GLOBALISATION OF FOOD &                BEVERAGESHBI241N AUSTRALIAN GLOBAL BUSINESS                     PERSPECTIVES       ...
―Imagine all the food mankind has produced over the past 8,000 years. Nowconsider that we need to produce that same amount...
Introduction   Director @Creatovate    Innovation &    International Business    Consultancy   FMCG Background   Asia F...
Globalisation of AustralasianFMCGMy own working experience to date      Company             Ownership Structure        Own...
Fundamental drivers & shifts inglobal Food & Bev in recent years   Population growth         9b by 2050       From 7b t...
Top 10 Global F&B Companies                        Ran   Company         Establishe 2011 US$b Country of                  ...
Australian Top 10 Grocery Brands& their ParentsTop 10 Brands            Owner                    Origin of Owners1. Cadbur...
Top Global RetailersTop Retailers              Country of Origin                Turnover 2010 US$b1) Wal*Mart             ...
Global retailing is not easyNumber of Countries Operates   Grocery retailers     Carrefour 38     Wal-Mart 15     Tesc...
Case study – Foster’s in Asia3 different countries – 3 different talesIndia1998 JV                                        ...
Foster’s India Pvt LtdChallenges                 Successes   1 country, 28 states      Early mover   Taxes across      ...
Foster’s Vietnam LtdChallenges                 Successes   No. 4 or 5 on entry       Sales & Distribution   Tap contrac...
Shanghai Foster’s Brewery         LtdChallenges                   Successes   1 country, 22               Formula 1    p...
Conclusion   We all need to eat and by 2050 that’s 9b of us!   Consolidation of manufacturers (faster) and    retailers ...
ReferencesMarcel Corstjens and Rajiv Lal (2012) Retail Doesn’t Cross Borders: Harvard BusinessReview, April, pp: 104-111.K...
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Going global in food & grocery retailing business

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Going global in food and beverage manufacturing, marketing and retailing is easy is it not? The big get bigger and fewer in number. The little guys keep popping up in their local niches. The middle gets squeezed. Its not all beer and skittles expanding your exports in Asia and its even harder if you are a retailer. The opportunity is there for business to capture in the long run we have more hungry mouths to feed and innovation is sorely needed to grow and feed the population sustainably.

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Going global in food & grocery retailing business

