Developing Processed Foods for Emerging Economies

Indian woman carrying water bucket on her head

Water scarcity is an issue in many emerging economies. Developing bottled beverages for these markets will present unique challenges.

I was watching an interview with Indra Nooyi, CEO and President of PepsiCo on CNBC yesterday. Like many other consumer goods companies, the food industry has focused a great deal of attention on potential market opportunities in emerging economies. However, the program relayed solemn reminders that producing and marketing packaged consumer foods and beverages to relatively poor and populous nations cannot be “business as usual.”

A recent United Nation report predicted that in 2030 or perhaps even earlier, India will surpass China (excluding Hong Kong) as the most populated country on the planet. The two countries will “meet” at a population of about 1.45 billion people each.

The CNBC program went on to say that bottled beverage companies are being criticized in that they are encouraging the consumption of a product that requires the use of a scare and thus valuable commodity in its manufacturer…water. That is, more than one liter of water is required to produce one liter of a soda. Nooyi replied something along the lines that she understood the concern in that she grew up in one of the most water-deprived region of India. She told the story that everyone would be rationed “three buckets” of water and they would have to decide how to use it…to drink it, launder clothes with it, bath in it. Even today if she took a shower more than two or three minutes, she fought feelings of guilt.

Should food manufacturers thus not pursue such markets? I myself believe that responsible companies will find a way to serve consumers while developing innovative ways to maximize and not squander scare resources. When I worked for Orval Kent Foods, we had plants with similar equipment making the same products in New Jersey, Chicago and the Los Angeles area. The Los Angeles plant, however, used a fraction of the water that the other the plants did. Water was and is scarce in California. Cleaning regimes and other plant practices had evolved to do more with less.

The need to find innovative ways to maximize scare resources should not be a burden,  but a creative challenge for which both companies and their customers will be rewarded.

Posted on:January 3, 2012

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