A shift in global economic power is transforming business and society as countries such as China and India challenge traditional strongholds. In high growth markets, consumer demand continues to rise as increasing numbers of people move from rural to urban areas, where the middle class is growing.
With more disposable income and higher aspirations, these consumers look for items such as convenience foods and beauty products. People are living longer and lifestyles are changing, with overweight and obesity becoming a problem in countries where traditionally they were not, and with health and well-being increasingly a feature.
This changing global scene is a real opportunity for our Flavour Division. We will focus resources on further building our presence in markets where we see high growth opportunities and can accompany our customers in growing their business – we want to be by our customers’ side. Central to our high growth markets strategy is our ability to understand local market trends, strengthen our presence and adapt our business model accordingly. Middle income consumers in China are seeking new taste and flavour experiences, and in 2016 we marked an important milestone in the expansion of our business in this country with the opening of a new office along with sweet and savoury application laboratories in Zhengzhou.
Expansions of our local capabilities and innovation programmes played a large role in our success in many other parts of the world as well. In Mexico and Brazil during the year, we expanded our flavour creation and application (FC&A) resources to support the growth in beverage, dairy and processed meat, and increased the geographic reach of our commercial organisation. We held health and well-being symposiums in four Latin American countries that were highly successful in creating customer intimacy and demonstrating strategic directions for healthier consumer products.
A new FC&A laboratory in Delhi, India enables closer customer interactions, faster turnarounds and higher quality solutions, and our newly renovated Flavour Innovation Centre in Singapore will provide differentiated flavour solutions for consumer preferred products in the region. We also opened a new facility in Karachi, becoming the first global flavours company to do so in Pakistan. In Egypt, we upgraded our factory and increased capacity, and we plan to invest in new commercial and FC&A facilities at the site.
These multi-tiered investments in 2016 are part of the Flavour Division’s ‘1-5-5’ strategy of focusing on eleven markets in which it aims to grow at an accelerated pace to 2020. China (the ‘1’ of the strategy) is the most significant investment focus because of its population size and consumer growth. The first tier of five countries are large and fast-growing (India, Indonesia, Thailand, Brazil and Mexico). There will be a gradual build-up of our presence in the second tier of five countries (Nigeria, Egypt, Pakistan, Vietnam and the Philippines).