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The World's Top 100 Food & Beverage Companies - 2012

Investing Wisely in Local and Emerging Markets

October 4, 2012
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The desire for growth in emerging markets, along with the need to continue innovating in established areas, is driving a two-pronged strategy for leading food and beverage manufacturers. 
 
From a global perspective, the past decade or so has witnessed a huge swing of influence from developed countries toward the rapidly developing economic superpowers, such as China and India—and 2011 was no exception to this. 

View the Top 100 Food and Beverage Companies of other years

2011

2010

 
“Global food and beverage companies are under a great deal of strain in 2012. Slowing economies and intense competition are encouraging the industry to innovate in areas like health and wellness and to seek out growth both domestically and internationally,” says Jon Wright, senior retail analyst at IGD, a research firm that focuses on the food industry. He says expansion into emerging markets offers medium- to long-term growth opportunities, but international consumer goods companies are also focused on maintaining and growing market share in more mature markets like North America and Europe. “Despite the tough conditions, developed markets are not going to being written out of consumer goods
At the top of the ranking (see page 94), nutrition, health and wellness company Nestlé saw a 4.3 percent organic growth in developed markets (which account for 60 percent of group sales), with France and Japan showing the most growth. In emerging markets that now account for 40 percent of sales, organic growth was 13 percent, fueled by double-digit rises in the greater China region, India, Mexico and Africa. 
 
 
Building on this momentum, Nestlé  opened two new production sites in South Africa and a CHF 16 million factory in Luanda, Angola. In a strategic move to enhance its position in global infant nutrition, the company recently acquired Pfizer Nutrition for $11.85 billion, which derives around 85 percent of its revenue from emerging markets. 
 
“What is different in today’s market is the speed and unpredictability of change, whether new challenges or new opportunities. We think of this as the New Reality,” says Paul Bulcke, Nestlé’s chief executive officer. “The New Reality is characterized by political upheavals, economic uncertainty, lackluster growth in developed markets, high levels of volatility in commodity, currency and stock markets … but also by dynamic growth in emerging markets, increasing affluence, step changes in technology and digital communication, new markets and new ways to reach consumers and, indeed, by increasing numbers of consumers.” 
 
PepsiCo has built on its “innovating globally by delighting locally” promise to tackle these challenges and retain its number two position on the Top 100 list.
 
“In 2011, despite a still-difficult macroeconomic environment, we delivered solid results,” says  PepsiCo Chairman and CEO Indra K. Nooyi.  Despite challenging conditions, three PepsiCo brands—Diet Mountain Dew, Brisk and Starbucks ready-to-drink beverages—each grew to more than $1 billion in annual retail sales in 2011 and expanded PepsiCo’s portfolio of billion dollar brands to 22. 
 
“We are extremely well-positioned to grow—by category, region and trend,” says Nooyi. “Snacks, beverages and nutritional categories all have attractive growth, margins and returns, and are projected to grow revenue globally at 5 percent or higher. We believe our businesses will continue to benefit from favorable global trends, including on-the-go lifestyles and a rapidly growing middle class in emerging and developing markets.”
 
Demonstrating that even in the developed world, opportunities still exist, PepsiCo continued its commitment to dairy products with the recent US joint venture with Theo Müller. The two companies are investing $206 million in a new yogurt manufacturing facility in New York state.
 
This is the latest dairy strategy for PepsiCo, which has looked to increase its presence in the dairy market since the formation of its global nutrition unit in 2011. It completed the purchase of Russia’s largest dairy processor Wimm-Bill-Dann in September 2011; the deal with Müller marks PepsiCo’s first move into the North American dairy market. The first phase of the New York yogurt plant is scheduled for completion in 2013.
 
Dairy is not the only sector receiving attention from PepsiCo. In June, the company joined forces with Israeli food group Strauss to launch Obela, a refrigerated dips and spreads brand, investing 10 million into the Mexican marketplace. 
 
“We are constantly looking for new opportunities to grow our business by offering a wide range of products, including healthier choices,” says Pedro Padierna, president of PepsiCo Mexico. “Strauss brings unique capabilities and expertise in fresh foods that, when combined with PepsiCo’s go-to-market and brand-building strengths, will position us to give consumers a great, new line of products that complements our existing portfolio in Mexico.”
 
