Food processors that do a lot of business overseas are finding it tough to deal with a spotty pandemic recovery that has some countries facing new outbreaks.
Companies like Nestlé and Unilever, which have a significant portion of total sales in developing countries, are especially vulnerable, the Wall Street Journal reports. Sales in those countries were strong for both companies in the most recent quarter, but many developing areas are struggling with a pandemic response. Vaccination rates in emerging countries are expected to reach only 30% by the end of this year, compared with 90% in the developed world.
As the economic impact of the pandemic worsens in the Third World, consumers who are dropping out of the middle class are trading down from brand names. Nestlé CEO Mark Schneider recently remarked that the pandemic “has wiped out a lot of our progress” in such areas, the Journal reports. Another problem is currency fluctuations, which can diminish or even destroy overseas earnings.
On the other hand, certain trends in the developing world are favorable for multinational food companies, such as overall long-term growth in the middle class and greater readiness by retailers to accept price increases.