Argentina and the opportunity to export processed foods to the world
The idea of exporting value-added foods to the world arises from the increase in demand for the consumption of processed products and the potential that our country has to produce them.
After studying in depth Argentina’s exports, especially to the Asian market, together with the Argentine-Chinese Council, especially with its Executive Director and specialist in Asia and China, Ernesto Fernández Taboada, we observed the enormous opportunity that exists for this type of products.
From this analysis of the market it clearly emerges that Argentina sells mainly primary products. Among them, meat, cereals, oils and wines, with the strong exports being raw materials in bulk.
These studies, approached from different commercial angles, show that we can export processed foods, which carry a conceptually international product idea. This means that it does not require explaining to consumers what it is about.
From this, we built the idea of looking for foods that are recognized almost as a “commodity”, but processed. This created the opportunity to export frozen pizzas, meat hamburgers, ice cream, veggie products, etc.
There is no doubt about the importance of foreign trade for the growth of our country. We are considered a power in food production, but in reality we export primary products.
That is why we believe it is essential to transform this excellent raw material (cereals, cheeses, oils and meat) into final products, from our country, since food processing generates a significant volume of jobs.
We have the enormous opportunity to export these products to China or Southeast Asia, since demand grows every day.
Today, a large part of the enormous Chinese population has a very high income, mainly in the so-called coastal cities; it has also experienced significant economic growth and a middle class with a high purchasing power. In addition, many inhabitants of the Asian giant are young, with a more cosmopolitan life than their predecessors.
Before our eyes we have an exceptional opportunity, because China’s exponential growth and projections place it as the first world power in the coming years.
This translates into a surprising level of building infrastructure, bridges, high-speed trains, etc. The population already lives in a digital nation that is part of their daily reality. In this context, frozen foods constitute a commercial segment that is growing, driven by the current lifestyle.
Today, it is unthinkable to do without frozen products in our daily diet, since they are practically purchased in every home in the world.
Entering this market, increasing the volume of exports of finished foods, would imply a growth of the Argentine industry and of many SMEs that seek to sell their products abroad. It would open a very important door to growth.
Furthermore, due to its large size, China is a world in itself. We can say that there are “several Chinas” in one. There are also other destinations such as Hong Kong or Singapore, very interesting consumer centres.
Other markets that we find attractive are the countries of the Middle East; also Turkey as a bridge country between East and West, with 80 million inhabitants and a very wealthy and westernised middle class that demands frozen food products.
Data
Per capita income in China reached 70,724 Renminbis (RMB) in 2020, $10,262, according to the World Bank, which places it in the upper range of middle-income countries. However, there are large differences between provinces: the highest is Shanghai (107,960 RMB, approximately 15,800 dollars) and the lowest is Gansu, with 26,165 RMB, approximately 3,800 dollars.
This growth in income has allowed for a change in consumption habits in the last two decades.
The number of middle- and upper-middle-class families is expected to increase by 71 million within three years. The increase in the number of middle- and high-income households will also mean that more and more families will have greater purchasing power.
By José María Otamendi. Partner & CEO at Global Trading Bridge.