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Countries outside of the Organization for Economic Co-operation and Development contribute to more than fifty percent of the global GDP growth. Also, more than fifty percent of the urban population comes from these developing economies. A good example of a promising emerging economy is Vietnam, which recorded the highest GDP growth between 2018 and 2020 in SEAN and ranked as the seventeenth most populated country. These factors translate into increased demand for food in emerging economies due to income growth and adaptation of “rich-country diets,” including processed foods high in proteins and calories. According to FAO, diets in developing countries change when incomes increase. This results in a decline in share for staples such as tubers and cereals and a rise in meat and dairy consumption. Projections suggest that pa capita consumption of animal products might increase by forty-four percent by 2030.
Consumer behavioral changes often impact multiple industries and overall economic growth. For instance, the demand for proteins in emerging markets, particularly pork in China, will increase rapidly, creating opportunities for companies to expand their production and related industries such as vaccines, feeds, animal-health testing, and breeding. This phenomenon also applies to Brazil, where beef and animal production has expanded significantly in the recent past to meet the high global demand. Therefore, increasing feed conversion efficiency to help animals produce more meat without increasing feed amount can be a lucrative business for companies with unique intellectual property. Big, innovative, and well-equipped multinational companies can capitalize on the new opportunities in emerging economies. These markets can be leveraged to facilitate long-term growth, especially in China, Brazil, and India, where different consumer cantered industries are likely to benefit. Companies can alleviate associated risks through partnerships like franchises and joint ventures. Successful implementation of expansion strategies in emerging markets can increase sales and geographical diversification.
It is important to note that developed economies continue to be valuable markets because of relatively higher demand stability, sizeable middle class, and established population. However, these countries have limited opportunities for the growth of consumer-centered companies. For instance, in the 90s, developed economies accounted for sixty-five percent of the global GDP but have been overtaken by emerging markets. This explains why most multinationals seem to mainly target countries where the middle-class population is increasing rapidly. However, opportunities are also accompanied by risks. High prices in emerging economies, government policies, and environmental factors could negatively affect the demand. Furthermore, consumer preferences and behaviors can shift rapidly, making it difficult for companies to adjust their strategies according to changing market needs.
Consumption spending in the entire Asia Pacific region is expected to expand at the fastest rate in the coming years, with India and China contributing the most to this growth. Even though China’s consumption slowed down at some point, its consumption spending in this big economy is increasing. Findings show that India has recorded a higher economic growth rate than China. Budget reforms and advanced technologies can help in boosting consumption growth in rural areas.
Generally, Developing economies will contribute significantly to the growth of consumer products companies because their demographics are more favorable compared to advanced economies. The demand for branded products is also bound to increase due to many middle-class consumers. This applies especially to China, where consumers increasingly prefer premium branded products. Companies can also benefit from geographic diversity and generate profits consistently because economic strengths in one region offset weaknesses in another. Some consumer-oriented companies that have benefited from growth in emerging markets include Nestle S.A and Unilever PLC. Also, there are multinationals such as PepsiCo Inc., Coca-Cola, and Mead Johnson Nutrition Co.