Entrepreneurship's effect on the competitive landscape of the Food & Beverage industry

The competitive landscape of the Food & Beverage (F&B) industry is constantly changing; entrepreneurs have the greatest influence on this change. Entrepreneurs introduce new products and services that may eventually hold a large stake in the market, forcing pre-existing companies to adapt to their presence or disband.

            The F&B industry changes so constantly because there is a massive variety of businesses, great and small, that hold stake in it. This variety creates many different sectors in which innovation can bloom, which leads to more opportunities for entrepreneurs. This means that more businesses enter the industry frequently, changing the competitive landscape very frequently through new products, services, advertisements, technologies, popular social trends, etc.

            Lately the social and ethical aspects of the F&B industry have been two of the greatest driving forces in the competitive landscape of the industry. People are more likely to buy from socially responsible companies, products that are more eco-friendly, healthier foods & beverages, Organic and Local foods & beverages, ethically produced foods & beverages, etc. etc. This is causing companies to adapt to these new trends. For example, over the past few years water bottling companies such as Poland Springs (owned by a subsidiary of Nestle) have cut down on the amount of plastic that they use in their bottles by 30% to keep up with the competitive landscape as it shifts towards lower-waste and eco-friendly social preferences.

            Moreover, the economy of any given country will affect the competitive landscape within that country. In the United States of America, low-cost foods & beverages and personally prepared foods are becoming more and more popular due to the recent recession. This has provided more opportunities for entrepreneurs in areas such as the frozen foods sector. New companies such as Amy’s frozen foods are prospering and forcing the industry to adapt and become more competitive with these entrepreneurs.

As entrepreneurs begin appearing more frequently in different sectors, those sectors become more and more competitive because each company with a stake in that sector then has to fight harder to maintain a profit. 

http://ageconsearch.umn.edu/bitstream/27391/1/03020027.pdf

http://foodandbeveragesection2.blogspot.com/2012/03/competitive-landscape-of-food-beverage.html

http://www.nestle-watersna.com/pdf/ps_bwqr.pdf

http://www.enn.com/top_stories/article/39286

How do companies structure themselves and what are workforce trends in the F&B Industry?

 Benjamin S. Marks

Two workforce related questions in the food and beverage industry are: How do companies structure themselves, and what are the trends that this industry is experiencing? The first question provides beneficial insight into trends within the food and beverage industry, which is why it is good to begin the conversation there.

            So how would a company structure itself in this industry? The problem with dissecting the companies in the F&B industry is that there are extremely different types of companies. Some are agriculturally based, which would rely primarily on manual labor, while other companies are more based on mass-producing goods (such as bottling soda, or packaging frozen foods), which would be primarily manufacturing labor.

Seeing that there are different types of companies within this industry, there are a few key things to focus in on when breaking down companies. Firstly, it is possible for companies control multiple areas of the supply chain in order to produce their goods. This would allow a researcher to see the best of where a company would allocate its workforce, which would answer the question on how companies should structure themselves. This leads to the second point that not every company has the ability to partake in multiple areas of producing goods, which affects how the company structures itself. This would mainly apply to smaller companies, as they would not have the resources to expand / compete in multiple areas.

This is why you need to see how big the company is and what parts of the F&B sector the company is in before you look at its structure. For the bigger companies that can provide themselves with both the ingredients and the ability to manufacture the goods, you typically will see a breakdown focusing more towards manufacturing and marketing because that is how they distinguish themselves from its competitors. On the other hand for smaller companies you tend to see them highly focused on whatever there good is, whether that be manual work such as farming or manufacturing because marketing tends to be too expensive for these smaller companies.

            See now that there are breakdowns in what companies structure themselves in certain ways, that plays a key role into the trends being experienced in this specific sector. While it can be expensive to be a large company in the food and beverage industry for a number of factors, big companies, like SABMiller, used to move their workforce out of more expensive countries and into the cheaper areas in the past, but now a newer trend appears to have emerged for all companies. That trend is cutting down on waste.

Citing SABMiller’s Sustainable Development Summary Reports of 2009 and 2011 SABMiller focused on cutting down its expenses shortly after the economic crash. In the 2011 report it states, “We aim to use water as efficiently as possible and have set ourselves the demanding target of reducing our water use per hectolitre of beer by 25% between 2008 and 2015.” From the numbers of both the 2009 and 2011 report, SABMiller has been making a viable improvement reaching a remarkable an improved 8% efficiency from 2008 from the 2011 numbers.

