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Feeding the Global Middle Class

Global Megatrends and their Implications


on the Agribusiness Industry
April 22, 2015

Johan Gott

Megatrends

The global megatrends cut across traditional domains and have


direct impact on the agribusiness industry
From Domains to Megatrends
Global Megatrends

Stability &
global
orientation
Industrialization
& population
concentration

Birth rate,
immigration,
aging

Economic
Power Shifts

Social and
Cultural

Economic

Demographic

Political

Shifting
economic
influence

Resource
consumption

Well-being
and quality
of life

Shifting
Consumer
Demographics

Science,
Engineering
and
Technology

Custodianship

Innovation,
substitutes &
recycling

Resource
Availability

Megatrends for the agribusiness industry


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Megatrends Shifting Consumer Demographics

World population continues to expand, with an additional 2


billion people to feed by 2050
World Population Growth
The world population is expected to exceed 9 billion
by 2050
Population Projections (billion people)
2,192

2,155

1,598

2010
2050
1,692

1,225

1,341 1,296

1,022
751

738 719

590
345

China

India

Rest of
Asia

Africa

Source: UN Medium growth projection. Excludes Oceania

USA &
Canada

447

Latin
America

Related Insights
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 Chinas 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

Europe
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Megatrends Shifting Consumer Demographics

The planetary view: the expanding human population is far from


evenly distributed across the planet

This concentration of population requires global trade in food


Source: Reddit,, A.T. Kearney

Megatrends Shifting Consumer Demographics

Hyper-urbanization will continue to gather momentum altering


consumer behavior and supply chains, and eating up fertile land
Growth of Urban Consumers
Urban consumers are expected to represent nearly
70% of the global population by 2050
Urban Population Projections (% Population)

89%
82%

2010
2050

77%

87%
79%

82%
73%

66%
58%
49%

52% 51%

31%

India

Source: United Nations

Rest of
Asia

Africa

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 worlds 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

39%

China

Related Insights

USA &
Canada

Latin
America

Europe
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Megatrends Economic Power Shifts

This also translate to a transition from a unipolar to a


diversified global economy in the short perspective
Economic Power Shift
Shift of economic power to emerging markets is
expected to continue
Estimated global share of wealth1
100
90
80

100

100

29

24

70
60

22
27

50
40
30
20
10
0

9
9

14

17

9
10

19

11
2010
US
Western Europe

Related Insights
By 2020, Chinas 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 dollars preeminence 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

2020
Japan
Other developed

China
Other emerging

1. Assumes consensus GDP forecasts for individual countries and that emerging markets currencies appreciate vis--vis the US dollar
Source: DNI, Nalilord

Megatrends Economic Power Shifts

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

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

Related Insights

Middle Class Population Projections (Millions of People)


3,228
2009
2030

664

680

525

341

338

322

313

181
138

Asia

Africa

Source: World Bank, Brookings Institution

USA &
Canada

Latin America

Chinas 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 Chinas population
will have entered the middle class,
Indias middle class follows:
Small today (5% of population), but set to
expand dramatically
India could be the worlds 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

Europe
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Megatrends Resource Availability

Rising incomes have a direct impact on per capita calorie


consumption in developing countries
Increased Food Consumption
Consumption increases globally by 2050 developing
Related Insights
nations almost reach level of developed nations
Average per capita food consumption will
Per Capita Food Consumption (kcal/person/day)
approach 3,000 kcal/day by 2015
2005
These changes reflect both rising levels of
3,490
3,360
2050
consumption and a dietary shift from grains to
3,220
3,200
2,970
protein
2,898
2,850
2,820
2,623
Protein in turn requires significantly higher
2,293
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
worlds population) still lives in countries with
very low levels of per capita food consumption
(under 2 200 kcal/day )
China

India

Africa

Latin America

Developed
Nations

Increased appetite for meat, especially in East Asia, increases the demand for
grain by 100%
Source: FAO, USDA, A.T. Kearney

Megatrends Resource Availability

This puts additional stress on resources and the Resource Triad


The Resource Triad

Water

Hydropower
production,

The nexus of food, water


and energy will put
significant pressure on
resource availability

70% of water use


in agriculture

Oil sands
extraction

Energy
Biofuels, Ethanol

Land
(Food)
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Megatrends Resource Availability

Global demand for energy is expected to grow by as much as


50% by 2030, mainly driven by emerging markets
Global Demand for Energy
Developing nations lead the new demand for primary
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

Primary Energy Demand by region (Mtoe)


3,742

2010
2030

2,416
2,214 2,206
1,837 1,835
1,300
932
691

China
Source: EIU

India

690

Africa

856
586

Latin
America

USA

Related Insights

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

Europe
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Megatrends Resource Availability

The planetary view: available freshwater is scarcer than we


think and usage is growing at a unsustainable rate

By 2050, over one half of the world population4.8 billion peoplewill be


exposed to severe water scarcity
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Megatrends - conclusion

Big challenges ahead but also great opportunities


Selected Megatrends An Overview

Shifting Consumer
Demographics

Economic Power Shifts

Shrinking Resource
Availability

Challenges and
opportunities

The global population continues to grow, with a growing divergence


between aging in the worlds wealthiest nations and youth bulges in
some of the poorest developing countries
Immigration partially exempts the US and Canada from the challenges of
aging
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 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
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
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