Growth is a big problem for food industry companies.
Many food manufacturers are facing a serious threat: The inability to solve their revenue problem.
Industry M&A has peaked, and in hindsight, there’s little to show for it.
Core business performance is still miserable.
Mergers, acquisitions and divestitures are not strategies.
They are merely tools, and success is possible only if they create relevant value for customers. (We count deals on three fingers that meet this description.)
Divestitures and acquisitions can be unfortunate practices of high consequence promoted by investment bankers, lawyers, and big-name consultants eager to be kept warm and well-fed…
…intervening in a complex industry system they don’t understand…
…advocating for the cost, distraction and great risk of juggling brands and businesses as a way to make companies perform better.
An argument fit only for Wall Street and the like.
After buying and selling, deal heat and hype, three hard truths remain at the center of every core revenue problem (all three—no exceptions):
- The value equation with customers is no longer competitive.
- Growth engines have reached the limits of effectiveness.
- Business innovation is non-existent.
Does anyone notice?
Soon the company moves to another round of cost cutting and write downs.
One would think the repetition would lead to correction, but the wretched cycle continues.
This time, companies turn attention to start-ups in hopes of regaining the spark they lost.
But large corporations and spunky, spry firms share little in common.
They don’t even know how to talk to each other.
One has customers at the center of their purpose; the other is obsessed with cost cutting and other ways to satisfy the investor community.
Food manufacturers urgently need to approach 2019 as a period of correction.
Paying outrageous multiples as a so-called growth strategy will not fix their revenue problems.
Submitting to middlebrow strategic and financial advisors who know nothing of critical new industry elements won’t work either.
Core revenue growth will emerge only from the facilitated design of a phased, organic/non-DM&A plan that addresses the 1-2-3 hard truths above.
Intense, difficult, bull-by-the-horns work that requires immediate attention, not afterthought…
…or for many, it’s game over.
