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Dr. David Hughes Emeritus Professor of Food Marketing
Global Agribusiness & Food Industry Conference International Institute of Agri-Food Security Curtin University, WA, Australia The Rendezvous Observation City Hotel Perth, Monday, September 10th, 2012
Consumer and Other Trends in The Global Food Value Chain: Implications for Agribusiness
Population Projections for Japan and Proportion of Population 65+ years
20
22
24
26
28
30
32
34
36
million people
Proportion pop 65 + years
Source: National Institute of Population & Social Security, Gov. of Japan
U.S. Protein Availability
Low/No Market Growth in Developed Countries with Existing High Meat and Dairy Product Consumption
• Population growth slow or declining • Ageing population with reduced food intake • Concerns re. impact of saturated fat on health* • Social pressures: concern about GHG/climate-
friendly diets, animal welfare, guilt re. grain-fed beef • For lower income groups, migration to lower-priced
products (e.g. white meats, processed cheese) • But, for higher income groups, premium “special
treat” meats, dairy nutraceuticals, weight management/muscle-building products have appeal
* Particularly, older consumers; exacerbated by periodic food industry safety scares * Clear threat of “satfat taxes” on butter/cheese/full fat products
World Population: Who's Going Up and Who’s Going Down?
2010 2030 2050 - billion-
World 6.9 8.2 9.0 Africa 1.0 1.5 2.0 Asia 4.1 4.8 5.1 Europe 0.7 0.7 0.7 LAC* 0.6 0.7 0.8 North America 0.3 0.4 0.5 Oceania 0.04 0.04 0.05
*Latin America & Caribbean Source: UN (population scenario planning)
Source: Financial Times, 24/4/12
Market Size of Infant Nutrition Business by Major Region
World Meat Consumption* 2007-2012 2007 2012 p.a.%
Total meat consumption 223 mill. t. 239 1.3
Of which %: % Pork 40 41 Poultry 32 34 Beef 24 21 Sheep/lamb 4 3 Global meat consumption increased by 16 million tonnes
between 2007 and 2012 and most of growth was in emerging countries and was for chicken
* Not including fish and seafood
World Meat Consumption* Excluding China
2007 2012 p.a.%
Total meat consumption 158 mill. t. 164 <1 Of which %: % Pork 30 29 Poultry 38 41 Beef 29 28 Sheep/lamb 3 3 But 10 of 16 million tonnes global growth is in China!
* Not including fish and seafood
China: Share of Global Meat Consumption by Species
Species % Global Consumption Pork 52 Sheep/lamb 40 Fish & seafood 30 Poultry 18 Beef 9
FAO Global Food Price Index: 1990 to 2012*
Source: FAO * to August 2012 (September 4th, 2012)
Drought Areas in the USA, July 2012
Source: The Economist July 21st-27th, 2012
Importance of Food in the Consumer Price Index, Selected Countries, 2010
May 2011
Polarisation Evident in Global Grocery Markets: Growth in Hard Discount and Premium – e.g. UK
+ Double digit year-on-year sales growth
+9% & 5% year-on-year sales growth
+ 3% year-on-year sales growth
=
=
=
On-line shopping and integration with store pick-up
Focus on smaller stores
Food Retail Evolving and Converging with Food Service
Reinventing the hypermarket
Strong retail specialists
Food retail and food service converge
Virtual Shopping in Gatwick Airport North Terminal
UK Waitrose Supermarket: £10 (AUD15) Meal for Two: one main; one side, one dessert; and a bottle of wine. Good Deal or What!
The Notion of “Eating Out In”! See, also, in Woolies: “5 Dishes for R150”
VALUE VALUES
HERITAGE PROVENANCE
PACK SIZE
ETHICS SUSTAINABILITY
PERFORMANCE
PROMOTIONS
PRICE
Values: For Shoppers, It’s Not ONLY about Price
Source: IGD 2012
Customer Hierarchy at Coles Supermarket…
Kind to others
Back to Nature
Good for me, my family
Legal & safe
Source: Coles Supermarket, Australia
Jamie Oliver: Not Everyone’s Favourite Celebrity Chef in USA
Shoppers: not always rational/logical
Warning: This Product May Explode on March 12th, 2023 at 4.30 pm!
It’s a Challenge to Claim “All Natural Ingredients” with a 12 Year Shelf Life!
