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Asia | May 10, 2013

Changing Diets in Developing Countries: How Retailers Should React

We’ve written several times on the challenges for Western brands doing business in developing countries like China and India. We’ve focused on the branding challenges they face right now or in the near future, which is a sensible context given the need to please shareholders every quarter. But a fascinating recent piece from the Boston Consulting Group on how changing eating patterns in developing countries will challenge companies caught our eye. The bottom line: Any manufacturer or retailer in it for the long term also has to plan for huge changes in its customers’ eating habits as these countries grow more wealthy, more work-oriented, etc.

For example, the Chinese will spend nearly three times as much on food in 2020 as they did in 2010 – a trillion dollars. Pork and chicken will be a huge growth sector. Which will hugely impact the price for corn worldwide (and on greenhouse gas creation).

The author, Michael J. Silverstein, writes that retailers and manufacturers must prepare strategies that focus on price, recipe and hedging:
•They must be agile and flexible on the price and size of products, and collaborate closely with supply-chain partners.
•They must be flexible on which raw materials they can use and substitute, for a sufficient materials and vendor roster.
•And they must become better at hedging, to lock in profits.

The analogies with marketing are pretty clear: changes in demand and preference, price and sizes, and materials and recipes all have implications in marketing strategy. Not only do retailers have to be agile in marketing, they’ll have to collaborate very closely with their print vendors and packaging vendors and with their own procurement and operations departments, so that the entire enterprise adapts to these ruthlessly dynamic marketplaces as a single unit.