1. Dr David Hughes Emeritus Professor of Food Marketing Agri-Business Forum 13 th International Economic Forum of the Americas/ Conference of Montreal Montreal, Quebec, Wednesday, June 20 th, 2007 The Global Food Market and Developments in the Modern Food Industry in India

2. Migration to the Poles Global High Tech New and Improved Ready-to-Eat Fast Food Fuel Food Just Me Low Price Good For You All Year Large-Scale Open Supply Chain Local High Touch Traditional Natural/Unprocessed Slow Food Story Food Friends/Family Premium Price Naughty but Nice Seasonal Craft-scale Closed Supply Chain

3. Per Capita Consumption of Selected Food Groups, India and China Kg Per Capita RiceWheatMaize/ Corn Oilseeds‘Land’ Meat FishButter & Cheese Vegs.FruitSugar India91751113761663610 China1081071381861832342818 Source: Adapted from “Asian Agrifood Demand Trends and Outlook to 2010”, Department of Foreign Affairs and Trade, Fed. Gov. Australia, 2004

5. Share of Supermarkets in Food Retail - USA % U.S. Source: Reardon et al, 2005

6. Share of Supermarkets – Western Europe % U.S.France Source: Reardon et al, 2005

7. Share of Supermarkets – “First Wave of Supermarket Diffusion” % U.S.France Chile, Korea, Taiwan, Mexico, Philippines, Thailand Source: Reardon et al, 2005

8. Share of Supermarkets – 2 nd & 3 rd Waves Supermarket Diffusion % U.S. Indonesia, China, Vietnam, India Source: Reardon et al, 2005

9. Emergence of Modern Retailing Pace of supermarket penetration accelerating in emerging markets, but, one size does not fit all (and not all public and/or private enthusiastic) In any country, waves – first, in big cities, then secondary cities, then rural towns Processed foods and non-food grocery first, then, meats, dairy, fruit and last into vegetables Impetus is, often, significant FDI from major international players, and/or “retaliation in first” domestic investment Source: T. Riordan (2007), Hughes D

10. Emergence of Modern Retailing Supply chains modernise – from top end to mass market – through –National, regional, global sourcing networks –“Preferred supplier” systems –Direct purchase and specialised wholesalers –Private quality standards All the above have substantial implications for food industry players, in particular, smaller-scale businesses (not least small-scale farms) Source: T. Riordan (2007), Hughes D

11. Who Are The Global Retailers? RankRetailerBase Global Status 1CarrefourFrance Leading global retailers 2Wal*MartUSA 3TescoUK 4Metro GroupGermany 5AholdNeths 6AuchanFrance 7Seven&IJapan Leading international retailers 8AldiGermany 9Groupe CasinoFrance 10CostcoUSA 11DelhaizeBelgium Source: IGD, 2006

16. Major Players in the Indian Modern Grocery Sector, Late-2006 CompanyFaciaFormat Store Numbers Subhiksha Discount600 Margin Free Discount257 Trinethra Supermarket170 RPGSpencer’s Hyper/Super Supermarket125 Reliance RetailReliance FreshSupermarket120 PantaloonBig/Food BazaarSupermarket108 Dairy FarmFoodworldSupermarket50 Nilgiri’s Supermarket36 Sabka Bazaar Supermarket27

17. Leading Food Retailers in China, 2006 CompanyOwnership/HQSales Billion Yuan LianhuaState owned Shanghai44.0 China Resources VanguardHong Kong37.9 CarrefourFrance24.8 WumartPrivate Beijing23.1 SuguoState owned Nanjing22.3 Beijing HualianState owned Beijing21.2 NonggongshangState owned Shanghai19.6 Source: China Chain Store & Franchise Association, 2007

18. Leading Food Retailers in China, 2006 CompanyOwnership/HQSales Billion Yuan RT - MartTaiwan19.6 Wal*MartUSA15.0 Shanghai HualianState owned Shanghai15.0 Xinyijia (A. Best)Private Beijing14.3 Trust-MartTaiwan14.0 LotusThailand13.5 MetroGermany9.4 TescoUK9.3 Source: China Chain Store & Franchise Association, 2007

19. Fish market Sicily, Italy November 2005

23. British are “exceptionally slow of imagination and wanting in taste” when it comes to food. “As a rule, the Englishman’s dinner is plain and monotonous to a degree. The cook knows nothing of proportion in seasoning his food; little of variety, and has a rough slovenly touch”! Indian Tourist to the UK 1896

24. It’s not whether, it’s when? Development of the Modern Food Grocery Sector in India Huge young population and growing Real GDP growth rate high and resilient Rapid urbanisation Broadening of the middle class Retail industry pundits invariably rank India as No. 2 to China on modern retail development potential International retailers congregating at the borders

25. Source: UN (2002),IFPRI 19501960197019801990200020102020 0 1 2 3 4 5 6 7 8 Billions Developed countries Developing countries World Population, 1950-2020

26. Source: UN (2002),IFPRI 19501960197019801990200020102020 0 1 2 3 4 Billions rural urban Urban and Rural Population in Developing Countries, 1950-2020

27. It’s not whether, it’s when? Development of the Modern Food Grocery Sector in India But: Fresh food purchase preference and lack of modern fresh food supply chains provides a buffer for wet markets and traditional retailers Extended families and servants reduce convenience advantage of modern retailing Penchant for regulation embedded in Indian public sector DNA Farmers and small-scale retailers do have political clout and resist modern sector incursion

28. Source: Accenture in Coca-Cola RRC, The Fresh Imperative in Asia, 2005 Principal Fresh Food Shopper Segments in Selected Major Asian Urban Centres Quality Seekers Authority Seekers Easy Life Seekers Value Seekers

29. Shopper Segments and their Preferences: Traditional versus Modern Retail Source: Accenture in Coca-Cola RRC, The Fresh Imperative in Asia, 2005 Note: Sampled Asian consumers stated % of weekly Fresh Food expenditure % of weekly expenditure

30. Supply Chain Constraints Characteristic of Developing Countries Consumer mistrust, often reflecting variable/low quality, of processed foods Very poor wholesale market infrastructure (cool store, packing, grading, etc.) Wastage very high (20-40%) Traders dominate chain with little pricing transparency evident Quality produce not rewarded with producer premiums Fragmentation from production to end of supply chain

33. Ideal: Ideal:Short Fast Transparent Seamless Collaborative Too Often: Too Often:Complex Price-driven Confrontational Disjointed Opaque What Sort of Supply (aka Value) Chain?

34. Final Thoughts

35. CONTACT POINTS: e-mail profdavidhughes@aol.com telephone numbers office office +44(0)1600 715957 fax fax+44(0)1600 712544 mobile mobile+44(0)7798 558276 www.profdavidhughes.com