Can we Compete?
The Consumer Market
We’ve talked about innovation, productivity and sustainability, and positioned them all as critical to being competitive in the market place. Now, looking at the basics of strategic planning, the next thing we need to do is look at the market and understand what it needs/wants/demands. Because if we don’t respond to those things, we won’t be around long. Let’s start with consumers and then next time look at the distributor sector, our direct customers.
We hear a lot about what’s going on internationally as far as globalization, economics, demographics, climate change and other issues. Do we always listen to that news from the standpoint of how that affects our business? The successful do, believe me. So let’s look at some of those things.
Most of us understand the terms developed countries, developing countries and lesser-developed countries. Let’s look at them from a food marketing perspective. The developed markets are mostly North America, Western Europe, Australia/New Zealand, and Japan. Consumers here are used to getting pretty much whatever they want at a price they like, for example, 10 to 12 per cent of disposable income.
Then there are the developing countries like Brazil, Russia, India, China, Mexico and others. Not only are they developing domestically, they are starting to export to the developed markets. We are seeing more and more competition from businesses in those countries, which probably have lower commodity costs and lower labour costs, making them strong competition.
Finally, there are the lesser-developed countries that, over time, will emerge as viable players. Even now many of these are active in marketing their local commodities such as sugar and chocolate.
We know that the population will continue to grow for the next 40 to 50 years. Current projections are around nine billion to 9.5 billion people by 2050. That’s a growing market, especially as it increases in levels of disposable incomes. It’s always good to have a long-term growth market, and we do.
In developed countries, the populations are aging. This will bring about more focus on health and, as we’re beginning to see, healthier eating and a greater understanding of the interaction of diet and health. Today we have many chronic health problems like heart disease, cancers and obesity, and more dietary sensitivities like food allergies. Healthier foods – things that claim to be “low in…”, or “free of…” and “helps build better/stronger…” – will be a strong growth segment for a long time.
We will continue to see high-volume immigration to the developed countries, with Canada already being one of the most ethnically diverse countries in the world. This means the demand for global foods of all kinds will continue to increase in Canada, making it another growth niche for the food and beverage sector.
As the boomers retire and the echo boomers or more correctly, the millennial generation, replace them as consumers, I think we will see more interest in upscale, gourmet culinary products as well. Boomers are foodies, and when they retire they will have more time to cook and be creative, as well as dine out. And they have a great appreciation for the artisanal type of products like specialty cheeses and wines. This upscale niche will also be a growth market.