The Global Food Market and Developments in the Modern Food Industry in India
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Dr David Hughes Emeritus Professor of Food Marketing Emeritus Professor of Food Marketing Agri-Business Forum 13 th International Economic Forum of the Americas/ Conference of Montreal Montreal, Quebec, Wednesday, June 20 th , 2007 The Global Food Market and The Global Food Market and Developments in the Modern Developments in the Modern Food Industry in India Food Industry in India
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The Global Food Market and Developments in the Modern Food Industry in India. Dr David Hughes Emeritus Professor of Food Marketing Agri-Business Forum 13 th International Economic Forum of the Americas/ Conference of Montreal Montreal, Quebec, Wednesday, June 20 th , 2007. Global High Tech - PowerPoint PPT Presentation
Transcript of The Global Food Market and Developments in the Modern Food Industry in India
Dr David HughesEmeritus Professor of Food MarketingEmeritus Professor of Food Marketing
Agri-Business Forum
13th International Economic Forum of the Americas/ Conference of Montreal
Montreal, Quebec, Wednesday, June 20th, 2007
The Global Food Market and The Global Food Market and Developments in the Modern Developments in the Modern Food Industry in IndiaFood Industry in India
Migration to the PolesMigration to the Poles
GlobalHigh TechNew and ImprovedReady-to-EatFast FoodFuel FoodJust MeLow PriceGood For YouAll YearLarge-ScaleOpen Supply Chain
LocalHigh TouchTraditionalNatural/UnprocessedSlow FoodStory FoodFriends/FamilyPremium PriceNaughty but NiceSeasonalCraft-scaleClosed Supply Chain
Per Capita Consumption of Selected Food Per Capita Consumption of Selected Food Groups, India and ChinaGroups, India and China
Kg Per CapitaKg Per Capita
Rice Wheat Maize/Corn
Oilseeds ‘Land’ Meat
Fish Butter & Cheese
Vegs. Fruit Sugar
India 91 75 11 13 7 6 1 66 36 10
China 108 107 138 18 61 8 3 234 28 18
Source: Adapted from “Asian Agrifood Demand Trends and Outlook to 2010”, Department of Foreign Affairs and Trade, Fed . Gov. Australia, 2004
Share of Supermarkets in Food Retail - USAShare of Supermarkets in Food Retail - USA
0102030405060708090
100
1940 1950 1960 1970 1980 1990 2000 2010
%%
U.S.U.S.
Source: Reardon et al, 2005
Share of Supermarkets – Western EuropeShare of Supermarkets – Western Europe
0102030405060708090
100
1940 1950 1960 1970 1980 1990 2000 2010
%
U.S.U.S. FranceFrance
Source: Reardon et al, 2005
Share of Supermarkets – “First Wave of Share of Supermarkets – “First Wave of Supermarket Diffusion”Supermarket Diffusion”
0102030405060708090
100
1940 1950 1960 1970 1980 1990 2000 2010
%%
U.S.U.S. FranceFrance
Chile, Korea, Chile, Korea, Taiwan, Taiwan, Mexico, Mexico, Philippines, Philippines, ThailandThailand
Source: Reardon et al, 2005
Share of Supermarkets – 2Share of Supermarkets – 2ndnd & 3 & 3rdrd Waves Waves Supermarket DiffusionSupermarket Diffusion
0102030405060708090
100
1940 1950 1960 1970 1980 1990 2000 2010
%%
U.S.U.S.Indonesia, China, Indonesia, China, Vietnam, IndiaVietnam, India
Source: Reardon et al, 2005
Emergence of Modern Retailing Emergence of Modern Retailing
• Pace of supermarket penetration accelerating in emerging markets, but, one size does not fit all (and not all public and/or private enthusiastic)
• In any country, waves – first, in big cities, then secondary cities, then rural towns
• Processed foods and non-food grocery first, then, meats, dairy, fruit and last into vegetables
• Impetus is, often, significant FDI from major international players, and/or “retaliation in first” domestic investment
Source: T. Riordan (2007), Hughes D
Emergence of Modern Retailing Emergence of Modern Retailing
• Supply chains modernise – from top end to mass market – through– National, regional, global sourcing networks– “Preferred supplier” systems– Direct purchase and specialised wholesalers– Private quality standards
• All the above have substantial implications for food industry players, in particular, smaller-scale businesses (not least small-scale farms)
Source: T. Riordan (2007), Hughes D
Who Are The Global Retailers?Who Are The Global Retailers?
