Scope for food manufacturers in Latin America

Citation

(2009), "Scope for food manufacturers in Latin America", Strategic Direction, Vol. 25 No. 9. https://doi.org/10.1108/sd.2009.05625iab.001

Scope for food manufacturers in Latin America

Article Type: Competitive horizon From: Strategic Direction, Volume 25, Issue 9

A market report carried out by Leatherhead Food International claims that investment opportunities exist for food companies within Latin American nations. Several major food and beverage organizations are already expanding operations throughout the region as a means to sustain profit levels, attract new customers and lower manufacturing costs. According to the research organization, difficult trading conditions within recessionary hit markets like Europe and America furthers the attraction of targeting less-developed countries. Ready meals, beer and soft drinks, pizza and dairy foods like yoghurts and ice cream have been identified as products likely to offer significant growth opportunities. A shift towards more contemporary tastes of a predominantly urban consumer base in Latin America that is growing younger and more sophisticated is cited as influencing demand. The report, as published by Food Navigator (www.foodnavigator.com), identifies Brazil as a potentially key market for both exports and domestic sales to its sizeable urban population whose wealth is increasing. Statistics indicating gross national income suggest Argentina, Chile and Mexico as other growth markets. In contrast, Venezuela is named as the only unattractive proposition in the region due largely to ongoing political interference within the business sector.

China seeks to boost exports through free trade agreement

With export revenues continuing to fall, the Chinese government is turning towards the free trade area (FTA) strategy to help domestic manufacturers reduce export costs. Ongoing economic challenges in Europe and the United States, China’s largest export markets, have prompted the decision in the hope to protect against further decline that began in November 2008. According to a report published by www.china.org.cn, nations and regions involved in the FTA are compelled to remove trade barriers and lower tariffs to stimulate business between each other. China began the process when signing an agreement with ASEAN in 2004 and now has eight FTAs in place with 16 countries and regions around the globe. The most recent of these is with Peru and China is hoping to form similar agreements with other nations that include Pakistan, Norway, Costa Rica and Chile. In 2008, bilateral trade with its FTA partners accounted for 20 percent of China’s total.

Counterfeit problem grows with economic slump

The global economic crisis has increased traffic in counterfeit products, a report published by the Independent (www.independent-bangladesh.com) claims. According to estimates from Asia Risk, worldwide black market sales of such as CDs, DVDs and medicines could rise to almost $1 trillion this year. The Hong Kong-based organization believes that around $800 billion was raised through the sales of fake goods in 2007 and points to the anticipated 20 percent increase in revenues as evidence that the problem is becoming greater. Demand for cheaper consumer goods is fuelling activity to the extent that trade in counterfeit products is significantly higher than for illegal drugs. The report also notes that global fear about a potentially lethal flu virus is likely to see the market swamped by fake medicines and vaccines that may pose a significant health risk to users. The World Health Organization (WHO) has already identified counterfeit treatments as a possible cause of a new malaria strain that has emerged within the Mekong area.

Games developers face EU legislation threat

A proposal by the EU Commission to update the EU Sales and Guarantees Directive could threaten games development in the future, according to a report published by the BBC (www.bbc.co.uk). Consumers receive a minimum two-year warranty period for tangible consumer goods that are movable and the Commission proposes extending this cover to include games software. However, the Business Software Alliance argues that consumers purchase a license rather than a tangible product and software should not therefore be subjected to the same regulations. At present retailers are under no obligation to provide refunds for games containing bugs or glitches and developers fear that changing this ruling could lead to consumers fraudulently returning games that have been completed. To counter this threat, developers will have to ensure their software is flawless on release and a major fear is that this could stifle the innovation that is essential to the games industry.