The world’s largest packaged foods companies are entering a period of heightened focus on their most promising brands and categories. This has involved a willingness to cut SKU counts, sell off iconic brands, or even split apart entirely. Long-term market shifts will continue to push companies in this direction, meaning the future of packaged food is a more fragmented one than it is today.
Delivery
This report comes in PPT.
Key Findings
Wider forces in the industry have shifted in favour of smaller, localised and agile companies
The largest packaged food companies in the world, including Nestlé, Unilever, Kraft Heinz and PepsiCo, are in a period of aggressively tightening their focus to a more limited set of brands, SKUs and categories. This is in response to shifting market conditions that increasingly work against their historic business models.
This has led to a wave of divestments of brands that were once at the core of companies’ strategies
Many of these companies have shown a willingness to divest huge portions of their portfolios in the search for a stronger and more profitable stance towards the future. This has often involved a ruthless willingness to ditch brands that they have long been associated with – sometimes for many decades – such as Kellogg’s decision to spin off its North American cereal brands.
The global environment is shifting against multinational food companies
A number of distinct macro trends (the peaking of calorie consumption and erosion of the middle class in developed markets, private label growth, UPF backlash, de-globalisation and growing levels of consumer distrust) are all pushing against a “bigger is always better” model and driving these trends towards divestments.
Expansionary efforts are becoming more selective and disproportionately focused on wellness
M&A and product innovation have not stopped by any means, but they have slowed down. Where companies are looking to add brands, they are being more selective and focusing on brands with a strong wellness positioning and/or that appeal to the higher income consumers who they are otherwise struggling to target.
Private companies are going on a different route
Notably, some of the largest privately held companies (Ferrero and Mars, most notably) are following a very different path. This is likely to be because they do not face the same pressure for quarterly growth as the public companies, and they are proving willing to absorb large but troubled brands in a way that their public counterparts are not.
Why read this report?
Key findings
A new and challenging era for large packaged food companies
Our expert’s view on the challenges facing “Big Food” in the coming years
A note on the companies discussed in this report
What has changed for the food industry?
Volume growth in many markets is not what it once was
The K-shaped economy is hitting legacy food companies especially hard
Private label is making steady inroads across the board
The ultra-processed food backlash is disproportionately felt by “Big Food”
Declining trust in institutions is affecting food brands as well
The forces of deglobalisation are pushing against multinationals
The large companies have collectively lost share every year for a decade
Food industry performance has been lacklustre for the last several years
The break-up of Kellogg was a sign that something had changed
Kraft Heinz flirts with following the Kellogg playbook
The big companies (and most others too) are pulling back on innovation
The Hostess purchase was the last gasp of the old way of doing things
Industry leader Nestl é is tightening its focus on its largest brands
Unilever continues to sell off some of its major food brands
PepsiCo stays together but announces big cuts in its product offerings
Danone “renews” by doubling down on health as the core of future growth
Hershey’s, Lesser Evil and the future of food M&A
Mars, Ferrero and the diverging paths of the major privately-held firms
Key findings
Recommendations
Questions we are asking
NEW REPORT GUARANTEE
If you purchase a report that is updated in the next 60 days, we will send you the new edition and data extraction Free!