Concerns of spiking corporate leverage and capital flight have seen sentiment towards emerging markets (EMs) spiral downwards, but one unlikely indicator serves as a timely reminder of the sector's strong fundamentals.
The flavor enhancer monosodium L-glutamate, commonly known as MSG, is enjoying solid demand thanks to the growing appetites of emerging economies, according to new analysis from research house IHS.
MSG produces a savory taste known as umami and is often used in foods ranging from instant noodles to condiments. MSG also occurs naturally in items like tomatoes, cheeses, truffles and soybeans.
Global demand for the chemical could hit 4 million metric tons (MMT) by 2019, up from 3 MMT in 2014, an annual growth rate of nearly 4 percent, IHS predicts. The catalyst? Rising MSG use in Thailand, Indonesia, Vietnam, China, Brazil and Nigeria on the back of higher incomes and the movement of more women into the workforce.
"These factors, as well as improvements in living standards and expansion of the middle class, are big factors driving MSG consumption growth. Busier lifestyles, increased urbanization and changes in dietary patterns are driving greater demand for convenience foods, snacks and seasonings, which, in turn, will stimulate MSG consumption in these countries," the IHS report said.
Like fast food, which has long been considered a proxy for emerging markets growth because it reflects a prosperous, brand conscious middle-class that is shifting away from home cooking, MSG use provides valuable, wider insights.