23rd November, 2012 by Rupert Millar
Rabobank has reminded the trade not to ignore emerging markets such as Nigeria and Mexico as attention becomes increasingly fixed on the Far East.
With China, Hong Kong and South Korea attracting headlines all over the world, Rabobank has singled out Nigeria, Poland, Brazil and Mexico as what it terms “hidden gems that have the potential to become important growth markets”.
It adds that, at present, these countries may not represent the largest or most attractive markets and being in the early stages of development may carry more risk.
Nonetheless, early investment in these markets and the building of brand awareness could pay dividends as they offer good prospects for long term growth.
Rabobank explained that Mexico has seen 20% CAGR in wine imports between 2006 and 2011 thanks to a burgeoning middle class; Brazil’s wine market grew 30% between 2007 and 2011 thanks in part to a growing domestic wine industry; Poland is also seeing strong demand for wine and although pricing may remain an issue it also suffers from low corruption rates.
Of them all, Rabobank concedes that Nigeria would require “a much higher tolerance for risk”, but wine imports have grown by 16% in the last three years and there are on-going efforts to stabilise the country.
Coupled with oil reserves and a large population, “Nigeria has a strong foundation for continued economic growth and increased demand for wine,” concludes the report.
Stephen Rannekleiv, Rabobank Food & Agribusiness Research analyst said: “Wine companies are now facing the question of what to do with these four hidden gems. Although they present opportunities, each has a very different market with much uncertainty for traditional branded wine companies.
“Furthermore, along with the opportunities in these markets come risks, and the possibility that the opportunity may not be realised.
“The flip side is that early exposure to nascent markets gives a company hard-won experience and expertise as well as a head start on the competition that will likely emerge as the markets develop. Wine companies that manage these opportunities correctly have a chance at securing long-term profitable growth”.