Replies to post #2414 on The Rising Influence of Rising Affluence

[DewDiligence]

In case you missed it (#msg-42162914):

If Proctor & Gamble were able to raise the per capita consumption of its products in China and India to merely the level of the per capita consumption of its products in Mexico, it would increase PG’s annual worldwide sales by 50% (about $40B of incremental revenue).

[DewDiligence]

Re: Brands in Emerging Markets

Further to your excellent post about the importance of brands, it’s worth noting that emerging markets generally have a 3-tier structure with wide disparities in prices between each tier:

• In the top tier are international brands, such as Heinz ketchup and Pampers. These products have sky-high profit margins for the simple reason that consumers are willing to pay. The emerging middle classes can afford to buy a few of these products, but not a lot of them.

• In the middle tier are regional brands, some of which are sold by the same multinational firms who sell the top-tier products. These products are affordable by intended to be affordable for the emerging middle classes.

• In the lowest tier are generics, which are made by local firms and are of plainly lower quality than the products in the higher tiers.

HNZ in particular has made a science out of the above kind of “trifurcation.”

p.s. #msg-51490876 is the iconic post on this subject, IMO.

[hogfan2]

ALN..is anothre way to play this shift in the chinese consumption habits....As long as raw material costs are kept under control ALN should have another great qtr...hog
http://seekingalpha.com/article/249909-the-long-case-for-american-lorain

[DewDiligence]

MCD Tests ‘McBaguette’

http://online.wsj.com/article/SB10001424052970204778604577241312286387028.html

›FEBRUARY 24, 2012
By MARION ISSARD

PARIS—McDonald's Corp. is adopting a thicker French accent.

In France the fast-food giant is gearing up to offer a burger served on baguette, part of a wider effort to add more locally inspired fare to its menu and attract more upscale diners.

For six weeks starting April 18, the 1,228 McDonald's restaurants across France will feature the McBaguette, with a burger made from France's famed Charolais beef. McDonald's said the burger will be topped with French-made Emmental cheese and mustard. It will replace the chain's current special offer here: three limited-edition burgers featuring locally produced cheeses.

The promotion is in line with the U.S. company's successful global strategy of updating its restaurants to appeal to a broader clientele, while offering a more varied menu, up and down the price scale. In France that involves tapping into a national obsession: bread.

France's national Bread Observatory, which studies and promotes bread, says the French each consume about 150 grams of it a day, or roughly 55 kilograms a year. Many of them eat it with most meals, viewing bread almost as an extension of the knife and fork in pushing food around on the plate. French research center Credoc found that 98% of French people eat bread every day.

In particular, they are major fans of the baguette. A recent study for the Sandwich and Snack trade fair in Paris showed that 65% of the two billion sandwiches sold each year in France are baguette-based.

Incorporating the baguette could support sales in McDonald's most-profitable market in Europe. "McDonald's is trying to diversify and is aiming at more traditional or older customers," said Yves Marin, a senior manager at consulting firm Kurt Salmon. "The company is willing to attract those who won't eat the Big Mac."

McDo—as the French call it—is trying to appeal to national culinary tastes elsewhere in Europe too. The company has devised around 20 locally tailored menu items in some 14 European countries, including Finland, where it offers the Rye McFeast, a burger served on a rye bun, and Spain, where it offers the tomato-based soup Gazpacho.

In Italy, McDonald's teamed up in October with Gualtiero Marchesi, the country's only three-star chef, to create three new recipes: two sandwiches and a dessert. It sold the sandwiches, called Adagio and Vivace, for €4.50 ($5.96) apiece and Minuetto, the dessert, for €2. The company said it has similar partnerships under way in Germany and Austria.

In France, McCafés already are serving slices of baguette for breakfast, as well as macarons, sweet meringue-based confections that are riding a popularity wave of their own during the day. Both products are supplied by Groupe Holder, owner of Ladurée and the Paul bakery chain.

McDonald's foray into baguette sandwiches could give it more pricing power. The McBaguette will be sold for €4.50, more than a euro above the average price of a sandwich in France and within the range of McDonald's premium burgers like the Big Tasty. McDonald's said it could introduce the baguette burger again if the initial six-week run is a success.

McDonald's now has to win the hearts and stomachs of French customers, who can be very picky when it comes to their pain. "It doesn't quite look like a baguette; a baguette isn't square. But I would give it a try," said one Parisian, who was shown a picture of the sandwich as she left a bakery. "It looks good, and much healthier than McDo's regular burger," another added.‹