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The Balance Tips Toward High-Value Consumer Foods
As the harvest season gives way to winter, fields may lie fallow, but today’s exporters find themselves busier than ever, keeping up with the changing pace of U.S. agricultural trade.
This year, for the first time, the value and percentage share of U.S. consumer food and beverage exports will surpass that of bulk commodities. The percentage share of U.S. consumer food exports has grown from 15 percent 15 years ago to 40 percent today.
In value terms, these exports have quadrupled in the same time frame, from $4.8 billion to an estimated $19.5 billion. We expect this trend to continue.
The total export pie grew from $31 billion in 1985 to an expected $49 billion in 1999.
Consumer foods include a lot more than just snack foods and cereals–including everything from dairy, livestock and poultry products to horticultural, tropical and fish products: steaks, ice cream, broccoli, french fries, pistachios and salmon.
Why have these exports met with such success over the last decade or so? Mainly, because demand-driven consumer spending is increasing throughout the globe.
With increased purchasing power, consumer food purchasing decisions are driven by the same desires worldwide: demand for convenience foods, including home meal replacements, safe and healthy foods, and organic foods. U.S. processors are world leaders in variety and innovation to satisfy the ever-changing demand for new products.
It’s also a time when structural changes are occurring in the world’s retailing operations. Supermarkets, especially those in Europe, are rapidly expanding to meet this demand by opening new outlets worldwide and merging into a powerful handful of global chains with large market shares. The changes in the last five to ten years have been phenomenal.
In northern Europe, where the supermarket industry is one of the most developed in the world, the top five supermarket chains in any one country account for up to 95 percent of the total supermarket sales.
Supermarket suppliers are concentrating and globalizing as well. Global suppliers and retailers can offer the economies and efficiencies of scale that attract a wide range of consumers to shop in supermarkets.
U.S. exporters need to understand who the players are and how they operate in order to make sales. For example, how does the U.S. exporter supply product to the 715 WalMart outlets outside of the United States or do business with Ito-Yokado of Japan, owner of 17,000 7-Eleven stores worldwide? We need to promote U.S. products well to make sure they end up on the supermarket shelves not only in Europe but also in Latin America, Asia, the Middle East and the rest of the world.
Clearly, supermarket industry globalization has significant implications for the Foreign Agricultural Service’s market strategies for 70 offices overseas, as well as for our industry partners and U.S. food manufacturers and exporters.
In response, we are revamping the market information reports from our overseas offices to provide the U.S. exporter with the information necessary to understand the new distribution channels, know the key players and identify specific market and product opportunities.
Tim Galvin
Administrator, Foreign Agricultural Service
U.S. Department of Agriculture
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