Regional Concentration in the Global Food Economy

Mark Gehlhar1

Presented at the First Biennial Conference of the Food System Research Group June 27, 2003 Madison, Wisconsin.
1

Mark Gehlhar is a senior economist in the Market and Trade Division, ERS-USDA.

Abstract The global food manufacturing industry is comprised of diverse firms, varying in their geographic coverage and product portfolios. While the largest firms have wide product portfolios and global coverage, many concentrate on few product categories or in regional markets. There are variations in the four-firm concentration ratio across regions at the aggregate level and at the product-specific level. In addition firm concentration varies across countries within the same region. Sales concentration in packaged food is highest in Latin America and Australasia and lowest in Asia Pacific and Eastern Europe.

Introduction Large and growing food companies are a prominent feature in the landscape of the global food industry. Some predict that in the near future there will be four or five large retail firms and about twenty or twenty-five manufacturers operating globally (Grievink, Josten, Valk 2002). Many industries have evolved into markets with a transnational dimension where the leading firms in an industry are the leading firms in the same industry of other countries (Connor 1985). However, outside of Western Europe and the United States little is known about the structure at the manufacturing level in processed food. Evidence is scant whether large multinational manufacturers have dominate positions in food markets globally or whether local firms have a greater presence in home markets.

The current structure of world food industry is unlike other manufacturing such as auto, aircraft, or electronics, which are dominated by large firms with manufacturing facilities located in few locations. Food manufacturing comprises of a wide array of industries, each using different inputs and producing products that require specific marketing expertise and brands for individual markets. This provides broader scope for different firms tailoring product for specific consumer demands. In many cases different sized firms have advantages allowing for their coexistence in world food. In the United States, for example, there is a growing bimodal distribution of firms as larger firms expand and the number of smaller firms increases (Rogers 2001).

Consolidation in food manufacturing is continuing in Western Europe and the United States (Cotterill 1999). However it is debatable whether the food industry structure will converge to a similar structure as other manufacturing with few dominant firms. Although the largest

multinational food companies may become proportionately larger in the next decade, this may or may not lead to more concentrated markets. International expansion and sheer size of companies do not necessarily translate to greater market power (Scherer and Ross 1991). It is not the size of a corporation that confers power, but the nature of the market in which a firm operates and their position in these markets. The ability of firms to gain access to retail channels and heighten entry barriers can lead to higher concentration in specific food markets.

The paper provides a global view of the structure of food manufacturing by identifying key players and examining levels of concentration at the global and regional level. It begins with reasons why and how some food manufacturers have evolved into the largest firms in the world. Early history of the firm and incentives for acquisition are important for understanding industry structure in global food manufacturing. Concentration is examined using the four-firm concentration ratio (CR4). Differences in concentration are compared across regions by examining concentration at the product and country-specific level. Cases of firm dominance are also examined and in specific cases brands are identified which may play a role in determining a firms position in international food markets.

Diversity of firms and their global presence An important feature in global food markets is the diversity of firms in terms of size, uniqueness in products and brands, and geographic coverage. Large firms coexists with many smaller firms, with the top twenty-five firms in the world accounting for less than 25 percent of global packaged food sales. The structure of an industry is influenced by firm history, brand

acquisition, geographic coverage, and resistance towards expansion either from legal authorities or by firm choice.

Historys role Simply being first in a market has been important in the success of the worlds largest food corporations. Large-scale commercial food processing and retailing originated in Western Europe and the United States. Of the worlds fifty largest food manufacturing firms, thirty-six are based either in the United States or Western Europe (table 1). The most renowned food companies today were founded in the late 1800s and during the turn of the 20th century when household incomes grew rapidly with the industrial revolution. As households could no longer afford the time processing farm products, entrepreneurs gained greater access to capital from private and public sources for launching new food companies. This led to strong growth in commercial processing in the United States and Western Europe where the two regions today account for more than 53 percent of global packaged food sales (table 2). Product innovations in some food categories such as ready meals, frozen foods, and meal replacement drinks are marketed mainly in the United States and Western Europe accounting for nearly 70 percent of global sales (table 2)2. The high level of packaged food sales gave U.S. and European firms more opportunity to introduce new products and establish consumer loyalty.

The three largest companies in packaged food sales, Nestl, Unilever, and Kraft continue to have their most profitable activity in products they established in their early history. The Nestl Company, founded in 1865 in Switzerland by Henri Nestl started with an initial focus on infant

All data for this paper is from Euromonitor International (www.euromonitor.com) a private vendor for global consumer markets and business data.

nutrition and later was followed by other milk-based products. This company is now the worlds largest food company with a strong focus on the same items. Unilever is the global leader in ice cream and spreadable oils and fats. Its roots can be traced to the 1930 merger between a Dutch margarine manufacturer, Margarine Unie, and the British company, Lever Brothers, a company that had previously diversified into ice cream. In 1903, James Kraft began a wholesale cheese business in Chicago which later became Kraft Foods, and is now the worlds largest cheese supplier to retail markets.

