Why are large food companies thriving in emerging markets?

Growth Focus Shift: From Mature Markets to the Global South

While consumers in Europe and North America cut spending at the shelf due to inflation, and private labels erode the share of giants, a very different story unfolds in the supermarkets of the Global South. In the first quarter of 2026, Mondelēz International's net revenue grew 12.1% year-on-year in Latin America, 14.3% in Asia, the Middle East, and Africa, but only 0.5% in North America. Kraft Heinz's net sales in emerging markets rose 7.6% year-on-year, more than double the rate in developed international markets. Nestlé CEO Philipp Navratil also explicitly stated that emerging markets "stood out" in growth, far surpassing mature markets.

This is not an accidental quarterly fluctuation but a signal of a structural shift in the center of global food consumption growth.

Four Structural Drivers of Growth

1. Demographic Dividend and Urbanization

Emerging markets boast the world's youngest population structures. Sub-Saharan Africa is the only major region where the primary population group remains young and rapidly urbanizing—young people offer huge "consumer recruitment" opportunities for brands during their habit-forming years. Meanwhile, India will add more food consumers over the next decade than the entire existing scale of Western Europe. Urbanization in these regions is driving strong demand for convenience foods and processed products.

2. Income Growth and Middle-Class Expansion

Per capita GDP in emerging markets continues to rise, enabling more households to upgrade from basic subsistence to branded, nutritious, and even premium foods. Some affluent consumers are beginning to pursue health snacks with natural, organic, and locally sourced ingredients, forming a multi-tiered consumption upgrade structure.

3. Brand Loyalty Not Yet Solidified

In developed markets, food giants must compete for existing market share from rivals while facing high private-label penetration. In emerging markets, however, a large number of consumers are entering the branded food space for the first time, with no strong loyalty yet established. As Filiberto Amati, consultant at FMCG consulting firm Amati and Associates, put it: "Brands are not fighting for attention; they are recruiting new consumers who have never formed brand preferences." Moreover, the fragmented retail infrastructure in emerging markets limits the expansion of private labels, leaving more room for national brands to compete with ease.

4. Significant Room for Category Penetration

Categories like oral health and vitamins—considered "unsexy" in Western Europe—are growing rapidly in emerging markets as the health awareness of the middle class awakens. Pet food is also experiencing a boom due to rising incomes, with more households adopting pets and being willing to spend on them.

The Dual Game of Capital and RiskDespite the enticing prospects, emerging markets are not a risk-free paradise. Russ Mould, investment director at AJ Bell, points out that currency risk is the primary challenge: strong revenues denominated in local currencies may shrink in the group's consolidated statements due to exchange rate fluctuations. Economic volatility—including inflation, currency depreciation, and boom-bust cycles—is also a systemic risk that cannot be ignored.

Operational challenges are more specific. Amati emphasizes that distribution models in South Asia, Southeast Asia, and Sub-Saharan Africa are vastly different from those in Europe. "Assuming that products can flow through the same logistics infrastructure as in Europe, companies will burn through cash waiting for sales that never come." Additionally, differences in religious regulations, local tastes, packaging, and ingredient requirements demand flexible adjustments from multinational corporations.

Perhaps the most fatal mistake is a misalignment in strategic logic. Introducing premiumization too early without establishing an affordable base is a common trap. Amati warns: "Decisions made from headquarters in Europe or the US are likely to be disconnected from ground reality—such as how the local supply chain actually works."