A REVOLUTION IN FOOD RETAILING

PACIFIC FOOD SYSTEM OUTLOOK 2005 - 2006, Pacific Economic Cooperation Council

Revolutionary change occurring in the retail food sector of the PECC's less-developed economies has significant ramifications for the region's entire food system. Assessing these impacts is the focus of this year's report, generated from the May 2005 Pacific Food System Outlook (PFSO) annual meeting in Kunming, China.

In the region's less developed economies, modern supermarkets now represent 10 to 50 percent of total food sales, rapidly approaching the 70 to 90 percent levels of developed markets. The growth of modern supermarkets is driven by rapid urbanization, economic specialization, income growth and liberalization of foreign investment. Modern supermarkets are generating centralized procurement and distribution systems, and contributing to the emergence of specialized suppliers. The more efficient and modern food system developing as a result of these changes is broadening the geographic range of firms, lowering consumer costs, raising food safety standards, and transforming the face of traditional agriculture and traditional food-marketing channels.

This report builds on the work of the PFSO participants in previous years. In 2003, we identified rapid urbanization in the region's developing countries as the most significant demographic change shaping the Asia-Pacific food system in the next 50 years. Modern supermarkets can better meet the demands of rapid urbanization in densely populated areas and consumers who are more affluent, place a higher value on convenience, and demand reliability and safety in a complex, impersonal marketing system. The 2004 PFSO report recommended investing in domestic supply chains, including transportation infrastructure, to more efficiently connect domestic food-producing areas with urban supermarkets.

Available for download at http://www.pecc.org/food/papers/pfso2005-06.pdf