Global Food Industry
The structure of the global food industry is continually
changing and evolving as food suppliers, manufacturers, and
retailers adjust to meet the needs of consumers, who are
increasingly demanding a wider variety of higher quality products.
Having first hand knowledge of consumer preferences and purchase
habits, food retailers are positioned to transmit this information
upstream to other segments of the supply chain. In the quest to
meet consumer demands for variety, affordability, safety, and
quality, the food retail sector is constantly evolving and
generating innovative sale formats. In addition to the popular
supermarket format, hypermarkets, discounters, convenience stores,
and combined gasoline and grocery outlets have emerged in numerous
countries in recent years.
Global food retail sales are about $4 trillion annually,
with supermarkets/hypermarkets accounting for the largest share of
sales (see Excel table ).
Most of the leading global retailers are U.S. and European firms
(see Excel table ), as large multinational retailers
expand their presence in developing countries and small retail
firms increasingly account for a smaller share of total food sales.
The top 15 global supermarket companies account for more than 30
percent of world supermarket sales. With improved technologies and
economies of size, these retailers enjoy operating cost advantages
over smaller local retailers.
Similar to retailers, food manufacturers are reorienting their
business strategies in response to consumer signals transmitted via
retailers. Two common strategies are geographic expansion in
developing countries and a greater emphasis on product category
management. Although multinational manufacturers are rapidly
expanding their operations, firm concentration in food
manufacturing is not visible at the global level. Together, the top
50 food manufacturers' share of global packaged food retail sales
account for less than 20 percent (see Excel table
Driven by innovation and competition from private retail brands,
food manufacturers are focusing on specific product lines where
they have inherent advantages. There is greater emphasis on
"category management" and "focused growth" compared with the
product portfolio diversification strategies of the past. This
strategy allows food firms to become leaders in certain core
product lines and to better cater to consumer demand for these
products in different markets. Therefore, while manufacturer
concentration is not evident at the global level for total packaged
food sales, firm concentration may exist in specific product lines
and regional markets. Firm concentration is particularly evident
for those products where the manufacturer's brands are popular,
such as in soup, breakfast cereal, and baby food (see Excel table ).