Food companies soon realized they needed recognizable brands in order to differentiate their products from competitors to retain and expand their customer base. Technology employed by food processing firms was relatively unsophisticated and could easily be replicated by rivals. Preserving their product identity with brands was essential in preventing displacement by competitors using similar processing technology. For example, Kraft Foods would not have attained its global presence without its famous cheese brands, patented trademarks, and the longstanding goodwill earned from consumers. In the food industry, these intangible assets are often more important than capital and technology.

Brand acquisition Firm expansion with new products and brands are less frequent in the contemporary food industry. Rather the expansion of food companies, particularly the largest firms, is principally achieved through acquisition of existing brands. This strategy has been employed in numerous occasions in recent years for growth and entering new markets. For example Unilevers

acquisition of the successful meal replacement drink (Slim fast) significantly helped the company in this product category in the U.S. market

Global food industry structure has evolved from a series of acquisitions over time. Large diversified companies have accumulated premium brands in their core product categories (table 3). Nestl and Unilever compete with each other in ice cream markets globally. Recently they became more aggressive in the U.S. market as incentives to acquire U.S. brands were amplified with consumer demand shift toward premium ice cream. In 2000, Unilever acquired the U.S. ice cream manufacturer Ben and Jerrys Ice Cream. Nestl, on the other hand expanded its ice cream core business by acquiring General Mills stake in Ice Cream Partners USA, giving it ownership of the premium Hagen-Dazs in the United States. In 2002, Nestl acquired a majority stake in Dreyerss Grand Ice Cream.

The combination of processing technology and specific brands helped Unilever differentiate its oils and fat products from those of its rival ConAgra. For example, some of Unilevers margarine products, having a butter-like flavor, opened an opportunity to attract more consumers away from other margarine. The strategy helped Unilever compete with ConAgras strong domestic margarine brands (table 3) acquired previously from Nabiscos table spread business.

Accumulating high-performance brands is a way for firms to boost their regional presence and compete for market share. Nestles acquisition of the Stouffers brand in the United States gave the company the leading position in the ready meals product category. ConAgra, the second largest supplier of ready meals has acquired many brands through the purchase of companies

such as International Home Foods, GoodMark Foods (meat snacks), Golden Valley Foods (microwaveable popcorn), Knotts Berry Farm Foods, and Beatrice Foods. In another example, General Mills extended its presence in bakery goods, canned and frozen foods, and snacks foods through acquisition of Pillsbury in 2001. This substantially increased its market share in North America and provided the company with strong brands, including Betty Crocker, Old El Paso, and Green Giant.

Geographic expansion Geographic expansion will likely become a more important growth strategy in the future as Western European and North American markets become saturated. Developing country markets will be critical for food volume growth. Only a few companies currently have sales in every region in the world, and firms with a global presence are not necessarily associated with product and size (table 4). Firms with a global presence generally have extensive expertise in certain product categories where they have an inherent technological and marketing advantage. Nestl exemplifies this point with its global sales in baby food products, drawing expertise from its extensive research and development program in infant formulation. The company is the largest food manufacturer with a diversified product portfolio and extensive geographic sales reach. Similarly, Unilever has extensive geographic coverage in its core products. Technology and marketing expertise of smaller firms help them achieve a global presence as well. Two examples are the Wrigley Jr. Company specializing in confectionery, and the newly formed Fonterra Cooperative Group specializes in dairy products. Wrigley has less than one tenth the sales in packaged food as Nestl, yet it is a truly global company specializing in gum products, supported by extensive product development and global marketing expertise. The Fonterra Cooperative

Group, based in New Zealand, has sales in more than 140 countries and maintains extensive research and development and dairy technology. The U.S. based ConAgra Company is at the other extreme where it has limited geographic sales in its packaged food but has a diverse product portfolio. Its primary geographical market is North America. L

Local orientation would characterize Dean Foods (USA) and Meiji Dairies (Japan). They have limited product portfolios specializing in milk products. Despite their current local orientation many companies are striving for extending their geographical coverage. Meiji a leading dairy, ice cream, and baby food manufacturer for the Asia Pacific region is targeting South East Asia, where it has subsidiaries in Indonesia and Thailand. In Western Europe Arla Foods Amba is Europes largest dairy co-operative with a regional market orientation. However, Arla Foods is setting up a new Middle East subsidiary in the United Arab Emirates.

PepsiCo, another U.S. based company is continuously extending its geographical reach with its international marketing arm in snack foods focussing on Latin America, Eastern Europe and Asia. The Heinz Company is capitalizing on it brand strength and strong growth potential in Eastern Europe and Asia Pacific where it is building it presence through local acquisitions and joint ventures. Danone is developing stronger presence in Africa and the Middle East through investments in fresh dairy products and bakery products. Italys popular confectionery company Ferrero is expanding operations in North America, Australasia, Asia-Pacific and Eastern Europe. Geographic expansion will likely become the most important growth strategy in the future as the food demand outside of North America and Western Europe grow with faster growth in incomes

and population. Latin America and Asia are regions where U.S. and European-based firms are trying to establish themselves for the future growth.

