Risk, Opportunity and Astonishing Growth: Harnessing the Potential of Emerging Markets

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“Fewer than expected multinational food and beverage companies are really leveraging the emerging market growth,” says Michael Honan, managing associate at Linklaters (www.linklaters.com). “But recently there’s been a clear shift toward emerging economies. Most of these economies—like the BRIC countries [Brazil, Russia, India and China]—have high consumer demand in food and beverage, high market growth rates and potential for production bases for the industry.”

“The world has just suffered from an intense crisis, with huge impact on the global economy,” says Julia Fernández, olfactive design studio manager, Americas, at IFF. “This has impacted millions of consumers, the way they spend their money and the way they observe the brands. But, mostly, it impacted the way brands and companies invested into new markets—an upside-down economy that created opportunities aplenty.” Honan says that the number of middle class households in emerging market economies is forecast to grow to about 3 billion by 2015, while an Ernst & Young report notes that there are 525 million middle class people “in Asia alone.”

“By 2030, so many people will have escaped poverty that the balance of geopolitical power will have changed completely, and global trade patterns will also be unrecognizable,” the Ernst & Young report continues. “The 20 years in between will see more and more people entering the middle classes with new money and demands, and economists hope these consumers can help rescue the global economy. Meanwhile, companies used to serving the middle-income brackets of the old Western democracies need to decide how to supply the new bourgeois of Africa, Asia and beyond.”

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