Friday, March 18, 2005
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.
Johnson & Johnson, the multinational healthcare and consumer products brand with a strong presence in India, has run into troubled waters because of its baby oil product, Johnson’s Baby Oil, as there have been no clinical trials to brand the product as a special baby product. The Maharashtra Food & Drug Administration, the apex body for food and drug products in the state, has served a notice on Johnson & Johnson for the same. The FDA may take legal action after 15 days if Johnson & Johnson doesn't take any corrective steps. Officials at Johnson & Johnson India confirmed that the company had received a communication from the FDA and that they are examinig the same to formulate the defence Johnson’s Baby Oil is a leading brand in the baby care segment of its business. The baby care market in India is estimated to be over Rs 200 crore. Johnson & Johnson is the market leader, with a share of almost 75%.