Friday, March 18, 2005

US Food Companies eye India and China

Emerging markets like China and India are likely to fuel overseas expansion of U.S. food companies and restaurants, but industry executives and analysts say they also pose numerous challenges that could make any forays costly. Addressing the Reuters Food Summit, two of the largest U.S food companies brands like Kraft Foods Inc. and cereal maker Kellogg Co., expressed optimism about growth prospects of various emerging markets. But at the same time, expansion into these markets will present many unique short-term challenges due to rising business costs amid a weaker dollar and a lack of critical infrastructure in some of these places. Commenting on China, Scott Dahnke, managing partner at private equity firm Catterton Partners, said the world's most populous country was so far a very difficult market to crack, but is so big it just couldn't be ignored. "It's a difficult place ... in addition to the fact many folks are concerned about trademarks and branding. It's relatively an expensive place to play today," he told the summit. He said Catterton would be working with several executives to devise ways to understand the Chinese market through a conference planned for this summer. Even though U.S. food companies and restaurant companies are still heavily focused on increasing U.S. market share, they have also set their sights on developing markets whose growth would augment slower U.S. demand.