There are certain forces resisting further acquisition and the drive for diversification. In some cases, a firm may choose to limit it self, or in other cases the legal environment may restrain firm activities in specific markets. Firms must constantly evaluate whether there is a good fit between their inherent strengths and the new opportunities that lie ahead. Diversifying a firms product portfolio may reduce marketing focus and prevent the firm from achieving economies of scale.

Multinationals have not gained a strong foothold in all regions of the world. Local firms hold leading positions in certain regional markets. In such cases firms may have a greater identity with consumers and the general public. This is noticeable in Northern Europe and East Asia. In Scandinavian countries Danish and Swedish firms hold the top positions (table 5). There seems to be support for locally owned and managed companies among the East Asian countries of Japan, South Korea, and China. For example Koreas top four food manufacturing firms (Lotte, Nong Shim, Namy Dairy Products, and Cheil Jedang) are nationally owned companies. In sharp contrast, Brazils leading manufacturing firms are all European based multinationals (Nestl, Unilever, Pamalat, and Danone). Lack of domestic capital is one reason for greater foreign investment but many laws still prevent foreign control of domestic assets.

Aggregate concentration by region There are wide variations in firm concentration ratios within geographic regions. How concentration is calculated can matter in some cases. For example the CR4 ratio for Western

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Europe, treating the regional as an aggregate, is 12.2. In contrast, the simple average CR4 using all individual countries in Western Europe is 22, with a range from 39.8 to 11.8 (listed in table 6). Northern European countries, Denmark, Finland, Norway and Sweden, all have CR4 ratios above 27. Many national food manufacturers make up the leading firms in these countries such as, Arla Amba Foods, Danish Crown Amba, Tine, Norske Meireier, and Valio Oy. The rest of Western Europe is less concentrated. In these other countries, multinational such as Nestl, Unilever, Danone, and Kaft share the packaged food market more evenly with national companies. Germany, France, Italy, and the United Kingdom all have CR4s below 19. Eastern Europe is the least concentrated region in the world with an aggregate CR4 ratio of 6 and a simple average CR4 for individual countries of 13, ranging from 5.4 in Russia to 20 in Hungary. In this region, the leading four firms are nearly exclusively national firms and with no single firm having a share above 7 percent.

The structure for packaged food sales in North America is closer to that of the largest Western European countries. Canada and the United States both have CR4 ratios both of 19 percent. Kraft Foods is the leading firm in both countries, but is the only common firm in the top four. As in many industrialized countries, each have their own national firms, such as Maple Leaf Foods in Canada and ConAgra Foods in the United States which share their respected markets with other multinationals. In contrast to North America, Australia and New Zealand have very different market structures. New Zealand is the most concentrated with a CR4 ratio of 44.1. In this case, concentration is largely accounted by New Zealands biggest firm, Fonterra, having a dominant position (22 percent) in New Zealands total packaged food sales. In Australia, Nestl is the leading firm with only 6 percent of packaged food sales.

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Asia Pacific and Latin America have wide variations in firm concentration across individual countries. In these regions, countries with more multinationals in leading positions tend to have higher concentration levels. South East Asian countries have higher concentration levels than East Asian countries, where multinationals are noticeable absent from in the top four positions. In Latin American countries, however, Nestl, Unilever and Parmalat are pervasive throughout the region.

Importance of concentration in product markets The global size of firms and widening disparity in the size of firms is inevitable as the global food industry evolves. But differences in the relative size of firms is not itself directly related to concentration, rather the degree of control firms possess in individual product markets is of more importance. The tendency for firms to specialize in specific product categories by acquiring brands and obtaining exclusive rights to retail channels raises questions regarding concentration levels.

Aggregate industry level data is often too broad to reflect a true economic market. Industrial organization economists have traditionally defined markets as a break in the distinct chain of substitutes that exist for an array of products. They are primarily concerned with the extent to which consumers differentiate substitute products. Industry classifications are based on similarity of production technologies and major inputs purchased. The problem is that many products within the industry may not be substitutes in consumption. Other market definition problems are caused by differences in the geographic scope of product markets. Food industries

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in particular often are comprised of local and regional markets. The relevant market becomes more local as one moves down the distribution channel towards consumers (Cotterill 2003).