Many other companies have been trying to cut down on waste after the financial meltdown as seen by the 2009 and 2010 market numbers within the F&B industry. The 2009 and 2010 years in this industry were labeled the “less is more years” because despite fewer sales, there was more profit. While companies realized there would be fewer consumers due to highly leveraged consumers that would not be able to purchase their goods, which led companies to focus on efficiency. This is still the trend in the marketplace today, and SABMiller is an excellent example of how being efficient is a workforce trend that helps companies do well in the market place even if some believe the recession could be ending soon. It does not only save the company money, but the company is also working toward an ethical goal of being conscious of the world’s scare resources. 

Works Cited:

http://www.foodprocessing.com/articles/2010/top100foodprocessors.html

http://www.sabmiller.com/files/reports/2011_SD_report.pdf

http://www.sabmiller.com/files/reports/2009_SD_report.pdf

Company Responses to the Health Fad

Sophie Paridon

Persily-Lamel

29 March 2012

Blog 6A

Company Responses to the Health Fad

            Companies within the Food and Beverage industry are very responsive to the different trends and fads that the population follow, updating old products and releasing new ones to satisfy customers’ wants and needs. The current trend shows that people are taking greater interest in their health and are therefore buying foods and beverages that are healthier and more organic. John M. Foraker, Annie’s chief executive, describes the current food trend by stating that “Organic was considered a niche business 15 years ago, now it’s mainstream” (Rusli).  Therefore, increasingly, the emerging companies are those that are known for their healthy and/or organic products. This includes companies such as Vita Coco and Annie’s

Vita Coco is a company that sells coconut water that is “considered the best-selling coconut juice in the US with 2011 sales expected to hit $100 million” (Gorgon). This product is growing high in demand due to the fact that it is a completely natural rehydration beverage. Not only does this beverage rehydrate and detoxify your body, but it also is “naturally loaded with the five key electrolytes: potassium, magnesium, phosphorous, sodium and calcium” (Gorgon).

Annie’s is an increasingly popular company known for their organic foods, such as Mac & Cheese, pizza, and cheddar snacks. The consistently increasing desire for customers to buy healthier goods resulted in Annie’s recording “revenue of $117.6 million, a 22.5 percent jump from the previous year, with net income attributable to common shareholders of $596,000” in 2011 (Rusli).

With the emergence of companies such as Vita Coco and Annie’s, it becomes clear that the customers of the Food and Beverage Industry are in fact following the popular fad of staying healthy and organic. Not only are new companies emerging, but already popular companies such as General Mills and Pepsi Co are updating their products as well as releasing new ones to follow this new trend. This proves that the Food and Beverage industry is in fact extremely responsive to this growing health trend.

http://dealbook.nytimes.com/2012/03/28/annies-pops-64-on-debut/?scp=1&sq=food%20and%20beverage&st=Search

http://news.softpedia.com/news/Latest-Celebrity-Fad-Vita-Coco-Coconut-Water-140455.shtml

Leaders in the Industry

There are three leaders that have influenced various aspects of the food and beverage industries. First, is CEO of Whole Foods, John Mackey. As a very successful entrepreneur, Mackey has introduced free trade economics to the US on a large scale. Having hundreds of stores around the US, Whole Foods has become a store that sells natural, organic, and free trade products to the US and around the world. Mackey is also a large advocate of animal welfare, donating about 1 millions dollars a year for animal welfare groups and organizations. Mackey has been very influential in becoming a great entrepreneur that has a social aspect to his company, allowing him to become a social entrepreneur, a trend that many entrepreneurs are now following.

Another leader in the food and beverage industries is the current CEO of PepsiCo. Being one of the most 100 influential women in the world, Indra Nooyi has a large influence in the beverage industry. Pepsi is one of the most recognized brands in the world, thanks to the leadership and managing skills of Nooyi. She has been able to continue a legacy that has lasted for many years. She has allowed the company to also prosper and take the right decisions. After selling restaurants Pizza Hut, KFC, and Taco Bell, the company focused more on offering better service in beverage rather than food.

Lastly, on a smaller level than PepsiCo is the frozen food industry. According to the American Frozen Food Association, A. Ray Walker was awarded a place in the frozen food hall of fame. This honorary role was gained by his great leadership in developing the frozen food industry in his Patterson Vegetable Company. Patterson Vegetable Company offers the latest technology in trying to keep vegetables fresher than fresh. This great goal that the company has allowed the company to develop to its greatest achievements, and thus allow greater influence in the frozen food industry.

