Chicago, IL – December 10, 2019 – An escalation of industry forces is putting many of the biggest and best-known food companies on track for big losses between 2020 and 2022.
Blueberry Business Group Ltd., a leading food industry advisory firm, puts the risk at 8.5% of core revenues.
“We believe that estimate is conservative,” says Blueberry President, Debra Bachar. “We calculated the run rate and projections of five industry forces with impacts that are being overlooked by food company boards and CEOs.”
Debra cites store and private brands, channel disruption, higher value placed on access to products than on products themselves, persistent inability to create value for today’s consumer, and the rise of challenger brands with no barriers to entry.
“Every leader and governance body should be rattled, asking hard questions and looking for the right answers. Despite large scale internal programs, organizations have no concrete mission to get on top of forces that are changing the way the industry works.”
Blueberry says that flat or declining unit volume in the core tells the real story, and that revenue growth is largely attributable to price increases and mix.
“Volume doesn’t lie, says Bill Pierrakeas, Blueberry Senior Advisor. “In most cases, Big Food has lost its grip on consumers and is lagging behind in the fight for growth over the next 24 months.”
“The new rule of thumb is to be driven by consumers choosing what companies can do for them, not what companies can make for them.”
Blueberry offers a message to CEOs and Boards.
“Large-scale initiatives such as acquisitions, cost cutting and R&D that once helped companies succeed are now no match—even at odds—with the complexities, challenges and stressors on a market that has been changed forever by a single player, Amazon.”
Avoiding the 8.5% hit means that boards and CEOs vitally understand the state their businesses are in and how they will confront the escalating impacts of the five industry forces that threaten results by 2022.
“Without a strategy to address them, there is every reason to be nervous.”