Food companies expand sales in emerging markets

Publicly traded companies cannot simply make a profit.  They must grow profits and report growth to Wall Street every 90 days.  This requirement is tough on all corporations, but especially tough on those selling food.  People can only eat so much.

To expand sales, food companies desperately seek new markets.  Last week, The Guardian and the Wall Street Journal described how food corporations are marketing processed foods to the poorest inhabitants of developing countries.

According to The Guardian,

Nestlé is using a floating supermarket to take its products to remote communities in the Amazon. Unilever has a small army of door-to-door vendors selling to low-income villages in India and west and east Africa. The brewer SABMiller has developed cheap beers in some African countries as part of a “price ladder” to its premium lager brands, and, as a leading Coca-Cola bottler and distributor, is aiming to double fizzy drinks sales in South African townships.

Last year 39% of acquisition deals by consumer goods companies were in emerging markets, compared with just 1% in 2008, according to the Grocer’s OC&C Global 50 league table.

The Wall Street Journal follows a salesman in South Africa who is “digging for his gold” in poor neighborhoods:

While Nestlé’s usual sales staff focus on filling shelves of big supermarkets, Mr. Mugwambane and 80 other salespeople like him hunt for tiny shops across South Africa that will buy such Nestlé products as baby food and nondairy creamers, often in single-serving packages that appeal to Africa’s price-sensitive customers.

…Nestlé says it expects 45% of its sales to come from emerging markets by 2020, up from roughly 30% now.

From the standpoint of food companies, says The Guardian, this is about “finding innovative ways to give isolated people the kind of choices the rich have enjoyed for years and are providing valuable jobs and incomes to some of the most marginalised.”

Baby food and nondairy creamers?

Maybe selling items like these brings jobs to some people, but it also brings nutrient-poor diets, obesity, and the resulting chronic diseases to those populations.

The ultimate costs will be high.