Dying Giants and Content Kings: Key Takeaways from the 2018 Food Industry SummitOctober 26, 2018 - by Taylor Getler
The 2018 Food Industry Summit brought together leaders from across retail and CPG food brands. After listening to a series of compelling lectures and presentations about the direction of the industry, a few key insights became apparent.
For new companies, it’s easy to hit a billion dollar valuation. For older giants, maintaining their share of consumers is growing increasingly difficult.
A comparative chart of Fortune 500 companies from the year 2000 and today reveal a startling truth: many of the largest companies of the millennium have already faded away. The recent news about Sears’ demise has only reinforced the notion that national retailers are facing an identity crisis.
There are ways to effectively manage this, as outlined by John Bennett from McCormick:
-Invest while the company is healthy
-Leverage the company’s unique strengths
He also advised that brands get used to the idea of disrupting themselves before someone else does. Innovation is no longer a feature of the company; it is now a necessity and the first priority. For McCormick, this has meant paying close attention to international food trends and anticipating the globalization of flavor. What people are eating in East Africa today is going to impact what people are eating in Brooklyn tomorrow, and understanding nuances in cuisine – such as the differences between Malaysian food and Thai food – has been helpful for the spice company in developing new product concepts.
Every brand across the board is now in the same industry. They are all content companies now.
This was another point illustrated by Bennett. McCormick has shifted their marketing focus towards developing recipe media, as the brands that can best engage with their consumers are the only ones that stand a chance at long-term survival. If you’re not the one reaching them, you’re not the one feeding them.
Competitive advantages are getting increasingly less unique.
Brands used to be able to lean on special features like their ability to attract the best talent, or their financial power, or their strong relationships with retailers. In 2018, these things matter very little, as it is easier than ever for even small companies to source talent on demand, raise funds, and sell directly to the consumer.
Jeff Smith, company group chair at Johnson & Johnson, explained that his company is uniquely positioned in both the multinational world and the startup world, and that the most innovative companies will straddle both. You can’t put the toothpaste back in the tube, so to speak – once consumers get used to a new avenue of efficiency, they become impatient and disaffected with large companies that are unable to keep up.
Mr. Smith’s advice to executives struggling with this new reality is to build brands ambidextrously — develop global projects that have the ability to be intensely localized in their execution, fitting the specific needs of different communities and demographics.
If a company has built their image around one thing, they have absolutely no room for error anymore.
Chris Baldwin of BJ’s told the crowd that this has been incredibly impactful for the club store, as they built the BJ’s brand around having the lowest prices. Consumers are empowered by smart technology to check them on this instantly, and if they fail to live up to their promise, then they’ve lost their way in the eyes of the shopper. The same is true of other companies that positioned themselves as convenient before the explosion of ecommerce. If a brand is supposed to be convenient, it must be at the forefront of technology and consumer trends in order to consistently serve shoppers in the quickest and most efficient way.
Everybody loses money on delivery now, and it’s unclear how this is going to be resolved.
Walmart, one of the leaders in CPG ecommerce, has lost millions of dollars on this. Instacart is a company with a multibillion dollar valuation that hemorrhages money on delivery. Right now, money is effectively free in terms of investors giving startups cash to play with. The most likely scenario that we can expect is that interest rates in the CPG space are going to shoot up to make up the difference, but we will all have to wait and see how this plays out.
The industry pace of change will never be as slow as it is today.
Gerarda Vankirk of Accenture presented data that showed a troubling trend in corporate training: the lifespan of a skill has dropped from 30 years to 5 years of relevancy for businesses. This is to say, a logistics or procurement employee with deep knowledge of current systems today could be totally obsolete by 2023. Employee teams need to be enabled and empowered to adapt quickly, which will require much more flexibility, support, and investment than the majority of big brands are providing in this space.
After digesting the research and insights from all of these industry experts, there is one big idea that we can take away: in a few short years, the entire landscape of the food and beverage industry could be unrecognizably different. From the expansion of smart technology and the Internet of Things to progressive food trends that promote traits like globalism and protein, executives need to be prepared for change however it may come.