Which company acquires another has implications for how concentration changes in specific markets. The U.S. confectionery industry comprises individual product markets where concentration could become a concern to regulators if further acquisitions were to take place in the future. Wrigley and Pfizer are the largest firms in the U.S. gum market, whereas Hershey, Mars, and Nestl are major suppliers of chocolate confectionery products. If Nestl had acquired in Hershey, concentration would have increased in the U.S. chocolate confectionery market, as Nestl share would have increased from 6 percent to 38 percent. However if Wrigley had acquired Hershey, concentration in chocolate confectionery would not have increased. Wrigley is not a supplier of chocolate products to the U.S. market, so concentration in the chocolate market would remain unchanged. On the other hand, the U.S. gum market would become more concentrated. The reason is that Wrigley would have acquired Hersheys share of the U.S. gum market (12 percent), add to its current share (43 percent) of U.S. market. Thus, concern over concentration may differ under each acquisition scenario due to specificity of the products involved.

As described earlier, Nestl has extensive sales throughout the world and across many product categories, making it the leading food manufacturer in the world. But, one can hardly say that the global food industry is concentrated with Nestl having only a 3 percent share of world food. A very different story emerges by progressing from the aggregate level to individual country and product specific markets (table 8). Market dominance becomes more evident in core categories

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of the firm in individual countries. Nestl shares at the regional level for total packaged food ranges from 1.3 percent in Asia Pacific to 6.3 percent in Latin America. At the product level in its core categories, its global share ranges from 25.7 percent in pet food to 0.5 percent in bakery products. But for these same product categories, its shares increase considerably in individual regions and countries. While Nestl holds 6.3 percent share of the Latin American packaged food market, it commands a substantially higher share of the baby food products in Latin America (60.7 percent). And at the sub-product level, Nestl has near-monopoly control (91.2 percent) in infant milk-based formula market in Brazil. Similar examples are evident for other core categories, including chocolate confectionery in the U.K (24.6 percent), dehydrated soup in Russia (58.9 percent), cat food in the United States (40 percent), milk in the Philippines (48.3 percent), and cookies in Israel (42.3 percent).

With local brand ownership of foreign firms consumers are sometimes unaware they are purchasing products from a multinational company. For example, the top-three baby food brands in Brazil (Mucilon, Nan, and Nestogeno, and Neston) are brands owned by Nestl. It is Nestl local brand ownership that gives it strong presence in the Brazilian baby food market. Gerber a global brand owned by Novartis accounts, for only 1 percent of this market.

The next example of firm dominance is Unilever. It is a very large and diverse global food manufacturer but with a different mix of product categories than Nestl (table 9). Similar to Nestl it has does not have a dominate position in any particular region (4 percent in Western Europe and 1 percent in Asia Pacific). But at the global-product level, its core products have noticeably higher shares ranging from 39 percent in meal replacement drinks to 7 percent in

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spreads. It has a dominant position in Austrian ice cream market (60 percent) and a nearmonopoly control (81 percent) in the sub-product category of impulse ice cream.

A weak position at the regional level does not leave the door shut for attaining a strong position in a specific country market in the same region. This is the case oils and fats in the Asia Pacific region, where it has a weak overall presence (4.4 percent). However, in Indonesia Unilever controls more than a third of the countrys oil and fats product category, with 84 percent of the spreadable oils and fats. It achieves this high share through a single brand (Blue Brand) in the e oils and fats. This type of single brand market penetration is seen elsewhere where it achieved high market shares with its Slim Fast (meal replacement drink) in the United States, Knorr (soup) in Poland, and Hellmans (Ketchup) in Argentina.

At the global level, sales concentration using the four-firm concentration ratio reveals wide differences. As a result of previous brand acquisitions by leading firms, certain products are becoming increasingly dominated by fewer firms. Pet food, soups, breakfast food, and baby foods have concentration ratio of greater than 50 percent. For example the CR4 ratio for global pet food is 63, with Nestl alone accounting for 26 percent of global pet foods sales. Evidently there is strong incentives among leading food firms to acquire high-margin premium brands in this product category. The same can be seen in soups and baby foods. In baby foods, global brands such as Enfamil, Gerber, and Similac account for 70 percent of world sales. For soup, Campbells, Knorr, Maggi, and Progresso brands account for nearly 60 percent of the global soup sales.

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At the regional level, there are differences in concentration within each product category. For example, breakfast cereals in Latin America have the highest level of concentration (CR4 = 91), while Eastern Europe is much lower (CR4 = 42). In many cases the level of concentration will depend on a single firm with a dominant position. In Latin America Kelloggs has a dominant position, with over 40 percent of sales compared with only 5 percent Eastern Europe. Multinationals can have territorial specialization leading to high concentration in selected regions. This is illustrated in the case of baby food where the CR4 ratio is 39 in Asia Pacific but 93 in Australasia. The reason for this is that Heinz has a dominant position with 50 percent of baby food sales in Australisia but has little or no baby food sales in Asia Pacific. This is also true in confectionery but with Cadbury Schweppes dominating the Australisia region while having only a minor presence in Asia Pacific. There appears to be a tendency for firms to be territorial in many cases.

