Tesco, one of Europe's largest food retailers, held a meeting for 200 or more of its leading suppliers in a city-centre hotel at the beginning of last month. Nothing unusual in that, except that this supplier conference took place on a sweaty September weekday in Hong Kong only hours before Asiafruit Congress and Asia Fruit Logistica opened their doors.
Of course, Tesco has a rapidly expanding food retail business in Asia which, despite plans for an orderly retreat from Japan in the next few months, is growing year-on-year in such countries as China, India, Korea and Thailand. No surprise therefore that the management team at Tesco Global Food Sourcing should pitch its tent in Hong Kong, where the cover story of last month’s Eurofruit was already being read with more than usual interest.
Tesco’s ambitions to become a global food retailer have not been fulfilled just yet. But, much like Wal-Mart and Carrefour – its two main market rivals at an international level – the ongoing globalisation of its business is pulling the rest of the supply chain along in its wake.
Indeed, the results of this year’s Asiafruit Congress and Asia Fruit Logistica bear witness to that development: more delegates and more visitors – the large majority of them the decision-makers in their business – from more than 60 countries worldwide attended an event that has more than trebled in size since its inception five years ago.
For a European, it was surprising to see just how many other Europeans you happened upon in the conference hall and on the trade show floor. They came variously and in large number from Italy, France, Belgium, Holland, Germany, and even from Greece - among Europe’s major producing countries only the Spanish were conspicuous by their absence - to scout out new opportunities in the Asia market.
It isn’t just the assiduous readers of Asiafruit who know that these opportunities now run wider and deeper than those on offer in China, the world’s mega-market that lies only an hour’s drive north from the bright lights on Hong Kong’s dazzling harbour. They are everywhere.
Naturally enough, European and other suppliers are attracted by the huge reservoirs of demand that Asia now offers, both actual and latent. And they’re also surprised to find in Asia a multiplicity of supply chains that will already be very familiar to them. They recall the days in Europe when supermarkets didn’t have it all their own way.
Asia’s so-called ‘wet’ markets, which source their fresh fruit and vegetables from wholesale markets serviced by a highly competitive network of importers and distributors, compete head-on with supermarkets to an extent that is largely unknown in Europe today. Over the last 20 years food retail in Europe has been conquered by the supermarkets, leaving few parts of the market unaffected by their reach.
The supermarkets’ focus on quality is now matched by an obsession with low prices, which Europe’s current economic crisis is doing nothing to alter. For suppliers, especially those in the Southern Hemisphere that track the US dollar much more closely, Europe is in danger of becoming a market that is all bang and no buck. That is to say it demands a great deal but delivers comparatively little. Asia, by contrast, represents an uncomplicated, less demanding alternative route to market – one which is hungry for volume and seems ready to pay for it.
Europe’s supermarkets must be mindful of the competitive challenge posed by Asia. Its quicker, easier returns may mean that in future Europeans don’t always get the pick of the bunch. So keep your eyes peeled for signs that their sourcing and pricing policies become more flexible. Asia seems set to make a real difference in Europe and deliver the kind of happy ending we can all enjoy.
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