Sources:
http://www.pattersonvegetable.com/
http://www.affi.org/assets/news/frozen-food-industry-leaders-honored-2011-affi-frozen-food-convention.pdf
http://www.guardian.co.uk/lifeandstyle/2006/jan/29/foodanddrink.organics
http://www.time.com/time/specials/2007/article/0,28804,1595326_1615737_1615996,00.html

Opportunities for Innovation

Throughout the food and beverage industry there are many opportunities for innovation. Because the millennial age group is aging, and has become the "largest consumer segment"(grantthornton) food and beverage companies are focusing on their preferences. This generation has "a lot less brand loyalty and a lot more focus on health and wellness" (grantthornton) so companies that are focusing on creating healthy alternatives and branding their products with a health focus will appeal more to the millenials. An article entitled "Food for Thought" by Grant Thornton a company that specializes in auditing, management consulting, corporate finance, risk management, and information technology states, “Innovation continues to be key. Food and beverage companies need to find new and different ways of doing things”(Grantthornton). Companies such as General Mills continue to change its cereal brands by making them whole grain, heart healthy, etc. Companies such as General Mills, that already have a strong product line, that continue to make health changes to its products, will win over the millennial generation. The company PepsiCo, has also changed its product line in order to create healthier food, "Slashing fat, sugar, and sodium by as much as 25% in the next 10 years--without changing their taste"(fastcompany).
 
Companies, along with changing the health content of their food, can also change how their product is made, where it is made, and what it is packaged in. For example, recently Sun Chip has changed its packaging of its chips to create a biodegradable bag, in efforts to become a more "green" company. Another example of innovation within a company, would be to change the fuel that the trucks use to deliver the food and beverages. Coca-Cola is "working to increase the fuel efficiency of the system's fleet of more than 200,000 vehicles used to deliver our products around the world" (Coca-cola). There are various types of innovation that a company can use in order to improve their products. 






http://www.grantthornton.com/staticfiles/GTCom/location/S/San%20Francisco/GBA-F&B-Newsletter-2012_WEB.PDF
(http://www.fastcompany.com/1738541/the-10-most-innovative-companies-in-food
http://www.thecoca-colacompany.com/citizenship/fleet_transportation.html

Current Events: New Categories in the Beverage Industry?

Benjamin S. Marks

       No matter what the marketplace everyone is looking for the next big category. Bevindustry.com came out with an interesting article based on possible new categories in the beverage industry focusing on Healthy and Exotic, Fizzy alternatives, and Recovery Drinks. This article focuses on these new possible categories, all which seem viable possibilities due to how the market is broken down.

       Beginning with the Healthy and Exotic products, this section is seeing to be very trendy in the U.S. market. Major players in the market have taken up stock in this growing section, as Coca-Cola co owns minority stake in Zico, PepsiCo purchased a majority stake in O.N.E. Coconut Water, and Dr. Pepper Snapple Group is distributing Vita Coco. Seeing that the major players are trying to get a major foothold in this growing section, it seems imperative that these healthy and exotic products are becoming its own category in the beverage industry.

       For Fizzy alternatives as a new category, companies are looking for a medium between fountain drinks (soda) and alcohol. This gap is very large as a growing trend is adults cutting back on sugar as they age. While this seems to be more of a niche market, this interest in these different carbonated drinks has picked up in Europe and may make its way to the United States. Some of these types of drinks include Utmost brands Inc’s Dry Root Beer flavor GUS (Grown Up Sodas). Other companies such as Oogave are trying to target this section of the market by introducing organic sodas. As more and more companies may jump on this growing idea, it has the possibility to be a fad rather than a trendy section, but nonetheless Fizzy alternatives can carve out a space between beer and soda to make its own category.

       Lastly focusing in on recovery drinks, several companies have attempted to target a different group of people. Sarah Theodore, a global drink analyst, stated “The sports drink category has seen an increase in post-workout recovery beverages. Looking at recovery beverages from a nightlife perspective, hangover shots might fit into that trend.” Several companies have been releasing these hangover shots that is formulated to, “hydrate the human body with the nutrients it loses while drinking alcohol, thus preventing a hangover.” This is what led to the launch of Noho, a 2-ounce “hangover” shot, last year. This is the newest of all the categories talked about above, but this product possesses the traits to create a whole new category in the food and beverage market. Only time will tell if this becomes a true category in the beverage industry.



Works cited:

http://www.bevindustry.com/articles/85332-new-categories-on-the-horizon