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Packaged Food 2010 - Part 2: Global Market Opportunities
Euromonitor International, Nov 2010, Pages: 49
Objectives of Global Briefing:
- The core objective of this two-part report is to examine the current state of the global packaged food industry, and determine how latest industry trends and developments are impacting both present and future retail performance. This report will take into consideration a variety of industry developments that have taken place since the beginning of 2010, discussing their effects throughout the calendar year to date as well as future potential impact.
- The report begins by examining the present state of the health and wellness trend in global packaged food. Given increasing levels of regulatory and consumer scrutiny, particularly for functional food, many manufacturers with a health and wellness positioning are having to re-evaluate their product development and marketing strategies. While rumours of the ‘demise’ of health and wellness remain unfounded, significant changes may be in store.
- Health and wellness also plays at least in part to mounting global consumer demand for ‘lifestyle’ brands, that is products that very explicitly speak to consumers’ personalities, values, priorities and quirks. Other packaged food new product developments with an overt lifestyle positioning will also be reviewed and analysed.
- Another ‘lifestyle’ positioning that has been gaining traction especially in Western Europe – is ethical packaged food. As such, a summary of the current state of packaged food leveraging an ethical positioning will be provided, focusing specifically on organic, fair trade and other sustainably-sourced items. Any impact that continued global economic uncertainty is having on the retail performance of ethical packaged food will also be examined.
- The separately published first part of this report focuses on retail market performance. Since a full-fledged global economy recovery remains far from guaranteed – given high sovereign debt levels and public spending cuts in Europe and unemployment rates that refuse to come down in the USA the report begins with analysis as to how all this lingering uncertainty has impacted packaged food sales over the past year, both in general and by specific product category and geography. A mixture of staple and impulse food items will be reviewed. Given the present impact of broader economic factors, future industry prospects through to 2015 will also be discussed.
- The report also examines how the competitive landscape for packaged food has evolved since Kraft’s purchase of Cadbury in January 2010. Other M&A developments and their overall market impact will be reviewed, as well as other potential mergers, acquisitions and joint ventures currently in the pipeline.
- Retailer consolidation and its impact on packaged food sales will also be examined, as it relates to developed and developing markets alike. The impact of retail consolidation on private label development will be examined in the process, as will the consequences of retailing regulations in key emerging markets such as India and Russia.
Key Findings:
- Despite continued economic jitters, not least as many European markets are now facing significant public spending cuts and the USA continues to struggle with 10% unemployment, a double-dip recession is looking increasingly unlikely.
- To stave off the constraining effects of economic uncertainty in increasingly mature developed packaged food markets, aggressive and sustained expansion into emerging markets, especially Asia Pacific, will be essential to future success.
- Commodity prices are once again facing the spectre of volatility, which will put pressure on manufacturers and the broader supply chain. However, a repeat of the rapid food price inflation seen from mid-2007 to mid-2008 remains unlikely.
- Nevertheless, manufacturers that anticipate any increases to commodity costs will be in a stronger position, especially as cost savings and effective supply chain management become more important in the face of mounting retailer consolidation.
- Packaged food manufacturers will increase investment in new product developments in light of better economic prospects, particularly in fast-growing regions such as Asia Pacific. Innovation will also remain crucial to staving off private label encroachment.
- Manufacturers must become bolder and even more compelling in adding value to their new product launches, while resisting the temptation to retreat into a single-minded value-for-money proposition as they try to compete against private label.
- Even though economic prospects are gradually improving, there is no guarantee that consumers, especially those in developed markets, will return en masse to branded products, especially now that private label has become more adept at adding value.
- Private label encroachment looks here to stay, so if you can’t beat them, join them. Food manufacturers should explore opportunities to split production between added- value brands on the one hand and more commodified private label on the other.
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