Paula Guillermo

BRIEF OVERVIEW OF THE OPPORTUNITIES AND THREATS IN EMERGING ASIAN MARKETS Southeast Asia • ASEAN 6 Tiger Countries are the TOP markets in SEA: Indonesia; Malaysia; Vietnam; Thailand; Singapore • Consistent and stable economic growth, political stability, increasing support for trade within the region and are attractive investment opportunities for multi national corporations Why ASEAN 6? • Demand for import commodities in these countries are POPULATION DRIVEN • Increasing exposure to foreign tastes (due to expats, foreign workers, tourism and trade) makes them a great market for our mainstream products Why ASEAN 6? • Current food trends and lifestyle dictate demand for Ready-to-heat (RTH) and Ready-to-cook (RTC) products • Urbanization and increasing number of working moms in these nations also contribute to CONVENIENCE DRIVEN DEMAND for food products Why ASEAN 6? • Retail channels in these nations are starting to shift from WET MARKETS to MODERN RETAIL CHANNELS (such as supermarkets and hypermarkets) • Why? With urbanization comes lifestyle changes such as, going to the malls is an opportunity to bond and socialize; and also convenience and availability of a wide range of products contribute to this shift East Asia • Home to the ASIAN DRAGONS: Taiwan; HongKong and South Korea • They have an eager and plentiful labor supply; rapid industrialization; maintained exceptionally high growth rates and high income economies; and are world leaders in the financial and IT sectors The ASIAN DRAGONS • Two countries (Taiwan and Hongkong) are our gateway into entering the biggest market in the world: CHINA • High income economies = High spend on food • They have the highest growth rates and are market leaders in trends The ASIAN DRAGONS • All are TOP tourist destinations; foreign-worker destination presenting highest growing market for foodservice and HORECA industry • Rapid industrialization (on manufacturing) and focus on urbanization left them highly dependent on imports for agricultural commodities HongKong • Affluent economy with almost zero tariffs • Net food importer • Market opportunity for high value food and beverage • Gateway to china’s greater market • High tourism growth = high demand for imported products • Lenient labelling regulations • Increasing health consciousness and busy lifestyles demand for healthy but convenient products Target high end markets HONGKONG • To gain advantage over the market, products must be: • 1. from green production environment • 2. high food safety standards • Non GMO food • Organic certification Macau • Macau is significantly related to Hongkong as it is the legal gambling hub of CHINA • It is a very good market for for premium food products as demand is incresing for high quality products • Demand is quality and trend driven where price is not a main consideration • No import tariffs • Our advantage: our main competitor is the US with which we can have a more competitive price Challenges: South Korea • High import tariffs • Consumers are widely biased on locally produced items versus imported products • Food safety is a major issue and when it comes to seafood, competitiveness is always measured against safety certifications such as: Country of origin and heavy metals testing • They have a very strong food processing industry which increases competition for the market East Asia Superpowers: JAPAN • Japan is one of Asia’s superpowers that also has the best economy • Inverted population means that they are shifting to the older population that drives the demand for healthy products (low sodium and low cholesterol diets) • Single serve packages or personalized food products (most have no families to eat with) East Asia Superpowers: JAPAN • Great market for RTH and RTC with predominant busy and hectic lifestyle • FOOD SECURITY is a growing area of concern: the current state of agriculture in the country is that: considering the current healthy diet in JAPAN, 39% of kcal consumed came from foods produced locally; while 61% of kcal consumed came from imported goods East Asia Superpowers: JAPAN • Due to the food security concern; Japan is highly dependent on imports to maintain their current diet and to accommodate evolving food preferences • The current generation of farmers are getting older, presenting an uncertain future for the country’s agriculture • Amount of food produced is on a steady decline • High imports on soybean, wheat and maize (maize used as fodder for cattle with increasing meat consumption) East Asia Superpowers: JAPAN • The rich economy of the Japanese are more capable of handling oil price hikes that result to higher prices of commodities • Oil price hikes threaten japan’s dwindling food supply as higher price for imports and more costly domestic labor directly affect prices of foods • Dependence on import is triggered because locally produced food is much more expensive than imported ones East Asia Superpowers: CHINA • TOP target for this region is CHINA that has a population of 1.3B • Largest food sector in the world • Domestic supply won’t meet rising demand for food in the coming years • People here have