Challenging times for the food industry

As affluent consumers in China and India demand a more Western style diet we are seeing the effects on the price of meat and other foodstuffs. The price of cocoa has been driven to a three-year high with consumers in China and India getting a taste for chocolate.

China will continue to be a major buyer in the international markets in response to demand from its burgeoning middle classes.

By 2020 China’s consumers will be spending an annual £ £3,830 billion and their Indian counterpart’s £2,200 billion contrast this with British consumers who spent £937 billion last year.

A Chinese person born in 2009 will consume 38 times as much over his lifetime compared to one born in 1960.

With a population in excess of 1.3 billion (approximately 20% of the world’s population) imagine the implication for Western consumers should an early morning cup of coffee become the beverage of choice.

Meantime European Food manufacturers find that they are caught in a vice; the buying pattern for many continues to be “just in time” reflecting the need to keep inventories as low as possible.

However without the safeguard of a “buffer stock” they are now more than ever exposed to the harsh reality of having to “pay up” in order to secure the raw materials to keep their facilities in production.

At the same time suppliers will continue to face the problems of operating in the current economic background with buyers seeking to delay payment, renegotiate contracts etc.