways for Growth:
2012 Update
Mary Shelman, Harvard Business School
Agenda
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Pathways for Growth
Global trends
Still the right course?
Ireland has an enviable agricultural situation
that almost every other country would kill for…
… at a time when the global demand for food is
projected to increase by 70% over the next 40
years.
Pathways for Growth
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Challenges
– Fragmentation
– Lack of consumer orientation
– Low confidence in the future
Solutions
– Cooperation instead of competition (Co-opetition)
– Innovation leading to differentiation
– Brands built around customer feedback
– Umbrella strategy
“Come See Us”
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World class agricultural industry by 2016
“We are natural and we can prove it”
– Tough standards
– Universal adoption
Work as one to achieve export growth
Umbrella brand for Irish food and drink
Trends in the Global Food System
2012 Prices: Volatile
Source: FAO
Long-term fundamentals remain strong
Companies reorganizing, investing to
focus on high growth markets
Olam’s Africa double-down
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In the last 7 months, Olam has…
– Acquired biscuit and candy company and dairy in Nigeria and
announced US$50 million greenfield rice farm and mill
– Acquired tomato paste canning facility and biscuit company in
Ghana
– Acquired 49% stake in Ghana’s largest cotton company
– Opened new wheat mill in Gabon and announced new cashew
plant
– Partnered with Gabon gov’t on 50,000 hectare rubber plantation
– Opened new cashew plant in Côte d’Ivoire and announced new
cocoa processing plant
– Announced new dairy processing plant in West Africa
Supply Chains: From farm to fork
Domino’s is buying chicken feed
1,500
1,400
1,300
National Corn Index
1,200
Hard red spring wheat
Hard Red Spring Wheat
$/bushel (1 = $0.01)
1,100
1,000
900
800
700
600
500
400
300
200
100
Corn
Coca-Cola & Jain Irrigation helping
50,000 Indian mango growers
OSI grows lettuce for McDonald’s China
…and now broilers
Modern broiler farms
Modern feedmill
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Fonterra and Nestlé building large-scale
dairy farms in China
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Source: Greenpeace.org
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Sustainability: From Fashion to Staple
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“Our customers expect it”
“In the top three things buyers want”
“Platform of the future”
Unilever: Sustainably source 100% of agricultural inputs by 2020
Definition of Sustainability?
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Measures are evolving
– Carbon, energy, waste
– Water, biodiversity
– Animal welfare, labour practices, …
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And depend on the local market
– Needs (food safety) vs. preferences (farming intensity)
“The next big battleground”
Consumers: Engaged and Empowered
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Connected 24/7
– Trust “friends” more than advertising
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Expect companies to do MORE
– When quality and price are equal, Purpose is the deciding factor
A different role for brands
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Agri-food as a strategic industry: Global
champions
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JBS, Brasil Foods
Fonterra, Zespri
New Zealand Agribusiness Agenda 2012
– Calls for a industry strategy, vision
Source: KPMG Agribusiness Agenda 2012, www.kpmg.com/nz/aa2012
In closing…