Comfortably holding its number three slot following its merger with Cadbury in 2010, Kraft has spent the past year preparing to form two independent operating companies: one a high-growth global snacks business named Mondelez International and the other a North American grocery business called Kraft Foods Group.
 
Illustrating the New Reality, the move reflects the challenge of concentrating on established areas through innovation and marketing investment, while also tapping into growth opportunities, most notably snacking and on-the-go consumption, in new regions.
 
“2011 was another challenging year—economic turmoil, political upheaval, natural disasters. The world as we knew it has surely changed. But despite the challenges, Kraft Foods not only survived but thrived,” says Kraft Chairman and CEO Irene Rosenfeld. “We have built two strong, but distinct, portfolios. Our strategic actions have put us in a position to create two great companies, and the next phase of our development recognizes the distinct priorities within our portfolio. The global snacks business has tremendous opportunities for growth as consumer demand for snacks increases around the world. The North American grocery business has a remarkable set of iconic brands, industry-leading margins and the clear ability to generate significant cash flow.” 
 
Brands such as Kraft macaroni & cheese, Oscar Mayer meats, Philadelphia cream cheese, Maxwell House coffee, Capri Sun beverages, Jell-O desserts and Miracle Whip salad dressing will be the focus of the Kraft North American business, which has spent the past year working to lower its costs to provide funds to invest in these core brands. The company also plans to reduce its workforce by approximately 1,600 throughout the US and Canada primarily from sales, corporate and business unit areas, yet noticeably, not manufacturing. 
 
Meanwhile, its global snacks business, Mondelez International, consisting of the current Kraft Foods Europe and Developing Markets units as well as the North American snacks and confectionery businesses, will focus on growth across numerous markets. Approximately 75 percent of revenues are projected to be from snacks around the world, with approximately 42 percent from developing markets. The business will have a strong presence in the fast-growing and high-margin on-the-go channel, while its non-snacks portfolio, consisting primarily of powdered beverages and coffee, will have a strong growth and margin profile in developing markets and Europe. Key brands for Mondelez will include Oreo and LU biscuits, Cadbury and Milka chocolates, Trident gum, Jacobs coffee and Tang powdered beverages. The split is scheduled to take place in October 2012.
 
 Sara Lee Corporation (ranked 47, down from 42 last year) has taken a similar approach, completing its split to become Hillshire Brands, which aims to be the most innovative meat-centric food company and snack solutions company in the US. It also launched its international tea and coffee business, DE Master Blenders 1753, which will operate across Europe, Brazil, Australia and Thailand under brands such as Douwe Egberts, Senseo and Moccona. 
 
“Both companies believe there is still a growing market for snack products in the developing world, and this new split business focus will help to target these products at the BRIC countries as well as other parts of Latin America, Asia Pacific and the Middle East,” explains Jonathan Thomas, principal market analyst at Leatherhead Food Research. “In these challenging times, companies are working very hard to identify areas for growth and must target the areas which will expand. It wouldn’t surprise me if more companies look to have these divisions, and I think we will see more big acquisitions to come.” 
 
In 2009, Perdigão and Sadia merged, creating BRF. Based in Brazil, BRF is stretching its growth muscles far outside of its home territory, operating in segments such as poultry, pork, beef, margarines, pastas, pizzas and frozen vegetables, as well as the dairy sector, where it is one of the leading processors in Brazil. It operates 61 plants in Brazil, five in Argentina, two in Europe and, by early 2013, is expected to unveil its first processed products plant in the Middle East, hoping to tap into the Halal products market. As with all the leading players, BRF is expanding into China. It has entered into a joint venture with Dah Chong Hong Ltd. that will allow it to distribute its products in China, process meat locally, boost the Sadia brand and enter both the retail and food channels. Further plans are afoot to build a processing plant in China by the end of 2013.
 
“In 2011, we were confronted with a hostile scenario in the export market with the deceleration in several of the world economies and the continual appreciation of the real. Our costs also came under pressure as a result of the rise in commodity prices and an increase in payroll above inflation,” says José Antonio do Prado Fay, chief executive officer. “However, it was exactly in this inclement environment that we succeeded in ending the year with excellent results. Out of investments of R$1.9 billion during 2011, we allocated R$260.2 million to new businesses, including acquisitions.”
 
