Josh Sosland: Exploring emerging markets
BakingBusiness.com, February 22, 2010
by Josh Sosland

It was more than five years ago that PepsiCo, Inc. gave grain-based foods something to ponder when disclosing that for the first time ever its international business had become its largest division, eclipsing snacks, beverage and foods units. Even before that time, it was clear that PepsiCo and other industry players were devoting ever greater resources to tap into markets globally.

The degree to which these seedlings have blossomed was brought into focus by several developments in recent days.

Announcing 2009 earnings at Kraft Foods Inc., Irene Rosenfeld, the company’s chief executive officer, said more than half the company’s business is now from outside North America with a quarter coming from developing countries. A few days later, executives from both General Mills, Inc. and Kellogg Co. each described for investment analysts at a major annual conference how their respective companies have expanded internationally and were poised for further growth.

A General Mills executive described Cereal Partners Worldwide, its joint venture with Nestle, as “one of the biggest and best new food companies created in the past 20 years” with sales totaling $2 billion and 11% compound sales growth over the last several years.

Kellogg believes Turkey and Russia offer extraordinary opportunity for growth and is determined to make inroads in China as well.

In contrast to this focused, committed approach to investment worldwide, U.S. baking’s ventures abroad have been far more limited and episodic. The industry’s companies could benefit greatly from exploring how to parlay their extraordinary expertise into emerging markets around the world ripe for growth.