Part 1: Reimagining Food and Beverage in America
Fortune Magazine’s special report “The war on big food,” cited an astonishing fact: the top 25 food and beverage companies have lost a collective $18 billion in market share since 2009. Repeat: $18 BILLION in 6 years.
Inside supermarkets the evidence is there for all to see as smaller more nimble niche players like Annie’s (now owned by General Mills) and Boulder Brands’ Evol frozen entrees secure more and more in-store real estate.
What’s driving this shift? Foremost is the Premiumization of Everything – a topic we’ve covered many times previously. In a nutshell consumers want whole, pure unadulterated foods. This ladders up to desire for higher quality food and beverage experiences to go along with their higher quality lifestyles.
Right behind it comes a measure of skepticism: can large food companies deliver authenticity? Are they – you – willing to give back some margin by using higher quality, simpler and more natural food ingredients in recipes? Said another way, can you stop acting big and start thinking small?
Erosion of Relevance
The heart of this sea change is fading relevance. Consumers are moving at lightning speed to express their preferences – and along the way upending the supermarket retail traditions of devoting dominant space, energy and business model attention to center store grocery aisles.
Now, any product that surfs the perimeter areas (home of fresh ingredients, real food, and products bearing more artisanal personas) are generating sales and traction. Another news flash: organic food sales have tripled in the last 10 years, rising 11 percent in 2014 alone, according to the Organic Trade Association.
Smaller companies now sitting in the quiet eye of this food preference hurricane recognize what a premium food experience really is and are leveraging it to erode big companies’ big numbers. Smaller companies:
- Understand this in their supply chain decisions and sourcing standards.
- Know what a clean label means and the value of simplifying ingredient statements.
- Are mining global flavor profiles and understand the connections contemporary food has to what’s gaining popularity in urban restaurant kitchens.
Big food will need big change to compete successfully. It requires transformation in thinking and operating (this is what Emergent does). The solutions go deeper than transactional moves to “buy your way out” through acquiring these trailblazer brands. Buying without disturbing the value proposition is a real challenge in itself.
The answer is fundamental change in culture, systems, mission, balance sheet expectation, innovation – and most of all, dismantling some of the systemic marketing principles and operations mechanics that have been hallmarks of CPG brands for the last 30 years. And no we’re not talking just about shifting media focus to social channels…
Look for our next installment: The Marketing Sea Change
Bob Wheatley is the CEO of Chicago-based Emergent Healthy Living. Emergent provides integrated brand strategy, communications and insight solutions to national food, beverage, home and lifestyle companies. Emergent’s unique and proprietary transformation and growth focus helps organizations navigate, engage and leverage consumers’ desire for higher quality, healthier product or service experiences that mirror their desire for higher quality lifestyles. For more information, contact Bob@Emergent-Comm.com and follow on Twitter @BobWheatley.