Globalization of the Food & Beverage Industry

Advances in transportation and communications technology have contributed to the growing globalization of the food and beverage industry. Companies like McDonald's and Coca-Cola have grown from national brands to worldwide icons, while North American consumers have gained access to brands from around the world. The global reach of the food and beverage industry has presented businesses with unprecedented opportunities. However, these new markets have their share of challenges.

Food and beverage companies have developed various strategies to get their products into the global marketplace. Large companies expend their own resources to enter overseas markets, and this allows them to maintain control of their product quality and presentation. Smaller firms may join with partners who have established a presence in their target country and build their brands through the partnership. These arrangements can occur as partnerships, joint ventures or mergers.

Globalization offers benefits to suppliers and customers. Suppliers have the opportunity to present their products to new markets, while customers have the chance to try new products. When suppliers in one country partner with distributors in another, the distributors also benefit from moving the pipeline of products from the supplier to the customer. For instance, McDonald's benefits from opening stores in a large, untapped market in China. McDonald's franchise owners in China make a profit from selling the products to Chinese customers, who had not previously been exposed to the product.

While globalization offers numerous advantages to companies, the practice can present costly challenges. Food and beverage companies must be aware of the cultural, religious and political environments they are hoping to enter. For instance, a McDonald's franchise in the Middle East must offer kosher menu options for its Jewish customers and halal selections for its Muslim guests. In India, where cattle are considered sacred by the Hindu majority, a McDonald's restaurant will offer chicken, fish and vegetarian alternatives.

Concerns about dietary fats, land usage and resource consumption will affect the future of globalization in the food and beverage industry. As oil prices rise and fall, the cost of transporting food and beverages over long distances can cause price volatility. The growing epidemic of obesity may force suppliers to alter their ingredients or offer healthier options. Unilever, a leader in the European food and beverage industry, has begun developing plans to make its manufacturing processes more environmentally friendly.