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
© Euromonitor International
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
© Euromonitor International
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?
6
Euromonitor International – Danish Food and Drink
© Euromonitor International
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
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Euromonitor International – Danish Food and Drink
© Euromonitor International
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 %
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Euromonitor International – Danish Food and Drink
© Euromonitor International
Is it possible to be healthy
in a recession?
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Euromonitor International – Danish Food and Drink
© Euromonitor International
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
© Euromonitor International
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
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Euromonitor International – Danish Food and Drink
© Euromonitor International
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
12
Euromonitor International – Danish Food and Drink
© Euromonitor International
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
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Euromonitor International – Danish Food and Drink
© Euromonitor International
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
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Euromonitor International – Danish Food and Drink
© Euromonitor International
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
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Euromonitor International – Danish Food and Drink
© Euromonitor International
Moderate Increase in Labour and Energy Costs Expected
Source: Eurostat
Source: International Energy Agency
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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
© Euromonitor International
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
© Euromonitor International
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
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Euromonitor International – Danish Food and Drink
© Euromonitor International
Private Label Benefits for Suppliers
Economies
of scale
Simplified
logistics and
supply chain
Sustainable
Growth
No listing fees
No direct
advertising
investment
required
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Euromonitor International – Danish Food and Drink
© Euromonitor International
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
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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
© Euromonitor International
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
© Euromonitor International
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
© Euromonitor International
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
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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
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Euromonitor International – Danish Food and Drink
© Euromonitor International
Q&A
Q&A
THANK YOU.
Francisco Redruello
Senior Packaged Food Analyst
Euromonitor International
francisco.redruello@euromonitor.com
www.euromonitor.com
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