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The food                                                                              Sabin Azua

and beverage industry.                                                                 Partner - Director of B+ 1Strategy.

Keys for future competitiveness.

It is difficult to create a synthesis from the huge          trialised world - there is also another type of con-
wealth of competition that exists in the food and            sumer, (defined by Professor CK Prahalad as the
beverage industry of industrialised nations, given           "Base of the Pyramid"), which requires a distinct
the incessant amount of innovations and alterna-             approach. For this group it is necessary to adapt
tive strategies used in the name of rivalry among            quality products to offer at low cost in order to
the different players in the segments of this                solve the very real economic problems of the less
industry. That is why some of the conclusions                well-off sectors of society, moulding the characte-
presented in this brief contribution may not fit in          ristics of these products and services to a the
with the individual views of certain segments                defined set of needs of this group (such as single
here, and in the same way will doubtless not be              doses of soap, reduction in the number of pro-
interpreted as such from the standpoint of speci-            ducts per packet - avoiding wastage - high
fic companies in the sector.                                 energy products, modified promotions, etc.).

The basic aspect which companies in the sector               In terms of rivalry within the sector, a number of
have to focus their strategies on, is that of identif-       trends should be taken into account when it
ying the series of major changes which are hap-              comes to defining individual strategies of compa-
pening as a result of way consumers themselves               nies in this sector:
are modifying their consumption habits, laying
out new fields of competition for companies wor-             Consumption habits in terms of food and drink in
king in the sector.                                          the home have been noticeably changing: there
                                                             is now a segment of the population that are
If we pay attention to the most renowned works on            demanding an ever increasing sophistication in
this subject, we find ourselves in a situation which         meals and beverages, but the demand from
highlights the reality of groups of consumers with           homes for ready-made meals is also showing
more spending power and less time to decide on               considerable growth too.
what to buy, at the same time health conscious,
and of a multicultural background, increasing the            There is a rise in the number of clients with a grea-
frequency of purchase throughout the day - espe-             ter mobility, who are generating major changes in
cially in the afternoon and evening- and with a              the way companies have to present their products:
notable percentage who are mobile or prepared to             packaging, commercial distribution, etc. and this
travel in the quest for new experiences and fla-             reality is showing an exponential growth.
vours, etc. This is why one of the main concerns
for companies in the sector is that of researching           Food and drink of an essentially functional nature
new ways to reach consumers, at the same time                is also undergoing a marked development,
trying to increase their presence or profitability.          although it caters for a segment of consumers
                                                             with a wide variety of habits, thereby setting up a
In contrast to the abovementioned global trends              new areas of specialisation for certain companies
in consumption - strongly typified by the indus-             in the sector.
                                                              COPCA - OBSERVATORY OF INTERNATlONAL   MARKETS   I   57

The sophistication and raising of the quality level   tive to consumers. Traditional practices of seg-
of products, along with the way they are marke-       mentation of the food and drink industry have to
ted and sold in developing nations, has shown         become more sophisticated in order to meet the
important growth, which is leading to a shift in      constantly evolving demands of the market.
management mechanisms in the value chain of
companies in the food and beverage industry on         Food and beverage industry companies should
an international scale.                               be provided with a higher level of flexibility in the
                                                      processes of developing new products; they
The influence of the phenomenon of immigration        should launch more products and focus on seg-
in the West has also had a major impact on the        ments where they can find elements of differen-
competitivedynamics of the sector. Marketing and      tiation that can be sustained over time. World
sellingactivities have been adapted to take in this   brands continue to be strong, but it is still possi-
segmentof the population. There are an increa-        ble to compete in specific market niches when
singamount of "personalised" offers for these         acting quickly, as adapting to clients and imme-
groups produced by companies in the sector.           diacy are two factors, which give a competitive
Product innovation and adaptation to different
moments of consumption is one of the keys to          Another critical element for the development of
competitiveness in the sector. Products must be       the food and beverage industry is the role of dis-
armed with enough versatility in order to fit in      tribution, which has a huge influence on the
with the various requirements of consumers            competitive dynamic of the sector. For this rea-
according to the occasions when they may be           son it is also necessary to analyse certain rele-
purchased.                                            vant trends in this area:

There is a growing trend to give products, which      There is a marked tendency towards the concen-
havealways been market stapies, or difficult to       tration of distributors in Europe, especially in the
set apart, a label of "exclusivity": lettuce (ready   North, where three main groups account for 80%
cut and at a clearly higher price), bread for daily   of markets in Sweden, Norway, Finland and The
consumption (highly competitive), coffee,             Netherlands. This is not the case in the United
(Starbucks is a well known example), salt etc.        States given anti-trust regulations in force there.