41%
36%
27%
25%
22%
21%
14%
10%
9%
7%
6%
4%
3%
2%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
They Are Better Quality
Healthier
They Are A Treat
I Can Afford Them
They Are For Special Occasions
I Know I Will Like Them
Organic/ Natural Ingredients
More Ethically Produced
They Are Better For The Environment
I Will Spend More On Food For My Children
Special Dietary Needs E.G Gluten Free
Endorsed By A Brand Or An Organisation I Like And Trust
Religious Beliefs Eg Halal, Kosher
I Want To Impress My Friends
Reasons for paying more for food and drink
Thinking about food and drink that you are willing to pay more for, what are the most important reasons for doing so?
• Key Findings
• As many as 1 in 7 (14%) shoppers are willing to pay more for organic food
• 1 in 10 are willing to pay more for ethically produced goods and a similar number (9%) for goods that are better for the environment .
Business, Academia, Governments and NGO’s seeking new directions for green strategies
Business Members Include:
"We want to grow from the respected and trustworthy food company that we are known as now, into a respected and
trustworthy food, nutrition and wellness company“
Peter Brabeck-Letmathe Blue Print for the Future, October 2001
Nestlé Health Science S.A. and Nestlé Institute of Health Sciences established to target new opportunity between food and pharma Vevey, Switzerland, September 27, 2010
Creating Corporate and Social Value Through Sharing Values with Partners in the Supply Chain
• “Big Food” is “under the gun”! The bigger the brand, the bigger the risks for the brand owner
• brand owners will require supply chain partners who understand, share and live core values
• major suppliers of all inputs will carry the “brand integrity torch” for the brand owners
• branded supply chain partnerships will be closer and longer-lasting than commodity supply chains
• business models are changing, led by global fmcg firms, Major retailers, QSR and manufacturers will be expected to lead on safety and sustainability initiatives
•
For Food and Drink Products, Taste/Smell is Paramount but What About the Story? • When it comes to communicating the story to the
consumer, who is the hero/heroine?: - the country of production; - the region/local area; - the processor and/or farmer; - the production process; - the product; - the animals/produce/the ingredients; - the heritage/tradition/terroir; - all of the above?!
From a Consumer Perspective, What Are You Famous For in Global Export Markets?
Country Famous For Best Known Food Germany Engineering Sausage, beer, sauerkraut Mexico Hats, illicit drugs Tequila. burritos Italy Racing cars, fashion Pasta, olive oil, cheese, ham …. Ireland St. Patrick’s Day, charm Guinness, potatoes Japan Cars, electrical goods Sushi England Royalty, pop music Cream teas, fish & chips USA High tech, Hollywood Burgers, hot dogs, big portions Australia Sport, swimwear Wine, barbies (BBQ) South Africa Mandela, diamonds, gold Biltong!
Some Concluding Thoughts
• Don’t write off the old developed countries – that’s where the wealth is but not the growth
• If China stutters, we’ll all stumble! • Volatile global food price outlook will constrain
demand for protein foods and exacerbate political instability in emerging countries
• “The Green Train” has left the station get on board! • Big fmcg changing their business models – from
CSR to CSV • Supply chain relationships mature and strengthen
driven by the need to protect brand value
CONTACT POINTS: e-mail
telephone numbers office +44(0)1600 715957 fax +44(0)1600 712544 mobile +44(0)7798 558276
Check my latest podcast at www.profdavidhughes.com
Bye Bye Corporate Social Responsibility (CSR) and Welcome to Creating Shared Value (CSV) Value: doing good Citizenship, philanthropy,
sustainability Discretionary or in response to
external pressure Separate from profit
maximization Agenda is determined by
external reporting and personal preferences
Impact limited by corporate footprint and CSR budget
Example: Fair Trade purchasing
Value: economic and societal benefits relative to cost
Joint company and community value creation
Integral to competing Integral to profit maximization
Agenda is company specific
and internally generated
Realigns the entire company budget
Example: Transforming procurement in tea/coffee to increase quality and yield
Source: Harvard Business Review ”Creating Shared Values”, Porter, etc. 2011
Michael Porter’s “Big Idea” for Business What’s Good for Global Business is Good for the World Turned on Its Head: What’s Good for Our World – its citizens’ health, the environment, future generations, disadvantaged groups ....., etc. - is Good for Global Business
M. Porter and M. Kramer, “Creating Shared Value”, Harvard Business Review, Jan/Feb, 2011
