Emerging markets play growing role in exports growth, says Bord Bia

Emerging markets such as China, South Africa, Nigeria and Russia are playing a growing role in Irish food and drink exports growth, according to Bord Bia research.

During 2011, trade to China increased by 47%, South Africa by 43%, Nigeria by 38% and Russia by 30%. Bord Bia’s emerging markets manager, Breiffini Kennedy, says this growth is being driven by enhanced consumer purchasing power and greater urbanisation in these markets.

Mr Kennedy said: “These trends stimulate investment from retailers as they seek to secure market share and first mover advantage in emerging markets. Key areas of investment for retailers include new store openings and storage and logistic solutions.

“African markets in particular are attracting increased attention from leading international and regional retailers. KFC’s success in China and focus on Africa is an interesting example. For instance, Yum! Brands business development plans in Africa set out the objective of securing ‘major growth’ in the continent from their base of over 650 stores in South Africa.”

The Bord Bia analyst stated that, during 2011, Yum! launched in new markets such as Zambia, Ghana and Kenya with plans to roll out to seven new markets this year. Yum! aims to have a presence in 20 African markets by the end of 2012.

“Yum! Brands view emerging markets as key to their future growth, but they are not alone,” Breiffini Kennedy stated.

“Regional players such as Shoprite are also looking to expand from South Africa into other African markets. Shoprite recently opened their sixth outlet in Nigeria, and Africa’s largest retailer has a footprint in 17 African markets, with Zambia and Namibia the largest markets outside of South Africa.”

Mr Kennedy added: “Multinational food companies and retailers are moving swiftly to ensure they secure the new opportunities which emerging markets offer. This momentum will ensure emerging markets continue to play an important role in the growth of Irish food and drink exports.”

Meanwhile, a recent report by Rabobank suggests that it is not too late for US and European processed food brands to enter the Chinese market. Rabobank& suggests that effective distribution strategies are critical to Western food processing companies successfully winning customers in the Chinese market.

The bank’s report found that the annual growth in some areas of the country at 10%, with an overall growth of 150% in the last decade.

Among the indicators of growth potential, Rabo cites Chinese consumption of confectionery of less than 1.2kg per person annually. The current global average stands at 2.1kg per person, suggesting considerable additional room for growth.

Nick McIlroy in Bord Bia’s Shanghai office stated: “Confectionery is typically consumed during the festive gifting seasons around Chinese New Year. Rabobank suggests that the key for foreign brands entering this market can be “distilled down to tactics applied for specific sizes of cities within the country”.

“With a number of Western confectioners having established a presence in Tier 1 cities such as Shanghai and Beijing where distribution networks are more formalised, the report suggests that specific distribution strategies for smaller cities may prove fruitful for Western processed food brands which are perceived as higher quality products, attracting a premium from consumers.”