The Coca-Cola Company—number four on the Top 100 list— celebrated its 125th anniversary in 2011 with continued growth across its portfolio. The company is looking to emerging regions to underpin its growth. It plans to invest an additional $3 billion in India through 2020 to capture growth opportunities in the country’s fast-growing, non-alcoholic, ready-to-drink (NARTD) beverage market. 
 
“Achieving continued sustainable, responsible growth in India is core to achieving our 2020 vision of doubling system revenues in this decade,” says Muhtar Kent, chairman and CEO of The Coca-Cola Company. “Our ongoing investment in India is focused on delivering innovation, partnerships and a portfolio that enhances the consumer experience, ensures product affordability and builds brand loyalty to deliver long-term growth.”
 

Sustainability & collaboration

Without a doubt, long-term growth and environmental sustainability are key goals for most of the world’s leading food and beverage makers. The Coca-Cola Company has been investing significantly in innovation as a vehicle for developing sustainable solutions for its, and the planet’s, future. Recently, it joined forces with the Ford Motor Company, H.J. Heinz, NIKE and Procter & Gamble to create the Plant PET Technology Collaborative (PTC), a strategic working group focused on accelerating the development and use of 100 percent plant-based PET materials and fiber in their products. 
 
Other top 100 companies continue to view sustainability as the key to future long-term growth and an integral part of corporate strategy. Falling water tables across much of the world and overstretched natural resources have switched the emphasis to combining sustainability with resource efficiency, in other words, getting more from less. Social sustainability is also high on the agenda for businesses and their stakeholders. As a result, companies are seeking to build stronger links with local communities and collaborating with other processors to develop improved environmental strategies.
 
Unilever (number nine in the ranking) has recently joined forces with Cargill (ranked 12), which will supply the first-ever sustainable verified rapeseed oil to the company, with an initial consignment covering 5 percent of Unilever’s rapeseed oil needs. Within the next three years, Cargill’s European refined oils and grain and oilseed businesses are scheduled to meet all of Unilever’s needs for sustainable rapeseed oil used in products such as margarines and mayonnaise.
 
As a strategic supplier, Cargill is playing a key role in supporting Unilever’s ambitious target to source 100 percent of its agricultural raw materials from a sustainable source as part of its Sustainable Living Plan by 2020. A further positive outcome is that Cargill and Unilever now have established a repeatable model that can be applied to drive sustainability within other oilseed crops in the future.
 

Focus on dairy

The success of dairy products has again fueled a rise in the rankings for several dairy companies on this year’s list. The highest ranked is European dairy producer Lactalis, which rose five places to number 15, followed by New Zealand-based Fonterra, which rose six places to number 22 on the list. 
 
Lactalis, which gobbled up Parmalat (ranked 58) in July 2011, also recently acquired Skånemejerier, a major player in the Swedish dairy market—cementing Lactalis’ reputation as a growing player seeking the right acquisition partners.  
 
Earlier in the year, Fonterra, New Zealand’s only true multinational company, announced a “group strategy refresh” that echoed the strategies of the other big players: growth in emerging markets such as China, ASEAN and Latin America, the Middle East and Africa, plus a focus on nutrition.
 
“Strong economic and population growth in emerging markets is driving a situation where global demand for milk is forecast to grow by more than 100 billion liters by 2020, with New Zealand expected to contribute only five billion liters of additional supply by that date,” says Fonterra Chief Executive Theo Spierings. “In addition, nutritional needs, particularly among the young and the elderly, are getting more urgent and specific, which is where we have the capability to add significant value.”
 
To build its capacity to fulfill demand, Fonterra is investing rapidly in production in emerging markets. “Our pilot dairy farms in China are now producing some of the highest-quality milk in the country,” says Spierings, who explains that Fonterra does not need to fully own the farms or factories it operates. “We can achieve the same result through partnerships and supply agreements, which is how we run our integrated businesses in Australia and Latin America.”
 
Within China, indigenous companies are continuing their rise in dramatic fashion to compete with the traditional big players at the top. New kids on the block last year, Yili Group rose 25 places, while the China Mengniu Dairy Company crept up seven places on the Top 100 list. 
 
