Emerging Markets - "The french-fry market"

Essay by djdatnastyUniversity, Bachelor's February 2004

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As many of the food and drink markets in regions such as Western Europe and North America reach saturation levels, multinational suppliers are now looking elsewhere around the globe to achieve profitability. Markets in less well-established regions are generally showing higher levels of growth, offering numerous opportunities for companies bold and powerful enough to expand beyond their own geographical boundaries.

The United States currently imports more frozen potatoes than it exports. America's potato industry is focused on how to boost exports to countries where demand is booming. "We're still the largest french-fry market," says Chuck Plummer, an economist with the US Department of Agriculture, "the deficit just means that worldwide consumption is increasing" (Belsie). The US has a vibrant market in potato exports, primarily to our NAFTA neighbors, Canada and Mexico, with 75% of such exports to Canada (Skorburg).

"The french-fry market is a global market, and it's controlled by global market forces and a few global players," says Bruce Huffaker, publisher of North American Potato Market (Belsie).

With a 97 percent market share, the United States dominates the market for frozen french fries in China. In the 1997 marketing year, the United States exported about 2,500 metric tons of frozen french fries to China valued at $2.2 million. It's estimated that another 8,000 to14,000 tons of french fries, or 50 percent to 75 percent, are transshipped into China through Hong Kong (Cee & Theiler).

Chinese demand for frozen fries will grow 600% in the next five years according to a study done by Guenthner, Robert B. Dwelle and John C. Foltz, all from the University of Idaho, and Lingyun Zhang of Valmont Industries. If the trend continues, U.S. french fry companies will need additional production of 384,000 metric tons to meet the estimated 454,000 metric ton demand in 2005...