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Hughes: Be aware of global factors for foods marketing
Indiana Correspondent

INDIANAPOLIS, Ind. — U.S. food producers need to pay attention to the unique market demands in emerging economies, since their market share is growing faster than that in developed countries, said David Hughes, emeritus professor of food marketing at Imperial College London.

He spoke at last week’s Indiana Livestock, Forage and Grain Forum in Indianapolis. “As we look at emerging markets, we’ve got to come to terms that they are different. They are not near as red meat-oriented as we are,” Hughes told a crowd of more than 500 producers and ag industry representatives.

In developed countries with an aging population, per capita meat consumption is trending down, but in emerging economies, meat is more explosive, he indicated. He said world meat consumption has grown from 223 million tons in 2007 to 239 million tons in 2012.
While U.S. meats such as pork, chicken and turkey will continue to find markets, beef is more challenging because of high price and a history of low beef consumption worldwide. Other factors challenging beef are health concerns with saturated fat and production worries.
With 1.3 billion people, China is the biggest consumer in the world market. “Ten of 16 million tons of global growth in meat consumption is in China, and most of that is chicken. If China stutters, we all will stumble. We need to keep our fingers crossed that China continues to grow (economically),” Hughes said.

The Chinese overall eat food in different proportions from Americans: pork, chicken, fish and Chinese vegetables, but not as much red meat.

“International beef prices are more than double what the next meat is, usually pork. If we want consumers to pay two times as much for beef, we have to finish this sentence: ‘Beef is better because …’ If we can’t finish that sentence as a beef exporter, we’ve got a serious problem,” Hughes said.

Africa continues to be a question mark in terms of food markets. Its population is expected to double from 1 billion in 2010 to 2 billion in 2050. He explained the continent’s food self-sufficiency is declining, so it is relying on food imports. “That sounds good for us on the surface. I don’t know. Will they be able to afford to buy expensive meat (in the long term)?” Hughes stated. “Is Africa a brilliant marketing opportunity or a social problem? The jury’s out on that.”

Inside the U.S., market growth is a “real struggle.” Fast food is declining, he said.

Adding to global uncertainty is the volatile global food price index. According to the United Nations Food and Agriculture Organization, prices remained stable and low from 1990-2004. Sometime around 2007 to the present, the prices began to increase and fluctuate rapidly.

Hughes said volatile price swings are influenced by a growth in demand, offset by an unstable food supply. Greater demand is the result of increasing population and income, while the food supply is made unstable by an increase in weather events, he said.

“In a volatile environment for staples, we can’t rely on low-income countries to buy high-income protein, such as meat and dairy. Those are discretionary in emerging markets,” he explained.
Despite the higher prices, the real moneymakers in the grocery business are cigarette, tobacco and alcohol companies. Philip Morris USA topped the list, followed by Altria and BAT (tobacco).
After Anheuser Busch and SAB, beer companies, were Coca-Cola and Colgate-Palmolive.

“It’s useful if your product is addictive,” Hughes told an amused audience. “Hardly any food companies are at the top because there is less intellectual property bound up in their products, and therefore it is easy to copy them.”

Those who spend to create brand recognition – big food companies like Nestle, Dannon, Kraft and Heinz – build strong consumer loyalty for their products, he explained.

Companies such as DuPont, BASF and Monsanto invest in research and development to provide blockbuster products protected by patents.

Another trend is Internet shopping in convenient locations. Hughes gave the example of a consumer shopping at a virtual retail store in a subway using his smart phone. The groceries were later delivered to his home.

Finally, food producers must recognize a big barrier to marketing is the perception that there is something wrong with the “big food” industry. This perception is fueled by “scare stories” and food safety problems, he said, and consumers don’t always get the facts right.

The industry is charged also with creating the obesity epidemic in the United States. Worldwide, governments are examining the possibility of taxes on fat and sugar.

“Shoppers are concerned not only with price. They are also about ethics and sustainability. Organic sales are up,” he added.

Organic products, however, must taste “yummy” and have a great story if they want to succeed. “The good news is that the family farmer is becoming fashionable, even sexy, which is scary if I look around this room,” Hughes said. “Not factory farmers. Perception is (key).”

All things considered, he added, “It’s going to be volatile, so put your crash hats on and buckle.”

Check out for more information. The Indiana forum, in its fourth year, was sponsored by various farm groups in the state. Indiana Soybean Alliance sponsored Hughes and other world-renowned speakers at the conference.