Since Mengniu’s acquisition of Shijiazhuang Junlebao Dairy Co., both parties have achieved synergies by sharing resources in the procurement of raw milk and sales channels, improving both sales and product branding. Mengniu also established an overseas sales center during the year and launched products in Hong Kong and Macau, the first important step in entering the international market.
 
This dynamism, the mergers and the consolidation, the investment in new growth channels and an eye to sustainable activity will continue to punctuate the moves of the top players as they pursue success during difficult times. It is clear that it takes great fortitude to succeed in the “New Reality” of today’s food and beverage industry. 
 

Click here to view the Top 100 Food and Beverage Companies! (PDF)

 


 
nestle gold chocolat biscuit

Nestlé

 
fex1012top2_nestle.jpg“What is different in today’s market is the speed and unpredictability of change, whether new challenges or new opportunities. We think of this as the New Reality,” says Paul Bulcke, Nestlé’s chief executive officer. “The New Reality is characterized by political upheavals, economic uncertainty, lackluster growth in developed markets, high levels of volatility in commodity, currency and stock markets … but also by dynamic growth in emerging markets, increasing affluence, step changes in technology and digital communication, new markets and new ways to reach consumers and, indeed, by increasing numbers of consumers.”  Photo source: Nestlé.

 


miller greek corner yogurt

PepsiCo

 
fex1012top4_pepsico.jpg“In 2011, despite a still-difficult macroeconomic environment, we delivered solid results,” says PepsiCo Chairman and CEO Indra K. Nooyi, who highlights that despite challenging conditions, three  PepsiCo brands—Diet Mountain Dew, Brisk and Starbucks ready-to-drink beverages—each grew to more than $1 billion in annual retail sales in 2011. “Snacks, beverages and nutritional categories all have attractive growth, margins and returns, and are projected to grow revenue globally at 5 percent or higher.” Demonstrating that even in the developed world, opportunities still exist, PepsiCo continued its commitment to dairy products with the recent US joint venture with Theo Müller. The two companies are investing $206 million in a new yogurt manufacturing facility in New York state. 

 


velveeta cheesy skillets dinner kit

Kraft

 
fex1012top6_kraft.jpg“2011 was another challenging year—economic turmoil, political upheaval, natural disasters,” says Kraft Chairman and CEO Irene Rosenfeld.  “The world as we knew it has surely changed. But despite the challenges, Kraft Foods not only survived but thrived. We have built two strong, but distinct, portfolios. Our strategic actions have put us in a position to create two great companies, and the next phase of our development recognizes the distinct priorities within our portfolio. The global snacks business has tremendous opportunities for growth as consumer demand for snacks increases around the world. The North American grocery business has a remarkable set of iconic brands, industry-leading margins and the clear ability to generate significant cash flow.” 

 


new coke bottles diet zero red

Coca-Cola

 
fex1012top8_cocacola.jpgThe Coca-Cola Company celebrated its 125th anniversary last year and enjoyed continued growth across its portfolio. The company is looking to emerging regions to underpin its growth. It plans to invest an additional $3 billion in India through 2020 to capture growth opportunities in the country’s fast-growing, non-alcoholic, ready-to-drink (NARTD) beverage market. “Achieving continued sustainable, responsible growth in India is core to achieving our 2020 vision of doubling system revenues in this decade,” says Muhtar Kent, chairman and CEO of The Coca-Cola Company. “Our ongoing investment in India is focused on delivering innovation, partnerships and a portfolio that enhances the consumer experience, ensures product affordability and builds brand loyalty to deliver long-term growth.”

 


symbio mixed berry yogurt

Fonterra

 
fex1012top10_fonterra.jpg“Strong economic and population growth in emerging markets is driving a situation where global demand for milk is forecast to grow by more than 100 billion liters by 2020, with New Zealand expected to contribute only five billion liters of additional supply by that date,” says Fonterra Chief Executive Theo Spierings. “In addition, nutritional needs, particularly among the young and the elderly, are getting more urgent and specific, which is where we have the capability to add significant value.” To build its capacity to fulfill demand, Fonterra is investing rapidly in production in emerging markets. “We can achieve the same result through partnerships and supply agreements, which is how we run our integrated businesses in Australia and Latin America,” says Spierings.

 

 

 

 

 
 
 
 
 

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