  1. 1. GLOBALISATION OF FOOD & BEVERAGESHBI241N AUSTRALIAN GLOBAL BUSINESS PERSPECTIVES Dermott Dowling 5 Oct 2012
  2. 2. ―Imagine all the food mankind has produced over the past 8,000 years. Nowconsider that we need to produce that same amount again — but in just thenext 40 years if we are to feed our growing and hungry world.‖– Paul Polman, CEO of Unilever, and Daniel Servitje, CEO of GrupoBimbo―Trade makes consumers less vulnerable to local shortages and thehigher prices caused by bad weather, disease or civil disorder. Freetrade helps feed a hungry world. Export restrictions and trading bansisolate local markets and give farmers little incentive to expand productionfor the next season. Governments must encourage open trade and a fair,transparent, rules-based system to everyone’s gain, including theenvironment. And companies that are directly or indirectly in the businessof feeding the world have a responsibility to promote trust-based freetrade.‖– Greg Page, Cargill Chairman and CEOSource: http://www.globalharvestinitiative.org/index.php/2012/06/notable-food-security-quotes-from-the-rio20-and-g20-conferences/ viewed on 1.10.12
  3. 3. Introduction Director @Creatovate Innovation & International Business Consultancy FMCG Background Asia Focus  Fonterra  Foster’s  National Foods (Lion) 15 years F&B 11 years F&B focus on Asia Pacific
  4. 4. Globalisation of AustralasianFMCGMy own working experience to date Company Ownership Structure Owner / Country of Date of Acquisition Origin Fonterra Co-operative New Zealand n/a Foster’s Subsidiary of PLC SAB Miller / SA-UK 2011 National Foods Ltd Subsidiary of PLC Kirin / Japan 2008 (now Lion Dairy & San Miguel Corp / 2005 Drinks Pty Ltd) PhilippinesDo we have anything left? Vegemite has gone to Kraft. Hoadleys VioletCrumble is with Nestle. Kiwi and Nicholas Aspro went to Sara Lee. ArnottsBiscuits were gobbled by Campbell Foods. Holden is really General Motors. Icould go on and on . . .K. Dunstan (2011) The Age ―Our lost heritage is enough to drive a person todrink‖http://www.theage.com.au/opinion/society-and-culture/our-lost-heritage-is-enough-to-drive-a-person-to-drink-20110922-1kn4u.html#ixzz27GS2ENT5 viewed on 23.9.12
  5. 5. Fundamental drivers & shifts inglobal Food & Bev in recent years Population growth  9b by 2050  From 7b to 9b by 2050 Climate Change Growth in GDP in developing world Limited food productivity growth Water shortages
  6. 6. Top 10 Global F&B Companies Ran Company Establishe 2011 US$b Country of k d Revenue Origin 1 Nestle 1866 $87 Switzerlan d 2 Archer Daniels 1923 $81 USA Midland Company 3 PepsiCo 1965 $60 USASources: Companywebsites & 4 Kraft 1903 $54 USAhttp://www.rediff.com/business/slide- 5 Coca-Cola 1886 $47 USAshow/slide-show-1-worlds-biggest-food- 6 ABInBev 1852 AB $39 USAand-beverage- 1366 InBevcompanies/20120416.htm retrieved on 7 Tyson 1935 $32 USA23/9/12 8 JBS 1953 $31 Brazil 9 Mars 1911 $30 USA 10 Unilever 1930 $23 (€47b) UK/Holland
  7. 7. Australian Top 10 Grocery Brands& their ParentsTop 10 Brands Owner Origin of Owners1. Cadbury Kraft Inc. USA2. Coca-Cola The Coca-Cola USA Company3. Bega Bega Australia4. Smith’s PepsiCo USA5. Kleenex Cottonelle Kimberley Clark USA6. Birds Eye Simplot USA7. Mainland Fonterra NZ8. Berri Lion (Kirin) Japan9. Sorbent SCA / PEP 50/50 JV SCA Sweden10. Colgate Colgate-Palmolive USA Sources: Nielsen top 100 brands report 2010 viewed on AFN website 26.9.12, Company Websites, Google
  8. 8. Top Global RetailersTop Retailers Country of Origin Turnover 2010 US$b1) Wal*Mart USA $405b2) Carrefour France $120b3) Metro Germany $91b4) Tesco UK $90b5) Lidl Germany $77b6) Kroger US $77b7) Costco US $70b8) Aldi Germany $68b20) Woolworths Australia $36b (2011)23) Wesfarmers (Coles) Australia $25b (2011) Sources: http://www.insideretailing.com.au/IR/IRNews/Top-25-retailers- 5718.aspx and http://www.deloitte.com/view/en_AU/au/industries/consumerbusiness/e278116 0f279d210VgnVCM3000001c56f00aRCRD.htm viewed on 2.10.12
  9. 9. Global retailing is not easyNumber of Countries Operates Grocery retailers  Carrefour 38  Wal-Mart 15  Tesco 13 Grocery suppliers  Coca-Cola 200 (approx.)  Danone 120 Source: ‘Retail Doesn’t Cross Borders, HBR, Apr 12, p.109  P&G 180
  10. 10. Case study – Foster’s in Asia3 different countries – 3 different talesIndia1998 JV 1993, acquiredGreenfield 1998 Acquisition of two breweries majority stakesBrewery, built in in Shanghai,Aurangabad (Central & Southern Guangdong &Sold to TianjinSABMiller for Vietnam) from BGI for $80m breweries, SoldUS$120m in Guangdong and2006 Sold to APB for US$105m in Tianjin 2006 breweries for $18m in 1999. Sold Shanghai Sources: Foster’s Annual Reports 99-06 to Suntory for $20m in 2006.
  11. 11. Foster’s India Pvt LtdChallenges Successes 1 country, 28 states  Early mover Taxes across  Excellent people borders  Experiential No advertising marketing Tap contracts (bars)  F1 Low consumption  Cricket& BBQ  Fashion  Sales & Marketing
  12. 12. Foster’s Vietnam LtdChallenges Successes No. 4 or 5 on entry  Sales & Distribution Tap contracts (bars)  Draught beer Low awareness (Angel) Low A&P budget  Local brands  Biere Larue  BGI  F1 to Go Karts (localisation)
  13. 13. Shanghai Foster’s Brewery LtdChallenges Successes 1 country, 22  Formula 1 provinces  Shanghai race Oversupply / capacity  F1 Sunday nights in Price deflation/cost Shanghai inflation bars/hotels Wholesalers  Local beer Local to International (Guangming) – 2km price gap from brewery sales Culture gap drive
  14. 14. Conclusion We all need to eat and by 2050 that’s 9b of us! Consolidation of manufacturers (faster) and retailers (more challenging) Internationalisation brings opportunity but has its challenges  Must glocalise  It is a significant step up from the home market  Expect more competition, faster innovation and new rules and regulations to navigate
  15. 15. ReferencesMarcel Corstjens and Rajiv Lal (2012) Retail Doesn’t Cross Borders: Harvard BusinessReview, April, pp: 104-111.K. Dunstan (2011) The Age ―Our lost heritage is enough to drive a person to drink‖http://www.theage.com.au/opinion/society-and-culture/our-lost-heritage-is-enough-to-drive-a-person-to-drink-20110922-1kn4u.html#ixzz27GS2ENT5 viewed on 23.9.12The Economist (2011) We are 7 billionhttp://www.economist.com/blogs/dailychart/2011/10/world-population retrieved on 23/9/12Fosters Group Annual Reports (1998-2006), Press Releases,http://www.fostersgroup.com/news/results-and-reports-1.aspx viewed on 1/10/2012http://www.rediff.com/business/slide-show/slide-show-1-worlds-biggest-food-and-beverage-companies/20120416.htm retrieved on 23/9/12http://www.globalharvestinitiative.org/index.php/2012/06/notable-food-security-quotes-from-the-rio20-and-g20-conferences/ viewed on 1.10.12http://www.insideretailing.com.au/IR/IRNews/Top-25-retailers-5718.aspx andhttp://www.deloitte.com/view/en_AU/au/industries/consumerbusiness/e2781160f279d210VgnVCM3000001c56f00aRCRD.htm viewed on 2.10.12Nielsen top 100 brands report 2010 viewed on AFN website 26.9.12, Company Websites,Google

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