Winners and losers: state of America’s food and beverage marketplace. New report
The shake-up in the food and beverage industry continues. Our latest edition of Hartbeat Exec, The New Playbook in Packaged Food, examines the top players and analyzes the factors afflicting the underperformers. What’s the winning brand portfolio strategy for tomorrow?
The food and beverage industry is under more pressure than ever before to generate organic, volume-based topline growth. Some even say the total market is essentially now a zero-sum game. But this belies the enormous turbulence and reshuffling of market shares below the sector’s surface. It is clear the future of corporate growth is in rebalancing into the medium- and long-term pockets of growth revealed through careful market analytics.
As of the end of 2016, we are seeing a mix of positive and negative signs from our analysis of top players, reflecting the likelihood for continued shake-ups in the industry.
On the upside:
- 60 percent of top 25 firms are growing at or above inflation.
- 80 percent of the top 25 firms have at least positive topline growth.
On the downside:
- The industry topline growth rate has softened 31 basis points compared to 2011-2014.
- Among the top 25 firms, the high performers’ topline growth average has also softened compared to 2011-2014.
Overall, the highly bifurcated nature of these patterns (to see the chart, download a copy of The New Playbook in Packaged Food) is basically identical to what we saw two years ago. In fact, the biggest “improvement” we can identify here is that the underperformers are underperforming less than they were two years ago.
Cutting costs will surely continue at all of the big firms, yet many will find their financial scalpels approaching the bone in the next two years. Therefore, don’t believe this trajectory is sustainable for probably 25-50 percent of the firms depicted on the left side of the chart in the report.
When we deconstruct the winners and losers in broad strokes by the master category their core business serves (beverages, snacks, meals), we do find an interesting pattern that all should take note of: the winners are almost all beverage companies, and the losers are mostly companies with core revenue skewing heavily to center-store meal categories. (Of the top 25 firms, only one is a pure play snacks firm, so the positive impact of snacks is buried in this analysis.)
In The New Playbook in Package Food Hartbeat Exec, we will a) reiterate some themes discussed in our last industry review regarding the continued need for portfolio rebalancing at the brand level, b) introduce a simple portfolio segmentation tool to track your firm’s topline performance (i.e., the relative urgency of rebalancing) and, finally, c) address a burning issue within the portfolio rebalancing process: the need for big companies to operationalize separate playbooks for legacy brands and for small, emerging premium ones.
Simply, acquiring fast-growing insurgent brands is not enough to guarantee that top companies are maximizing their long-term scale potential.
DOWNLOAD YOUR FREE COPY OF THE NEW PLAYBOOK IN PACKAGED FOOD: HARTBEAT EXEC 2017