Summary In the global food manufacturing industry most firms operate in regional markets with few large companies having a truly global geographic reach. The world food industry is made up of many types of firms that specialize in product and regional markets. Both local and global brands help firms penetrate foreign markets and enter retailer channels, but products and brands are often tailored to specific markets to compete with national firms. Large firms are better able to manage brands with international appeal, giving them extensive geographical reach in sales such as Kraft Foods, Nestl, and Unilever. There is not a clear tendency for firms to continue to expand by diversifying their product portfolios. Rather many firms specialize in core product categories. This is what leads to more concentrated regional markets.

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Wide differences in concentration levels can be found across countries even within the same region. This is most evident in Western Europe and Asia Pacific. Aggregate sales concentration is highest in Latin America, Australasia and lowest in Asia Pacific and Eastern Europe. High concentration is observed where both national and transnational firms are present. There is stronger tendency for firms, large and small, to focus on specific core categories. Brand acquisition will likely be an important strategy for firms to enter new markets. In some cases this can lead to a single-firm achieving a dominant position.

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References Connor, J.M., R. T. Rogers, B.W. Marion, and W.F. Mueller. (1985) The Food Manufacturing Industries: Structure, Strategies, Performance and Policies. Lexington Massachusetts: D.C. Health and Company. Cotterill, W. Ronald (1999) Continuing Concentration in Food Industries Globally: Strategic Challenges to an Unstable Status Quo Food Marketing Policy Center, Research Report No. 49, University of Connecticut. Cotterill, W. Ronald (2003) Perspectives on Global Concentration and Public Policy workshop on Global Markets for High-Value Food, February 14 2003 at U.S. Department of Agriculture Economic Research Service. Grievink, Jan-Willem, Lia Josten, and Conny Valk (2002) State of the Art in Food: The Changing Face of the Worldwide Food Industry, Elsevier Business Information. Rogers, R.T, (2001) Structural Change in the U.S. Food Manufacturing, 1958-1997 Agribusiness, Vol. 17 (1) Scherer, F.M. and D. Ross,(1990). Industrial Market Structure and Economic Performance (3rd ed.) Boston: Houghton Mifflin Company.

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Table 1. Leading 50 food manufacturing firms in packaged food sales worldwide Sales Rank Company name Country origin Firm sales in packaged food percent 1 Nestle Switzerland 51.7 2 Kraft Foods USA 30.4 3 Unilever UK/Netherlands 50.2 4 PepsiCo USA 61.2 5 Danone France 73.9 6 Mars USA 50.4 7 Kellogg USA 97.7 8 ConAgra Foods USA 81.0 9 Heinz Co USA 58.2 10 Campbell Soup USA 90.4 11 General Mills USA 87.1 12 Dean Foods USA 100.0 13 Hershey Foods USA 99.0 14 Parmalat Italy 66.3 15 Cadbury Schweppes UK 43.9 16 Ferrero SpA Italy 100.0 17 Bimbo Mexico 96.0 18 Meiji Dairies Corp Japan 86.6 19 Morinaga Milk Industry Japan na 20 Sara Lee USA 28.6 21 Yamazaki Baking Co Japan 92.9 22 Lotte Group South Korea 100.0 23 Wrigle Jr Co USA 100.0 24 Arla Foods Amba Denmark 94.2 25 Snow Brand Milk Products Japan 90.0 26 Sodiaal SA France 89.3 27 Pfizer Inc USA 6.3 28 George Weston Ltd Australia na 29 Nissin Food Products Co Japan 100.0 30 Barilla G. R Flli SpA Italy 100.0 31 Interstate Bakeries Corp USA 100.0 32 Procter & Gamble Co USA 10.5 33 Bristol-Myers Squibb Co USA 9.8 34 Lactalis, Groupe France 85.5 35 Ezaki Glico Co Ltd Japan na 36 Fonterra Co-operative Group New Zealand 40.1 37 Hormel Foods Corp USA 79.3 38 United Biscuits (Holding) Plc. Belgium na 39 Ajinomoto Co Inc. Japan na 40 Bongrain SA France na 41 Abbott Laboratories Inc USA 7.1 42 Perfetti Van Melle Group Italy 100.0 43 Orkla Group Norway 28.8 44 Morinaga & Co Japan na 45 Del Monte Foods Co USA 78.6 46 Friesland Coberco Dairy Foods Netherlands na 47 Tine Norske Meierier BA Norway na 48 Meiji Seika Kaisha Ltd Japan 65.4 49 SanCor Cooperatives Unidas Argentina na 50 Ting Hsin International Group China na Source: Euromonitor International

