Big Food In Big Trouble?

Big Food has lost its way according to a new report from Rabobank, which claims that some of the world’s biggest food and drinks brands such as Kraft, Coca Cola and Kelloggs need to embrace radical change or face terminal decline.
Mega-trends cited in the Rabobank report include consumer demand for greater authenticity; growing health concerns and a suspicion of processed foods; a desire for ‘aspirational’ over mainstream food brands; the rise of social media; and the emergence of new routes to market, particularly around e-commerce.

 The Grocer notes “the changing consumer landscape favours smaller, more nimble companies with a more radical approach to innovation than the complicated corporate hierarchies big multinationals allow. Where scale was once seen as a prerequisite to success, it has since become a millstone around the neck of many large food and drinks companies.

 How does Big Food fight back? The report suggests five key actions:

  • buy in innovation and R&D capability through smart M&A
  • make acquisitions early so as to avoid paying too much
  • once you’ve acquired, resist the temptation to tinker with your new purchase – you’ll likely destroy what made it a good target in the first place
  • wave goodbye to ‘innovation-lite’ – work out what it means to be truly innovative in your sector and then have the guts to be bold; figure out if your ‘iconic’ legacy brands really are as iconic as you think they are.

 So is this equally true in the UK? Ex-retailer and Meantime brewer Glenn Payne says yes. “Food manufacturers are being assailed by ‘disrupters’ in the same way Uber and Airbnb are undermining cabs and hotels. The discounters are setting the agenda in food retailing, whilst in casual dining MacDonalds are losing business to more fleet-of-foot rivals with a keener eye on quality, adaptability and provenance. Big Food’s issue is a general distrust of BIG throughout society. Its decline will be gradual but will gather pace. Image will be key: appear small and artisanal, buy external skills and innovation, heritage will be part of the brand, not the anchor”.

 Paul Monk of Inventabrand finds some truth in the report. “I think Big FMCG companies that don’t adapt quicker will struggle for sure. There is a difficult balance to strike between why your brand HAS been successful in the past and why it WILL be successful in the future. Companies have tended to focus more on defending what they have rather than taking a risk to secure the future.”

 However industry expert Dave Brooks is unconvinced. “Is this really anything new? The joy of small is nimble and fleet of foot, whereas scale offers longevity, consumer dependability and economies. A vibrant marketplace thrives on both competing and whilst the Rabobank analysis is strong, there is likely to remain the beneficial divide with both groups seeking to improve their offering by learning from the other group.”

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