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ATKearney Global Megatrends And AgriBusiness 2015
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April 22, 2015
Feeding the Global Middle Class
Global Megatrends and their Implications on the Agribusiness Industry
Johan Gott
2
Social and Cultural Economic Demographic Political
Global Megatrends
Science, Engineering
and Technology
Economic Power Shifts
Shifting Consumer
Demographics Resource
Availability
Megatrends for the agribusiness industry
Shifting economic influence
Stability & global
orientation Industrialization
& population concentration
Birth rate, immigration,
aging Well-being and quality
of life
Resource consumption
Custodianship
Innovation, substitutes &
recycling
The global megatrends cut across traditional domains and have direct impact on the agribusiness industry From Domains to Megatrends
Megatrends
3
World population continues to expand, with an additional 2 billion people to feed by 2050
Megatrends – Shifting Consumer Demographics
World Population Growth
Source: UN Medium growth projection. Excludes Oceania
The world population is expected to exceed 9 billion by 2050
• World population is projected to grow nearly 10% by 2020 and 35% by 2050
• Feeding nearly 2 billion additional people adequately represents a fundamental global challenge
• According to the UN, most of the growth will occur in 3 regions: Africa, India and Asia (despite China’s leveling growth); these regions of fastest growth include some of the poorest countries in the world
• By 2050, the population of the US and Canada will grow between 0.6% and 0.7%, while Europe and China will decline by 0.06% and 0.09% respectively
Related Insights
Population Projections (billion people)
719 738
Europe Latin America
447 345
USA & Canada
751
590
Africa
1,296 1,341
Rest of Asia
1,692
1,225
India
2,155
1,598
China
2,192
1,022
2010 2050
4
The planetary view: the expanding human population is far from evenly distributed across the planet
Source: Reddit,, A.T. Kearney
Megatrends – Shifting Consumer Demographics
This concentration of population requires global trade in food
5
Hyper-urbanization will continue to gather momentum – altering consumer behavior and supply chains, and eating up fertile land Growth of Urban Consumers
Source: United Nations
Urban consumers are expected to represent nearly 70% of the global population by 2050
• 78% of the inhabitants of the developed world lives in cities, compared to just 47% of those in the developing world. By 2050, these numbers will increase to 86% and 64% respectively
• China now has the world’s largest urban population, with over 600 million citizens living in cities – projected to 900 million by 2050
• Implications of this hyper-urbanization include: • New patterns of consumer behavior • New supply chain requirements • A growing global urban construction and
infrastructure boom • New strains on water, food and energy
supplies • Growing investment in urban agricultural
capacity
Related Insights
Urban Population Projections (% Population)
Rest of Asia
India
49%
China
77%
31%
52% 51%
66%
82% 87% 89%
58%
73% 79%
82%
39%
Africa Latin America
USA & Canada
Europe
2050 2010
Megatrends – Shifting Consumer Demographics
6
This also translate to a transition from a ‘unipolar’ to a diversified global economy in the short perspective…
1. Assumes consensus GDP forecasts for individual countries and that emerging markets’ currencies appreciate vis-à-vis the US dollar Source: DNI, Nalilord
Economic Power Shift
• By 2020, China’s and other emerging markets’ share of global financial assets will reach ~36% from the current ~21%
• In purchasing power parity terms, China will surpass the United States in 2016-17
• GDP growth rates in India and China are slowing to 5-6% per year, creating new internal economic and political challenges
• The likely continued decline of the dollar’s pre-eminence is expected to coincide with a move to a multi-currency global system
• As China continues to grow in economic and geopolitical power, potentially destabilizing tensions with its neighbors are likely to rise as well
Related Insights
2722
29 24
0
10
20
30
40
50
60
70
80
90
100
9
14
2020
100
19
17
9 9
2010
100
11
10
Estimated global share of wealth1
Other developed Japan
Western Europe Other emerging US China
Shift of economic power to emerging markets is expected to continue
Megatrends – Economic Power Shifts
7
…while in the long perspective, this is far from new but rather a return to the old world order
Sources: Angus Maddison, The World Economy: Historical Statistics (Paris: OECD Development Center Studies, 2003), Table 8b, Share of World GDP; Coming of Age: The rich nations no longer dominate global production, The Economist, January 19, 2006; Emerging economies: Climbing back, The Economist, January 19, 2006;
Megatrends – Economic Power Shifts
8
Growing economies in the developing world translates to growing middle classes, and new ways to consume Middle Class Growth The global “middle class” is expected to more than double by 2030 – led by China and India
• China’s middle class growth will lead in the near-term:
• Second largest middle class (after the US) in absolute numbers at 157M, yet only 12% of population
• By 2030, over 70% of China’s population will have entered the “middle class,”
• India’s middle class follows: • Small today (5% of population), but set to
expand dramatically • India could be the world’s largest middle
class consumer market by 2030 • Middle class expansion is driving a shift from
grain based to protein based diet, placing greater strain on the global food supply chain
Related Insights
Source: World Bank, Brookings Institution
Middle Class Population Projections (Millions of People)
664
181
338
138
525
680
313322341
Africa USA & Canada
Europe Latin America Asia
3,228
2030 2009
Megatrends – Economic Power Shifts
9
Rising incomes have a direct impact on per capita calorie consumption in developing countries
Source: FAO, USDA, A.T. Kearney
Megatrends – Resource Availability
Increased Food Consumption
• Average per capita food consumption will approach 3,000 kcal/day by 2015
• These changes reflect both rising levels of consumption and a dietary shift from grains to protein
• Protein in turn requires significantly higher inputs for the same amount of calories, as 1 kg of meat requires 6.5 kg of grain
• But let us not forget: hunger remains a major issue; in 2015, 450 million people (6% of the world’s population) still lives in countries with very low levels of per capita food consumption (under 2 200 kcal/day )
Related Insights
3,360
2,8982,623
2,293
2,850
3,4903,200
2,9702,820
3,220
India China Africa Latin America Developed Nations
2050 2005
Consumption increases globally – by 2050 developing nations almost reach level of developed nations Per Capita Food Consumption (kcal/person/day)
Increased appetite for meat, especially in East Asia, increases the demand for grain by 100%
10
This puts additional stress on resources and the Resource Triad
Hydropower production, Oil sands extraction
70% of water use in agriculture
Energy Land (Food)
Water
Biofuels, Ethanol
The nexus of food, water and energy will put
significant pressure on resource availability
Megatrends – Resource Availability
The Resource Triad
11
Global demand for energy is expected to grow by as much as 50% by 2030, mainly driven by emerging markets
Source: EIU
Megatrends – Resource Availability
Global Demand for Energy
• World dependence on fossil fuels is expected to decline from ~80% today to 60-70% in 2035
• New technologies may soon allow some current net oil importers to become energy independent
• The US is expected to reach energy independence by 2030 as a result of the rapid development of its shale oil (light oil) resources and extraction capabilities
• Europe, China, India and Japan will continue to be net importers for the foreseeable future
• This divergence in energy costs and external energy resource dependence will have significant long-term economic and geopolitical consequences
Related Insights
1,837
2,214
586690691
2,416
1,835
2,206
856932
1,300
3,742
India China USA Europe Latin America
Africa
2030 2010
Developing nations lead the new demand for primary energy Primary Energy Demand by region (Mtoe)
12
By 2050, over one half of the world population—4.8 billion people—will be exposed to severe water scarcity
The planetary view: available freshwater is scarcer than we think and usage is growing at a unsustainable rate
Megatrends – Resource Availability
13
Big challenges ahead – but also great opportunities
Economic Power Shifts
Shifting Consumer Demographics
Shrinking Resource Availability
• Economic and geopolitical power will continue to shift to the East • Emerging markets have experienced stunning growth, however are
expected to slow over the next 5-10 years • The United States is likely to rebound in the near-term, leading to a more
balanced distribution of growth globally • Growth is Europe is expected to remain low for the foreseeable future
• The global population continues to grow, with a growing divergence between aging in the world’s wealthiest nations and youth bulges in some of the poorest developing countries
• Immigration partially exempts the US and Canada from the challenges of aging
• The world will face growing challenges in reliably meeting the demand for 3 interdependent resources: water, energy and food
• Corporations, govts. and consumers will have to adapt, innovate and collaborate to create resilient supply chains amidst growing price and supply volatility
Selected Megatrends – An Overview
Megatrends - conclusion
Challenges – and opportunities
• The world faces a challenge to stretch its resources to satisfy the demands of a growing and increasingly affluent population
• Opportunity for those who can provide sustainably produced, high quality food to the growing global middle class
14
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Asia Pacific Bangkok Beijing
Hong Kong Jakarta
Kuala Lumpur Melbourne
Mumbai New Delhi
Seoul Shanghai
Singapore Sydney
Tokyo
Europe Amsterdam Berlin Brussels Bucharest
Budapest Copenhagen Düsseldorf Frankfurt
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Middle East and Africa
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