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Table 2. Share of global sales in U.S. and Western Europe by product category USA Western Europe Rest of World percent of global sales Bakery products 25 33 42 Dairy products 22 35 43 Chilled foods 14 29 57 Confectionery 25 34 42 Dried food 14 11 75 Frozen food 37 32 31 Canned food 28 24 48 Sauces, condiments 23 19 58 Snack foods 39 18 43 Oils and fats 10 28 62 Ice cream 29 29 41 Ready meals 40 33 27 Pet food 38 30 31 Noodles 8 2 90 Baby food 31 25 43 Pasta 16 37 47 Spreads 23 34 43 Soup 42 25 33 Meal replacement drinks 66 11 22 Packaged Food 24 29 47 Source: Euromonitor International, product categories are defined by Euromonitor consistently across all regions

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Table 3. Examples of important brands in core product categories for selected companies Nestl Unilever ConAgra Baby food Carnation Oils and fats Rama Oils and fats Nan Mazola Lactogen Flora Cerelac I Can't Believe Its Not Butter! Alete Bertolli Nido Becel Nestogen Country Crock Confectionery KitKat Smarties After Eight Butterfinger Crunch Ice cream Soups Knorr Lipton Unox Findus Contenental Magnum Breyer's Algida Cornetto Ben and Jerry's Klondike Spreads

Wesson Parkay Pam Fleishchmann's

Peter Pan Knotts Berry Farm

Haagen-Dazs Ice cream Nestle Frigor Drumstick Ice Screamers Camy Stouffers Maggi Buitononi Tivaul La Cocinera

Snacks

Orville Redenbacker's Slim Jim Pennican Crunch 'n' Munch Super Slim Act II Healthy Choice Chef Boyardee Banquet Marie Callender's Libby's

Ready meals

Replacement drinks Slim fast Slim fit

Ready meals

Source: Euromonitor International

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Table 4. Firm aggregate sales share in packaged food in regions and world W.Europe Nestl 4 Kraft Foods 1.5 Unilever 4.3 PepsiCo 0.6 Danone 2.4 Mars 1.4 Kellogg 0.5 ConAgra Foods 0 Heinz 0.8 Campbell Soup 0.3 General Mills 0.1 Dean Foods Hershey Foods Parmalat 0.4 Cadbury Schweppes 1 Ferrero SpA 1.2 Bimbo Meiji Dairies Corp Morinaga Milk Industry Sara Lee Yamazaki Baking Co Lotte Group Wrigle Jr Co 0.4 Arla Foods Amba 1.1 Snow Brand Milk Products Sodiaal SA 0.5 Pfizer Inc 0.1 George Weston Ltd Nissin Food Products Co Barilla G. R Flli SpA 0.7 Interstate Bakeries Corp Procter & Gamble Co 0.2 Bristol-Myers Squibb Co Lactalis, Groupe 0.6 Ezaki Glico Co Ltd Fonterra Co-operative Group 0.1 Hormel Foods Corp United Biscuits (Holding) Plc. 0.6 Ajinomoto Co Inc. Bongrain SA 0.4 Abbott Laboratories Inc Perfetti Van Melle Group 0.3 Orkla Group 0.5 Morinaga & Co Del Monte Foods Co 0.2 Friesland Coberco Dairy Foods Tine Norske Meierier BA 0.5 Meiji Seika Kaisha Ltd SanCor Cooperatives Unidas Ting Hsin International Group Top 50 firm total 24.7 Source: Euromonitor International E.Europe 2.3 1 1.4 0.3 1.3 0.7 0 0 0.3 N. America sales share (%) 2.3 7.8 2.7 4.6 0.4 2 2.2 3 1.5 2.1 2.3 2.5 2.2 0.4 0.2 Latin America 6.3 2.4 3.6 4.3 2.8 0.8 0.3 0.1 0.2 0.2 2.8 0.2 3.4 1.8 1.7 1.1 0.1 1.5 1.5 0.2 1.7 0.4 0.4 1.1 0.1 1 0.5 0.7 0.2 0.7 0.7 0.8 0.4 0.6 0.2 0.2 0.7 0.5 0.3 0.2 0.2 0.7 1.4 11.1 41.9 32.8 0.6 17.8 0.3 0.9 0.1 0.2 0.1 0.1 0.1 1 0.5 1.2 Asia Pacific 1.3 0.6 0.9 0.2 0.4 0.2 World 3.2 3 2.7 1.9 1.4 1.1 0.9 0.8 0.8 0.7 0.7 0.6 0.6 0.6 0.6 0.5 0.4 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 28.3