A growing collaboration is being witnessed bet-       Globalisation of the retail trade is a significant
weenthe food and beverage industry and enter-         trend, although few chains have managed to
priseworking in other sectors with an aim to          establish profitable set ups in overseas markets.
makethe products on offer more attractive to
consumers.                                            Distribution chains focus their scope of activity to
                                                      Format Development. Some of these formats,
Eachand every aspect related to a given product       such as discount chains, convenience stores or
is important when it comes to aiding processes of     local stores, are increasingly used by consumers.
differentiation and sale: design, marketing, con-     This means that majar stores have to provide a
tainers, material, packaging, logistics, attracting   variety of formats within a single floorspace,
clients, unorthodox methods of selling etc.           whilst small shops are moving towards specialisa-
                                                      tion in offering unique value propositions.
Al!   the trends in the abovementioned section can
be summarised by the need to take the segmen-         A majar change is taking place in the concept of
tation of clients to an extreme, at the same time     private or own brands. These had their begin-
taking into account new behavioural trends and        nings in the battles to offer lower prices, but now,
habits, selecting the most suitable products at       own brands have been transformed into product
the right moment of consumption, providing            lines that are a commodity controlled, commer-
enough information and making the goods attrac-       cialised and sold in their own right by the chains,

competing with brands from other suppliers.                    It would not be possible to discuss future trends
Food and beverage manufacturers and distribu-                 for the food and beverage industry without taking
tors are also strengthening ties among themsel-               into consideration the changes derived from the
ves as it becomes necessary to fuse the aspira-               inclusion of new technologies in developing com-
tions of both parties concerned. Global manufac-              petition in the sector: sales over the internet,
turers are looking for increased growth, whilst               (experiencing growth, but without yet meeting
distributors focus on margins. There is a notable             expectations, envisaged or hoped for), use of
degree of collaboration between both sides in                 new technology to provide a more accurate seg-
terms of information exchange on consumer                     mentation of client groups, (to the extreme of
behaviour, on forms of adapting the launch of                 creating an individual client segment), use of the
new products to consumer needs, research into                 RFID system which allows goods to be traced
ways of in store commercialisation, packaging,                throughout the entire logistic process, and mobile
logistics, etc.                                               commerce, (generating new relationships with
                                                              clients). In other words, for this sector, although
The main challenges of retailing in relation to the           there may be limits to imaginative ideas and
aspirations of clients, (in other words; creating a           commercialisation, technology has no bounds.
store that offers a variety of purchasing choices
which allow the client to satisfy particular needs,           Catalan food and beverage firms should therefore
rather than a shop lacking in the ability to diffe-           orientate their activities bearing in mind the pro-
rentiate internally) can be met by; setting up                visos mentioned here. Although size matters, it is
ways of obtaining data on clients using multidi-              not everything when it comes to designing busi-
mensional analytical methods in order to define               ness strategies. It is the author's opinion that
client target groups, creation of specific offers for         these elements around us, (and those which are
different client segments in local markets and in             specific to a given market) should be taken into
a variety of purchasing opportunities, offering to            account when trying to develop action plans with
consumers a variety of purchasing formulae                    a tendency to research into the creation of
within the same store (from self-service to fully             niches overlooked by other organisations (taking
assisted sales), etc.                                         as a starting point the specific characteristics of a
                                                              given group of clients). In addition, they should
One of the most relevant aspects of cooperation               make sure that competition has less of an
among manufacturers and distributors is trade                 influence in these niches, look for emerging
marketing, namely direct contact with consumers               demands in them, break with the dynamic of
with the product within stores themselves. This is            choosing between value and cost, (both essential
an area of the future where leading companies                 elements in strategic planning), and streamline
are concentrating major promotional efforts in                all the activities of the company into looking to
order to win clients.                                         set apart its products from those of its main com-
                                                              petitors at international leve!.

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