Cambodia and Laos Food and Drink Report Q2 2016
BMI View: We believe that Cambodia, Laos and Myanmar will offer substantial opportunities for investorsas their economies grow rapidly and become more integrated with the world economy. Growingpopulations, growing GDP, increased urbanisation and a demographic profile favouring a young targetbase all offer opportunities for food and drink operators looking to establish a foothold in the region.
Nonetheless, the risks of operating in the region are still high, which means that multinational companiesneed to be here for the long run.
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Food sales per capita in Cambodia, Laos and Myanmar (CLM) are still low by regional and globalstandards, and food continues to account for a great share of total household spending. Therefore, anyincrease in disposable incomes will automatically translate into greater food sales. As we expect strongeconomic activity in CLM over the next five years, we hold a positive growth outlook for sales of foodand non-alcoholic drinks.
In particular, we hold a very favourable outlook for Myanmar's food industry. The country offers asizeable consumer base compared with Cambodia and Laos. As it continues to open to foreign investors,we expect multinationals to expand in the country. Many food and drink manufacturers - includingNestlé, Unilever, The Coca-Cola Company and Carlsberg - have entered the market since 2013.
In spite of an attractive growth outlook, we caution that the costs of operating in CLM are still very high -including weak distribution networks, burdensome administrative procedures and poor infrastructure.Therefore, multinational companies need to play the long game when investing in the region, bydedicating sufficient funds and establishing strong partnerships with local actors.
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