Companies look to Asia as an economic buffer

By staff reporter

- Last updated on GMT

Related tags: North america, Marketing

Food and beverage companies should look to Asia to bolster their business in times of economic crisis, while differentiating their products closer to home, according to a Frost and Sullivan analyst.

Compared to elsewhere in the world, the economic slowdown has had a limited impact on the APAC food industry, said Christopher Shanahan, research analyst with the Frost & Sullivan North America Chemicals, Materials & Foods Practice.

This means that for Europe and North America, Asia remains a “shining spot in this economic doom and gloom that many companies are experiencing”.

Speaking at a recent briefing in Singapore, called “Global Economic Outlook - Food & Beverage Ingredients Market Has Been Resilient During the Economic Downturn”, ​Shanahan described emerging markets as being one of the “saving graces”​ in terms of mid-term to long-term growth.

He said: “Many companies have witnessed strong growth there relative to decreasing demand and decreasing revenues in their larger markets of North America and Europe.”

In addition he believes that what distinguishes the food industry’s high performers from the average more than any other single factor is differentiation.

This is differentiation of product, application, service and price, as well as differentiation in terms of the kinds of collaborative partnerships and alliances struck with customers and providers.

With regards to ingredients companies in particular, Shanahan suggests they invest in marketing strategies that focus on core product offerings and gave the example of a salt provider.

He said: “If I supply that to Campbell Soup, I want to be able to perhaps offer a strong marketing strategy that enhances their product, such as offering a wider selection of sodium chloride products (sea salt, kosher etc).”

As well as having a wide product line, he suggested focusing on ensuring strong supplier availability credentials.

He said: “Having a strong partnership with end users will help stabilise top line growth.

“In terms of bottom line growth, you have to invest in your bargaining power. You have to decrease your price sensitivity by expanding your set of suppliers to buy from, investing in market research or other research to learn about your end market.

“That way you can get the best price because companies that are guarded with good information on pricing, and good information on their supplier, increase their ability to bargain.”

Health and wellness

The health and wellness trend was also described as a “bright spot”​ in the food and beverage economy in both Asia and the European and North America markets.

The analyst said this was particularly true of ingredients with an emphasis on trying to prevent the increasing occurrence of disease - the main beneficiaries being key suppliers of health ingredients, especially Omega 3, probiotics and antioxidants.

However, he cautioned that some experts believe the 2009 outlook among APAC food manufacturers is gloomy.

He said: “They in turn want to penetrate the North America and European market and they are seeing contracting economies and decreasing markets and increasingly cost-conscious consumers.”

Related topics: Emerging Markets, Markets

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