A patchy global recovery is bad news for big food companies such as Nestle and Unilever, even if their exposure to emerging markets remains a plus for long-term investors. The health situation in some developing countries is serious. Slow vaccine rollouts are likely to extend the problems.

Big European food companies are more exposed than U.S. peers, such as Kraft Heinz, which tend to do more business at home. Nestle and Unilever generate 42% and 60% of revenues in developing countries, respectively. Sales in these markets outpaced those in mature countries in the first quarter for both companies, reversing an unusual trend last year when the strongest demand came from European and American consumers who stockpiled goods.

Still, conditions in emerging markets could be harsh this year. With the notable exception of China, consumers in less wealthy economies have been hit harder by the pandemic. Across emerging markets, excluding China, per capita incomes are expected to slip 20% between 2020 and 2022 compared with pre-pandemic levels -- almost double the fall in developed countries, IMF data shows. Pinched shoppers are already trading down to cheaper goods. Nestle Chief Executive Mark Schneider said on a recent call with investors that the pandemic has "wiped out a lot of our progress" in emerging markets.

Major food companies that operate in emerging markets also have to deal with exchange rate swings. The Brazilian real, Mexican peso and Indian rupee were among depreciating currencies that wiped 7.9% off Nestle's top line in 2020. Although sales growth in developing markets can be impressive, the gains are often lost when translated back into companies' reporting currencies.

Long-term, emerging markets remain an attractive place for companies that sell food and other consumer staples. The growth of the middle classes is a deep-rooted trend that should return. And it is sometimes easier to pass on higher costs to consumers in developing countries than in wealthier regions such as Europe, where consolidated and powerful grocery retailers can resist price increases.

U.S. food companies such as Campbell Soup and Kraft Heinz have no significant emerging-markets exposure, so don't have to worry about health crises in far-flung countries. The outlook for the American market is rosy as consumers seem to be eating at home more than usual even as states reopen. While Europe's food names still offer better long-term growth prospects, investors this year might be tempted to stay local.

Based on the information provided in the article excerpt, determine whether Unilever or Kraft Heinz is more diversified internationally. What is one main benefit of being more diversified and explain whether this benefit still exists during the pandemic? [10 marks]