0.2 0.2

0.2

0.3

0.4

0.4

0.5

0.1 0.1

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Table 5. Leading four firms in packaged food sales by individual country Country Firm 1 Firm 2 Firm 3 Argentina Danone SanCor Cooperative Nestle Australia Nestl Goodman Fielder Cadbury Schweppes Austria Unilever Benalandmilch Kraft Foods Belgium Danone Unilever Nestle Brazil Nestl Unilever Pamalat Bulgaria Obedinena Kraft Foods Boni Oborot Canada Kraft Foods Saputo Maple Leaf Foods Chile Nestl Soprole Unilever China Ting Hsin Uni-President Long Fong Colombia Alpina Nestle Parmalat Czech Republic Nestl Hame Danone Denmark Arla Foods Amba Danish Crown Amba Unilever Egypt Nestl Cadbury Scheppes Salvala Finland Valio Oy Fazer Oy Ingman Foods France Danone Nestl Lactilis Germany Unilever Nestle Ferrero Greece Philippou Chipita Unilever Hong Kong Nestl Garden Golden Resources Hungary Pick Szeged Unilever Friesland Coberco India Gujarat Cooperative Unilever Danone Indonesia Indofood Sukes Nestl Unilever Ireland Unilever Glanbia Cadbury Schweppes Israel Tnuva Central Co-op Nestl Vadash Italy Barilla Unilever Nestl Japan Meiji Dairies Morinaga Yamazki Baking Malaysia Nestl Friesland Coberco Jasmine Food Mexico PepsiCo Bimbo Nestl Morocco Centrale Laitier Montedison Indusalim Netherlands Unilever Campina Mekunia Friesland Coberco New Zealand Fonterra Goodman Fielder Heinz Norway Tine Norske Meirerier Orkla Kraft Foods Phippines Nestl San Miquel JG Summit Poland Unilever Danone Nestle Portugal Unilever Nestle Fonterra Romania Napolact Topway Prodlacta Russia Cherkizovo Nestl Wimm Bill Dann Saudi Arabia Nestl Al Marai Danone Singapore QAF Nestle Faser Neavel Slovakia Nom Ag Henkel Nestl South Africa Tiger Brands Unilever Nestl South Korea Lotte Nong Shim Namyang Dairy Spain Danone Nestl Sos Arana Sweden Arla Foods Amba Orkla Unilever Switzerland Migros Nestle Unilever Taiwan Uni-President Wei Chuan Foods I-Mei Foods Thailand Nestle Saha Pathana Friesland Coberco Turkey Ulker Gida Unilever Nestle Ukraine Shepetovsky Cherkasskaya Keivsky United Kingdom Unilever Cadbury Scheppes Mars USA Kraft Foods PepsiCo ConAgra Venezuela Empresas Polar Cargil Parmalat Vietnam Haihaco Kinh Do23 Generics Source: Euromonitor International, with abbreviated company names Firm 4 Ancor Campbell Soup Ferrero Kraft Foods Danone Nestl Parmalat Empresas Carozzi Hai Pa Wang Productos Naturales Unilever Toms Fabrikker Hayed Saeed Unilever Unilever Kraft Foods Friesland Coberco Nissen Parmalat GlaxoSmithKline Friesland Coberco Kerry Strauss-Elite Ferrero Snow Brand Milk Yep Hiap Seng Ganaderos Margarinerie United Biscuits Danone Nestl Unilever Cadbury Schweppes Nutrinvest Kraft Foods Babayevsky Abdul-Kadir Kraft Foods Kraft Foods Danone Cheil Jedang Unilever Spira AB Chocoladefabriken Kraft Foods Unilever Eti Gida Kamenents Nestl Dean Foods Kraft Foods Vietnam Dairy

Table 6. Four-firm concentration ratio in aggregate packaged food sales of individual countries Country Region Four-firm concentration (CR4) Israel Africa and Middle East 43.4 South Africa Africa and Middle East 33.2 Morocco Africa and Middle East 31 Saudi Arabia Africa and Middle East 20.1 Egypt Africa and Middle East 9.4 Phippines Asia Pacific 27.7 Malaysia Asia Pacific 26.9 Indonesia Asia Pacific 25.2 Hong Kong Asia Pacific 23.3 South Korea Asia Pacific 21.5 Thailand Asia Pacific 19.8 Singapore Asia Pacific 17.6 India Asia Pacific 17.2 Taiwan Asia Pacific 15.1 Vietnam Asia Pacific 13.7 China Asia Pacific 10.1 Japan Asia Pacific 10.1 New Zealand Australasia 44.1 Australia Australasia 21.7 Hungary Eastern Europe 20.1 Czech Republic Eastern Europe 19.8 Slovakia Eastern Europe 16.5 Ukraine Eastern Europe 15.9 Poland Eastern Europe 12.1 Bulgaria Eastern Europe 11.2 Romania Eastern Europe 7.2 Russia Eastern Europe 5.4 Venezuela Latin America 35 Argentina Latin America 31.6 Chile Latin America 29.9 Colombia Latin America 28.1 Mexico Latin America 26.3 Brazil Latin America 18.5 Canada North America 19.1 USA North America 18.5 Norway Western Europe 39.8 Finland Western Europe 37.1 Portugal Western Europe 33.5 Ireland Western Europe 29.3 Denmark Western Europe 27.3 Sweden Western Europe 27.3 Austria Western Europe 18.7 France Western Europe 18.7 Switzerland Western Europe 17.8 Belgium Western Europe 17.6 Spain Western Europe 16.7 Greece Western Europe 16.3 United Kingdom Western Europe 16.3 Netherlands Western Europe 16 Turkey Western Europe 15.5 Germany Western Europe 13.7 Italy Western Europe 11.8 Source: Euromonitor International 24