RankRank RetailerRetailer BaseBase Global StatusGlobal Status1 Carrefour France
Leading global retailers
2 Wal*Mart USA
3 Tesco UK
4 Metro Group Germany
5 Ahold Neths
6 Auchan France
7 Seven&I Japan
Leading international retailers
8 Aldi Germany
9 Groupe Casino France
10 Costco USA
11 Delhaize Belgium
Source: IGD, 2006
Major Players in the Indian Modern Grocery Major Players in the Indian Modern Grocery Sector, Late-2006Sector, Late-2006
CompanyCompany FaciaFacia FormatFormat Store NumbersStore Numbers
Subhiksha Subhiksha Discount 600
Margin Free Margin Free Discount 257
Trinethra Trinethra Supermarket 170
RPG Spencer’s Hyper/Super
Supermarket 125
Reliance Retail Reliance Fresh Supermarket 120
Pantaloon Big/Food Bazaar Supermarket 108
Dairy Farm Foodworld Supermarket 50
Nilgiri’s Nilgiri’s Supermarket 36
Sabka Bazaar Sabka Bazaar Supermarket 27
Leading Food Retailers in China, 2006Leading Food Retailers in China, 2006
CompanyCompany Ownership/HQOwnership/HQ Sales Sales
Billion YuanBillion Yuan
Lianhua State owned Shanghai 44.0
China Resources Vanguard Hong Kong 37.9
Carrefour France 24.8
Wumart Private Beijing 23.1
Suguo State owned Nanjing 22.3
Beijing Hualian State owned Beijing 21.2
Nonggongshang State owned Shanghai 19.6
Source: China Chain Store & Franchise Association, 2007
Leading Food Retailers in China, 2006Leading Food Retailers in China, 2006CompanyCompany Ownership/HQOwnership/HQ Sales Sales
Billion YuanBillion Yuan
RT - Mart Taiwan 19.6
Wal*Mart USA 15.0
Shanghai Hualian State owned Shanghai 15.0
Xinyijia (A. Best) Private Beijing 14.3
Trust-Mart Taiwan 14.0
Lotus Thailand 13.5
Metro Germany 9.4
Tesco UK 9.3
Source: China Chain Store & Franchise Association, 2007
Fish market Sicily, ItalyNovember
2005
British are “exceptionally slow of imagination and wanting in taste” when it comes to food. “As a rule, the Englishman’s dinner is plain and monotonous to a degree. The cook knows nothing of proportion in seasoning his food; little of variety, and has a rough slovenly touch”!
Indian Tourist to the UK1896
It’s not whether , it’s whenIt’s not whether , it’s when??Development of the Modern Food Grocery Sector in IndiaDevelopment of the Modern Food Grocery Sector in India
• Huge young population and growing• Real GDP growth rate high and resilient• Rapid urbanisation• Broadening of the middle class• Retail industry pundits invariably rank India as
No. 2 to China on modern retail development potential
• International retailers congregating at the borders
Source: UN (2002),IFPRI
1950 1960 1970 1980 1990 2000 2010 20200
1
2
3
4
5
6
7
8Billions
Developed countries
Developing countries
World Population, 1950-2020World Population, 1950-2020
Source: UN (2002),IFPRI
1950 1960 1970 1980 1990 2000 2010 20200
1
2
3
4Billions
rural
urban
Urban and Rural Population in Developing Urban and Rural Population in Developing Countries, 1950-2020 Countries, 1950-2020
It’s not whether , it’s whenIt’s not whether , it’s when??Development of the Modern Food Grocery Sector in IndiaDevelopment of the Modern Food Grocery Sector in India
But:But:• Fresh food purchase preference and lack of
modern fresh food supply chains provides a buffer for wet markets and traditional retailers
• Extended families and servants reduce convenience advantage of modern retailing
• Penchant for regulation embedded in Indian public sector DNA
• Farmers and small-scale retailers do have political clout and resist modern sector incursion
Source: Accenture in Coca-Cola RRC, The Fresh Imperative in Asia, 2005
Principal Fresh Food Shopper Segments in Principal Fresh Food Shopper Segments in Selected Major Asian Urban CentresSelected Major Asian Urban Centres
27
41
824
Quality Seekers
Authority SeekersEasy Life Seekers
Value Seekers
Shopper Segments and their Preferences: Shopper Segments and their Preferences: Traditional versus Modern RetailTraditional versus Modern Retail
49
6458
50
32
51
3642
50
68
0
10
20
30
40
50
60
70
80
Overall QualitySeekers
Valueseekers
AuthoritySeekers
Easy LifeSeekers
Traditional Wet Markets Modern Retail
Source: Accenture in Coca-Cola RRC, The Fresh Imperative in Asia, 2005Note: Sampled Asian consumers stated % of weekly Fresh Food expenditure
% o
f w
eekl
y ex
pend
iture
Supply Chain Constraints Characteristic of Supply Chain Constraints Characteristic of Developing CountriesDeveloping Countries
• Consumer mistrust, often reflecting variable/low quality, of processed foods
• Very poor wholesale market infrastructure (cool store, packing, grading, etc.)
• Wastage very high (20-40%)• Traders dominate chain with little pricing
transparency evident• Quality produce not rewarded with producer
premiums• Fragmentation from production to end of supply
chain
Ideal:Ideal: ShortFastTransparentSeamlessCollaborative
Too Often:Too Often: ComplexPrice-drivenConfrontationalDisjointedOpaque
What Sort of Supply (aka Value) Chain?What Sort of Supply (aka Value) Chain?
Final ThoughtsFinal Thoughts
•
CONTACT POINTS:CONTACT POINTS:
e-maile-mail
telephone numberstelephone numbers
office office +44(0)1600 715957
faxfax +44(0)1600 712544
mobilemobile +44(0)7798 558276
www.profdavidhughes.com
