Market-based nutrition innovation opportunities

Anthony Hehir Director - Nutrition Improvement Program Bogotá, 15 May 2015

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The world economic pyramid

Annual per Capita income

based on 2005 purchasing

parity in US$

Population

Source: World Resources Institute, 2005 data

$ 3,260 - $ 20,000/year

More than $ 20,000/year

Less than

$ 3’260/year

0.5 billion

2 billion

4 billion

Emerging Markets

Mature

Survival Markets

Base of Pyramid

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Where are the 4 billion consumers?

Source: World Resources Institute, the next 4 billion

Africa:

486 million

people

429 billion USD

income

Asia:

2,86 billion people

3,470 billion USD income

Eastern Europe:

254 million people

458 billion USD income

Caribbean +

Latin America:

360 million people

509 billion USD

income

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Spending on food

4

Global:

2,894 billion USD/year

each square represents approx. 5 billion USD

Latin America:

199 billion USD/year

Africa:

215 billion USD/year

Eastern Europe:

244 billion USD/year

Asia:

2,236 billion USD/year

Source: the next 4 billion

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Food dominates household budgets % of spend on food

5

US 7%

Nigeria

40%

Kenya

45%

Mexico

24%

Brazil

25%

Egypt

38%

Pakistan

46%

India

35%

China

33%

Indonesia

43%

Source: Time Magazine, February 28, 2011

If you spend such a high percentage on food, the smallest price increases

in the world market, e.g. for flour and other staples, can become life-

threatening for people in developing countries.

Europe 6-15%

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High prevalence of micronutrient deficiencies

1/3 of the world’s population suffers from micronutrient deficiencies, the lack of essential

vitamins and minerals in a person’s diet.

Most of these people live at the

Base of the Pyramid.

6

What happens if we ignore

these 4 billion consumers?

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The vicious cycle of income poverty will not stop.

Individuals

Countries

Business

What happens if we DO

serve these 4 billion consumers with nutritious food solutions?

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Four reasons to serve these 4 billion

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High economic

return

High impact on economic

growth

Health improvement

Poverty reduction

Increase of GDP

because of increased

productivity and less

burden on health

care systems

Expand into new markets,

broader product

portfolio, competitive

advantage, image =

more growth

and profit.

Better able

to move up the

income ladder. Normal

physical and mental

development of children

increases chances as adults.

Less health care

cost, more

productive and able

to perform well.

Better learning and

concentration

The way to serve 4 billion people

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Knowing your BoP target group

13

Low income

3-6 USD/day

Subsistence

1-3 USD/day

Extreme poverty, some depending on aid less than 1 USD/day

Provide attractive and affordable solutions with added nutritional value for an existing consumer market

Work with local partners in product development, distribution and marketing to ensure acceptance and accessibility

Form Public Private Partnerships with governments and non-governmental organizations to ensure best solution and reach

The issue is not finding new target groups. Assuming products are affordable,

there are plenty of under- and non-consuming customers to tap.*

*Source: the business solution to poverty

FOR INTERNAL USE ONLY

Emerging

economies

and Base of

the Pyramid

Public health

interventions and

social safety nets

Institutional

feeding

Humanitarian aid

Higher

income

We believe there is one sure way, and

only one way, to foster genuine social

change on a large scale among the

world’s poverty-stricken billions – by

harnessing the power of business to the

task.*

*Source: Polak & Warwick: The business solution to poverty

”

Public health need

Business case

Market

solutions

Knowing your BoP target group

FOR INTERNAL USE ONLY

Where is the money?

Source: LGT Venture Philanthropy

FOR INTERNAL USE ONLY

Business model spectrum

Non-profit

Non-profit with

income

Social enterprise

Business with social impact

Business

Non-profit structure

For-profit structure

Philanthropic capital

Commercial capital

Financial

returns Social

returns

Source: Jed Emerson “The Blended Value Proposition:

Integrating Social and Financial Returns”, 2003

FOR INTERNAL USE ONLY

Differentiating between traditional charity, venture philanthropy and impact investing

High social return

Low social return

Negative financial return Positive financial return

Traditional

charity

Venture philanthropy

Impact investing

Examples

Hybrid models to deliver micronutrient powders (MNPs)

Image: http://www.tropmedex.com/ghana/ghana_en.html

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Healthier snacking for kids in Jakarta

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Issue

• High prevalence of micronutrient deficiencies

• Snacking in Indonesia is part of daily diet

• Many snacks lack nutrients

Challenge

• Raise awareness of partners to act

• Develop a product with more nutritional value

• Raise awareness about healthier eating and

importance of micronutrients

Partners

• Aisyiyah schools in Jakarta

• Indofood, the largest food producer in Indonesia

• DSM’s Nutrition Improvement Program (NIP)

Solution

• GoVIT snack with added micronutrients

• Schools and open market

• Education and awareness program

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Healthier snacking for kids in Jakarta Combining goals and strengths

Aisyiyah schools

Indo-food

DSM

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Indofood, Indonesia’s

largest food producer:

• product development

• marketing

• distribution

DSM’s Nutrition

Improvement Program:

• scientific and technical

support in fortification of

product development

(micronutrient

composition)

• education program

development for kids and

teachers

Aisyiyah schools for primary school children in

Jakarta:

• committed to improve health

• offer platform for a pilot, study and education

program, willing to scale up

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Miller’s Pride, Tanzania Partnership with World Vision to fortify maize milled at hammer-mill level

22

Insti-tutions

World Vision

DSM

DSM’s Nutrition

Improvement Program:

• scientific and technical

support in fortification of

product development

(micronutrient

composition)

• training and support of

millers

World Vision:

• experience in similar

projects

• local presence and

network, access to

government bodies

Institutions working on nutrition improvement:

• Tanzania National Fortification Alliance (TNFA)

• SIDO (Small Industries Dev. Organization)

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ONE GOAL is a

movement of

1.4 billion

football fans

tackling the

issue of child

malnutrition in

Asia. We have

one goal:

Nutrition for

every child.

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Sizanani Mzanzi (South Africa) Non-profit with income

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Partnerships are crucial for market solutions

- Design products consumers want

- Create market demand

- Supply chain and distribution

- Sustainable business case

- Meeting consumer health need

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© Sight and Life

Page

FOR INTERNAL USE ONLY

Social education

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Understanding Acceptance Demand Behavior

change

Investment in social education is a key

success factor and not a ‘nice to have’.