Table 7. Global sales share of top 5 food companies by product category Nestl Kraft Unilever PepsiCo sales share (%) Confectionery 9.0 5.6 Bakery Products 0.5 3.0 1.0 1.2 Ice cream 8.9 0.1 19.3 Dairy Products 4.4 3.7 0.3 Savory Snacks 0.1 3.0 32.4 Snack bars 3.1 4.0 5.7 9.9 Meal replacement drinks 0.2 38.7 Ready meals 9.7 5.7 3.0 0.2 Soup 6.9 0.2 17.3 Pasta 4.6 3.1 0.1 0.4 Noodles 1.3 0.4 1.3 Canned food 0.7 0.6 1.1 0.4 Frozen food 6.1 2.6 4.2 Dried food 2.3 3.2 3.3 0.2 Chilled food 0.9 2.6 0.2 Oils and fats 0.3 0.4 13.4 Sauces, dressings, condiments 3.0 4.3 10.7 0.8 Baby food 16.9 0.2 0.2 0.1 Spreads 0.6 2.2 7.1 Dog and cat food 25.7 0.5 Source: Euromonitor International

Danone

Mars 9.4

1.7 0.2 4.8 0.3 1.3

1.9 0.3 1.7 0.8

0.4 0.8 0.6 0.7 2.6 0.2

0.7 0.4 24.0

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Table 8. Firm sales share at regional, country, and product levels: The case of Nestl Global Market share % Region Market share % W. Europe (4.0) E. Europe (2.3) Packaged Food (3.2 %) N. America (2.3) Latin America (6.3) Asia Pacific (1.3) Africa and Middle East (5.8)

Global Product category Market share %

Confectionery (9.0)

Soup (17.3)

Pet food (25.7)

Baby Food (13.0)

Dairy Products (4.4)

Bakery Products (0.5)

Region Product category Market share %

W.Europe Confectionery (12.5)

E. Europe Soup (25.7)

N. America Pet food (30.7)

Latin America Baby Food (60.7)

Asia Pacific Dairy Products (5.2)

Africa and Middle East Bakery Products (1.5)

Country Product category Market share %

U.K Confectionery (20.2)

Slovakia Soup (52.5)

USA Pet Food (31.0)

Brazil Baby food (82.4)

Philippines Dairy Products (37.2)

Israel Bakery Products (8.0)

Country U.K. subproduct category Chocolate Market share % (24.6) Source: Euromonitor International

Russia Dehydrated soup (58.9)

USA Cat Food (40.0)

Brazil Milk formula (91.2)

Philippines Milk (48.3)

Israel Biscuits (42.4)

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Table 9. Firm sales share at regional, country, and product levels: The case of Unilever Global Market share % Regional Market share % Global Product category Market share % W. Europe (4.2) E. Europe (1.4) Packaged Food (2.7) N America (2.7) Latin America (3.6) Asia Pacific (0.9) Africa and Middle East (3.0)

Ice cream (19.3)

Soup (32.9)

Replacement drinks Sauces and Condiments (38.7) (10.7)

Oils and Fats (13.4)

Spreads (7.1)

Region Product category Market share %

W.Europe Ice cream (30.5)

E. Europe Soup (25.7)

N. America Latin America Replacement drinks Sauces and Condiments (49.9) (32.6)

Asia Pacific Oils and Fats (4.4)

Africa and Middle East Spreads (22.0)

Country Product category Market share %

Austria Ice cream (59.6)

Poland Soup (38.4)

USA Argentina Replacement drinks Sauces and Condiments (50.1) (43.0)

Indonesia Oils and Fats (37.2)

South Africa Spreads (46.6)

Country Austria Product Ice cream Subproduct Impulse Market share % (81.2) Source: Euromonitor International

Poland Soup Instant (76.5)

USA Argentina Replacement drinks Sauces and Condiments Slimming drinks Ketchup (79.1) (76.8)

Indonesia Oils and Fats Spreadables (83.9)

South Africa Spreads Yeast-based spreads (94.9)

Table 10. Four-Firm Concentration (CR4) by product category and region Pet food Soups Breakfast Cereal CR4 Western Europe 67.9 64 61.7 Eastern Europe 79.4 65.8 41.8 North America 62.7 73.3 78.3 Latin America 63.4 87.5 90.6 Asia Pacific 49.9 56.1 73.9 Australasia 75.1 88.5 89 Africa Middle East 60.3 88.1 60.8 Source: Euromonitor International

Baby food 65.6 46.2 89.8 75.9 38.7 93 67.5

Confectionery 38.4 33.4 51.2 42.2 26 79.1 36.4

Cheese 14.4 21.2 41.6 17.7 50.9 56.6 30.9

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