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  Feeding the Dragon: The Changing Face of the Food and Beverage Industry 

Llopis, Jaume; Gifra, Júlia; Pasamón, Fernando; Puig, María
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China edged out the United States for the first time as the most attractive export market for food and beverage companies. But don't count the U.S.A. out just yet: it's still in the running, placing second, while Germany holds steady as the most attractive European destination in third place.

Such are the findings of the 2016 food and beverage attractiveness (FBA) index in the Vademecum on Food and Beverage Markets 2016.

The annual report, now in its fourth year, measures countries' attractiveness and potential according to six weighted indicators: food and beverage import volumes, population, legal framework and security, the number of middle class households, food and beverage consumer spending per capita, and GDP per capita.

The remaining countries in the ranking's top 10 are the United Kingdom, India, Japan, France, the Netherlands, Italy and Canada, presenting a mix of European, Asian and North American markets. Australia in 18th place, and the United Arab Emirates at 22nd are the first countries representing their respective regions.

Who's Hungry?
China's rise to the top of the ranking is based on a number of factors: it boasts the world's largest middle class -- and largest overall population -- with indications of future growth in spending, as its urbanization rates rise and economic expansion continues. China also features huge megacities that can be seen as markets in and of themselves: the five largest cities contain populations of more than 10 million each, and Shanghai, the largest, has 23 million people.

While the United States comes in second, it scores highest on the food and beverage imports indicator, is third globally for population, and is one of the top 10 countries for ease of doing business.

Germany, meanwhile, is helped along by its total spending on food and beverage imports, its expansive middle class (representing over 82 percent of all German households), per capita GDP and stable legal framework.

Drilling down into food categories, we see China has become the world's top market for bakery and cereal products, while the United States remains top for fish and fruits and vegetables. Japan imports the most meat, while India -- boasting the world's second largest population -- is top for fats and oils and sugar products. Germany remains the largest importer of eggs and dairy.

Regional Differences
For those wanting to export to a whole region, rather than a single country, Europe continues to be the most attractive, taking five of the top 10 spots. Six more European countries place in the top 20: Belgium (12th), Spain (13th), Switzerland (14th), Norway (15th), Sweden (16th) and Russia (20th).


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Asia, alongside North America, is also an attractive option. In addition to the dominance of China, India and Japan in the top 10, Hong Kong (11th) and South Korea (17th) place well for their economic growth and middle class.

In North America, the United States and Canada dominate, but Mexico is also an attractive proposition in 19th place, third overall in the Americas, having moved up three places from the year before.

In Central and South America, Brazil placed the highest, ahead of Chile and Peru. However, it was one of the fastest fallers, continuing last year's trend and descending 11 places to 48th. Its downward trend was matched in Africa by Nigeria, which also fell 11 places. Egypt and South Africa were the strongest performing countries on the African continent. Despite this drop, Nigeria's growing middle class suggests a strong demographic potential for investment in the region.

Potential for More

The study also highlights the potential of certain countries that are not the highest placed, but which nonetheless could represent interesting markets for investment.

The authors draw special attention to the case of Singapore, consistently ranked first for its ease of doing business and legal framework. Singapore's small population keeps it from placing higher than 27th on the overall ranking. Yet it has many attractive features for the food and beverage market and could be of interest for certain companies.

Likewise, the report provides words of caution regarding markets that might place highly on the list, but which require specific local knowledge to navigate effectively. For example, Russia banned food imports from Europe in retaliation for Ukraine-related sanctions and its outlook looks cloudy. Although Russia still shows up in the ranking at number 20, its nine-place fall was among the year's most dramatic. In total, 82 countries for which information on all six of the indicators could be tallied, appear in the ranking.

Charting Emerging Markets
IESE and Deloitte have teamed up for the fourth year running to produce the Vademecum on Food and Beverage Markets 2016. The study was supervised by IESE professor Jaume Llopis with Júlia Gifra as lead researcher. The research was conducted by IESE Industry Meetings Department in collaboration with a team from consultancy firm Deloitte, led by Fernando Pasamón, with Jorge Gilabert and Blanca Morenés.

The FBA index scores, out of a possible 100, are based on data from the IMF, World Bank, the United Nations and Euromonitor International. The weightings of the six indicators (from 40 percent for import volumes to 5 percent for GDP per capita) were determined by the study's authors together with industry leaders and executive members of the IESE Advisory Council for the Food and Beverage Industry Meeting. The Vademecum is intended as a practical guide for executives at companies located in any country within the food and beverage sector.

New in 2016
The 2016 report includes a qualitative interpretation of 31 countries, reflecting the macroeconomic, political and regional situations, as well as opportunities and market structures.

The countries examined in greater detail were chosen not only for their placement in the ranking, but also to provide a wide geographical overview and to present a cross-section of developed and developing markets.

The 2016 report also boasts digital access for Industry Meeting participants, and a more concise analysis appropriate for business executives.

IESE's 20th Food and Beverage Industry Meeting was held at IESE's Barcelona Campus on May 26th, 2016.
This article is based on:  Vademecum on Food and Beverage Markets 2016
Year:  2016
Language:  English

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