a very cosmopolitan lifestyle, coupled with high urbanization rate East Asia Superpowers: CHINA • Main points of entry into the market is to find distributors and wholesalers in HongKong and Taiwan that already has a line of supply to CHINA • Main competitor in CHINA in terms of imported goods would be USA; where in we are at an advantage because we are in proximity South Asia: India • 1.2B population • 32.7% urbanized villages • 68% Rural villages • Rising disposable incomes and increasing middle class directs new lifestyles creating a demand for the food service market • Openness to try international cuisine however; Indian cuisine still dominates in terms of preference South Asia: India • The trend is to continuously introduce reworked Indian recipes or Fusion cuisine that still features Indian foods with a twist • Although increasing, only the young is currently developing preference towards Western cuisine • Aggresive health and wellness movement • Functional foods and added nutrition appeal to those with specific dietary preferences South Asia: India • Limited cold chain network • Food safety standards are still being strengthened and developed Potential target markets Long-term development targets • There are Asian countries that will be needing a lot of time to develop the markets and make them viable and healthy for exporters • Cambodia, Bangladesh, Sri Lanka, Maldives, Pakistan,Myanmar, and Brunei • They are developing countries that are still bridging the gaps that hinder them from fully developing Hindrances for growth: • Shift from Rural to Urban • Improving access to education, basic healthcare, and food • Still a wide gap between the rich and the poor without much opportunities for jobs • Has been tied to an aging industry and still needs to diversify to maximize available resources that can become income and job generating venues • Develop sustainable measures of food acquisition • Political and military unrest • Lack of access to clean and safe water • Underdeveloped logistics and cold chain sector Bangladesh • Currently at the low-middle developing country • striving to increase middle class • Great potential for imports as food service and hotel industries target this country of 151 Million population for further expansion Sri Lanka • Has a population of 22 Million • Underdeveloped highways and infrastructure • Increasing urbanization makes it a good market for food service sector and convenience driven products • 90% of landed fish is consumed locally – although investments from International hotel brands will drive demand for imported products Maldives • Very good potential for HORECA industry • Known as the island with high-end resorts that is being flocked by tourists from all over the world • With a relatively small population of 325K • Main problem to address food security is that: they lack lands for agriculture use, dwindling production of wild caught fish, prone to natural disasters Maldives • Economy is largely dependent on its main export partner: EU • EU’s experienced certain decline these past few years that also directly impacted Maldive’s income on exports • Dwindling imports • Its economy will mostly be driven by tourism (1.2M tourists > than population) Maldives • Delays to urbanization can be attributed to: • 1. lack of access to basic services health care and education • 2. wide dispersion of people, isolation (188 islands) at a rate that in an island, populations range from- only • Malnourishment is wide spread (obesity and underweight) Pakistan • 6th most populous country in the world • Young population (73%) is under 35 y/o • Exponential growth of middle class sector • Urbanization makes it a booming market for processed foods • Continuous trade encourages shift in tastes and increases demand in imports Pakistan • Dietary foods saw high demand and increasing emphasis in health • Metro saw the advent of huge wholesale retail chains • Growing preference of higher income and educated individuals for modern shopping where variety are main drivers • Convenient and attractive display is a main driving factor for buyers Pakistan: Challenges • 50% poverty rate • Political/military instability • Lowest fish consumption in the world • Technical and regulatory limitations for growth • Economic access is main limiting factor Brunei • An oil rich sultanate • High per capita income • Hurdle: there is not much demand for food • Why?: the sultanate has off-shore farms that cater to the island-state’s needs • Subsidized food for the population means public has lesser money to spend for food • Low private sector growth • No income generating opportunities for the people Myanmar • Low life expectancy due to high incidence of AIDS/HIV • High infant mortality • Good market for HORECA industry • Fast retail growth for FMCG • More liberal policies for retail market • Foreseen increase in imports due to increasing middle class • Largely rural Summary: General Trends in Asia • Increasing health consciousness • Convenience driven market • Rising middle class in developing nations • Sustainability is competitive advantage (aquaculture) • Rapid urbanization