A new day is dawning on the food and beverage industry as the hunt for growth is very much on. While merger and acquisition is the hot strategy of the moment, we believe there is more than one possible pathway to growth.
We are indeed in the midst of a new evolutionary period in food and beverage: disruption, stark challenges and enticing opportunities abound. And as with the dawn of any new era, it is accompanied by an inevitable proliferation and “great dying” as a new order shakes out. Much of the failure we witness in the food and beverage sector is heightened — a created chaos, so to speak, as companies of all sizes and types hunt for pockets of growth.
The question that is often central to our strategic engagements is how best for business leaders to think about their existing assets — especially the large, legacy brands anchoring their portfolios — and how to evaluate the new opportunities for premium product development in spaces that have been foreign.
Hartman’s Strategic Levers: RBB
We have identified three vital levers that can aid companies looking for strategic pathways to growth within the current food and beverage landscape: Renovate, Build and Buy (RBB). All three levers are viable strategies that medium to large firms should consider as they build a portfolio that will provide sustainable growth. However, using RBB requires that leaders apply a proper perspective of each lever’s roles, opportunities and limitations in contributing to portfolio growth. We believe there are certain principles business leaders with CPG food and beverage firms should consider as they determine the role that RBB will play across their business units and organizations and to what extent premium product development intersects with each of these levers.
While Renovate, Build and Buy each entail distinct roles in product and brand development, they should be thought of as a concerted strategy toward the broader objective of contemporizing portfolios for growth. The following simple framework demonstrates the distinction of these levers while underscoring their interrelatedness:
More so than just the terminology itself, it is helpful to think about each of these levers based on the scale of product-level innovation that they entail and, as such, the role of existing versus new brands in delivering such innovation. When taking the framework as a whole, here are three concepts important to acknowledge:
To this point, we can’t help but to borrow and adapt the terminology coined by the “father” of business innovation theory, Clayton Christensen, who described innovation as either sustaining or disruptive.
To learn how to employ Hartman’s RBB framework to help set you on a path toward growth, contact Shelley Balanko, Ph.D., SVP at: firstname.lastname@example.org
As leaders in the study of American food culture, The Hartman Group has been tracking how Americans shop for food since the 1990s. From one-stop shopping to multichannel shopping to online markets and click-and-collect, we continue to track consumers’ evolving perceptions, needs, habits and relationships with food retailers. New to the 2017 report is a special section on the expansion of the discount grocery channel, the emerging fresh-format channel and smaller-footprint retail formats.