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Food industry growth opportunities

Maximizing growth opportunities in the food industry

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“It is true that you see in these emerging markets, very strong competitors coming up, just go to China and India. The local and regional players are multi-billion dollar players and they are investing in R&D and they are attracting good talent because of the growth.” Paul Bulcke,
CEO, Nestle,
Dow Jones International,
17 May 2011

Food companies need to adapt their strategy to different markets.

Most leading food companies are expecting around half their business to continue to come from established markets in future. Innovation and differentiation is the key to success in developed markets.

Some food companies are responding to the pressures in these markets by:

  • Seeking out new retail and marketing channels
  • Investing more in social media and online platforms to learn more about consumers and potentially sell directly to them
  • Differentiating themselves and adding value by customizing products to the needs of different consumers and channels

Emerging markets are seen as holding the key to future growth for food companies. The opportunities are significant, but so are the complexities. Each market is unique, requiring companies to build new consumer insights, rethink product development and adapt market strategies that reflect local learning.

To succeed in emerging markets, you would need to:

  • Be strong on strategic improvisation
  • Be flexible in the absence of hard market data
  • Learn fast and respond rapidly to changing conditions
  • Be willing to experiment but always start with the fundamentals by understanding the growth opportunity, competition, existing presence, level of investment and timescales for returns

What attracts food companies to emerging markets?

  • 82% of the world’s population live there
  • 92% of the world’s births occur there
  • GDP growth is 4%–5% higher than developed markets
  • By 2030, 93% of the world’s middle class will live in what is currently termedemerging markets
  • 70% of global GDP will come from emerging markets in the next 10 years

Pursuing scale and market presence through M&A

Food consistently accounts for the greatest volume of deals in the consumer products sector. Key trends driving current deal activity include:

  • The search for scale and new product opportunities in developed markets
  • The pursuit of emerging market growth by developed world businesses
  • Expansion into the developed world by emerging market companies
  • The assertion of control in joint venture or similar structures by domestic companies in emerging markets
  • The growth of private label manufacturers, attracting both corporate and PE buyers

The scale opportunities from consolidation are still compelling and we may continue to see transformational deals — either defensive mergers or strategically enhancing acquisitions. More companies appear to be focusing on "bolt-on" deals in emerging markets.

How we can help

We have a proven track record in helping businesses worldwide create opportunities for growth — and knowledgeable local teams to support strategic moves in all key markets.

We can advise on:

  • Market prioritization and market segmentation
  • Growth opportunities in emerging markets
  • Transaction due diligence
  • Transaction tax
  • Merger integration and valuation
  • R&D program management and innovation
  • Monetizing assets

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