Market overview

Supplying future market growth

Interview with Nan-Dirk Mulder

Associate Director and Senior Animal Protein Analyst, Food and Agriculture, Rabobank


How would you describe the future outlook for the animal protein markets?

The outlook for global animal protein markets is bright. Global demand is expected to grow by 45% in the next twenty years with poultry (+60%) and seafood (+42%) as the fastest growing species.

Chicken is hereby the best positioned product because of its price competitive position and the fact that it has limited cultural barriers, but also other proteins will benefit from the positive long-term fundamentals for the world animal protein markets.

What are the main drivers?

The main drivers for this growth are population growth (world population will grow by 1.2 billion people over this period), while also expected income growth will lead in emerging markets to substitution from vegetable based consumption patterns to protein based consumption patterns.

Where will the growth take place?

“Most protein growth is expected to happen in emerging markets. Around 75% of world meat demand growth is expected to be in emerging markets, especially in Asia.

Beside this volume growth, markets are expected to change fundamentally when incomes further increase. People move from buying products at traditional market places to supermarkets and restaurants. This trend is already very visible in markets like China, Russia, and Brazil and is expected to accelerate further in the next years.

Emerging markets like India and Africa will face similar developments in the next twenty years. This market change will have a tremendous impact on the value chain as industry needs to change their supply chain to be able to supply bigger volumes and higher quality products. This will lead to a further modernizing of supply chains with bigger companies.”

“In the slipstream of this market change, higher incomes will mean also an increasing demand for higher value products. Consumer patterns will move from low value to higher value products.

Live bird markets might disappear and sales of basic whole chicken products will decline as consumers move to a larger demand for further processed products. The importance of further processed meat industry is expected to increase under such circumstances.”

“In the short term, markets are currently affected by economic crisis, with a relatively better economic performance in emerging markets. Where consumption of meat in emerged markets is under pressure, growth in emerging markets is accelerating. Chicken is in these markets performing better than other proteins because of its price position.

The high end of the industries in these markets is now moving to modern, often Western, technology, whereby the mid-segment is using more mainstream technologies. The trend to further modernization will continue in line with modern distribution growth.”

“Industries in emerged markets like Europe and the United States will face limited growth; poultry markets will grow only moderately while red meat markets tend to decline.

Markets will move whereby consumer concerns like animal welfare, environment, and food safety will change industries. Companies need to protect their license to operate. Higher standards are demanded and the importance of local products will grow. Industries need to anticipate on this and invest in technologies which meet this changing market demand.”

“One of the main global challenges for the future is how to supply future market growth. Most growth, especially in Asia and the Middle East, will take place in areas with limited availability in resources like land and water. This will mean that companies from these regions will increasingly need to consider how to supply future growth.

The two options they have are: a further modernization of the industry; and/or securing supply via internationalization. Both routes are currently followed and create potential win-wins between industries from different regions. Companies from grain-surplus countries and from areas lacking growth like U.S. and EU need new growth sources and Asia could offer this.”

Nan-Dirk Mulder is an Associate Director and Senior Animal Protein Analyst, Food and Agriculture at Rabobank. Mulder advises on global commitments in the animal protein sectors.

He has also been involved in Rabobank's many advisory and research activities in these sectors and has built up an in-depth knowledge about strategic issues in these industries.

Mulder has advised and participated in projects on all continents of the world, and is a regular speaker at conferences and seminars all over the world.

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