Sophie Paridon
22 March 2012
Blog 5D
The Development of Countries Launches
Food Market
Due
to the continuous development of countries, several of the companies sharing
good news in financial reporting are companies that sell agricultural raw
materials or those that sell high-end food. This is happening because “80% of
the world’s population is developing and emerging. They are going to eat more
and better” (Bellman). Although the sales and progress of agriculture raw
materials have been facing a downward trend for the past fifty years, this
trend is starting to reverse as more countries are purchasing higher-end food
that requires these raw materials.
Food
manufacturers expect for their markets to grow rapidly due to emerging markets
in countries such as Indonesia, India and China. The CEO of Nestlé notes that the company “generates about 40% of its
revenue in emerging markets” and that last year “its revenue rose 13%
developing economies but only 4.5% in developed markets”. This shows that due
to developing countries, the middle classes are growing quickly, creating
several emerging markets who favor higher end food than before. In addition to
Nestlé, companies who produce products such as “Kit Kat candy bars, Purina pet
food, and Haagen-Dazs ice cream continues to expand operations in emerging
countries” (Bellman). As Nestlé is expanding with good news in financial
reporting, they are also developing new products and customizing existing ones
in order to satisfy the emerging markets.
Similarly, Starbucks has been sharing positive news in terms of
finances, as their profits are soaring. Starbucks has decided to expand even
further into markets such as China, as well as introducing new products. For
example, Starbucks is now entering the energy drink market by creating their
new product “Starbucks Refreshers”, which is a combination of fruit juice and
green coffee extract.
Due to these examples, along with others found in the news, it is
clear that as more countries develop that higher end products and the companies
that sell them will face great financial growth. This is also incentive for
companies to expand and become more global. In addition, for companies that are
thriving already, it seems common for them to come out with new products to
satisfy the product and create even more “traffic” in their stores, thus
attracting new or more customers.
http://online.wsj.com/article/SB10001424052702304636404577295673557464182.html
I remember reading that emerging countries contributed a lot more to company's growth than already developed countries, but I never thought the gap would be this enormous. It would be interesting to see if companies tend to shy away from introducing new goods in developed countries altogether and just focus on these emerging countries.
ReplyDeleteFood and Beverage industry grows more rapidly across globe..very nice news that Nestlé developing new products and customizing existing ones in order to satisfy emerging market..keep continue sharing such informative post..Thanx for sharing
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