Dispatches from FIE 2015

Digitalisation, fragmentation and the new food landscape – will your firm survive?

This content item was originally published on www.foodnavigator.com, a William Reed online publication.


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The digital age has changed everything – fragmenting both consumer taste and industry response to it. Is your business tuned in to a shift that is pushing start-ups front and centre like never before or are you soon to be swept away?

Market analyst, consultant, author and editor Julian Mellentin from New Nutrition Business​ (NNB) believes seismic market fragmentation has irrevocably shaken the food chain as we know it – but is a reality many are ignoring at their peril.

“It’s not just a theory we have come up with. It’s a real trend that is affecting the branded side of the industry and the ingredients side and that’s a massive fragmentation of the consumer market,” ​Mellentin said at FiE recently, noting a proliferation of smaller brands acting as first-movers in the new climate.

This comes with people – people’s views about food and health have changed significantly and people no longer hold a few points of view – they hold a huge array of points of view.”

“The technology is actually having a big effect on everyone between 15 and 55…it’s enabling people to make more personal decisions about what I am going to eat and get more information about healthy eating.”


Ingredient suppliers were being forced to rethink their modes of business.

“Whereas in the past ingredients companies would think about targeting high-volume business at some big name, selling a lot of kilos to a Unilever, those days are becoming more difficult and increasingly what you find is that the most successful ingredients businesses are the ones who work often with small entrepreneurial start-ups,” ​he said.

“The volumes involved in the beginning are often tiny – this leads often to some very difficult internal debates – like why are we putting so much energy into serving a small company? But there are companies here today who have got significant business on the back of working with those entrepreneurial start-ups. So that’s a big strategic change that has started with the consumer, is happening to brands and is going to affect the ingredients supply industry more and more.”

He advised patience with smaller clients. “You shouldn’t smack your sales people over the head if they haven’t come back with a giant order from Nestlé. In fact what you should do is congratulate them that they have found 20 small entrepreneurial companies because out of those 20, two or three will become quite worthwhile and that’s a very difficult mind set for a lot of companies to adopt.”

Too big (old & male) to change?

business strategy deal woman iStock.com Chagin

Mellentin said volume challenges were creating headaches – and challenges – and that age and gender was playing a role in a company’s ability to change with women and younger people showing a greater capacity to comprehend and put in place actions that could roll with the changes .

Premium niche brands were winning greater segment share in many categories which may already be dominated by private label “which doesn’t leave much over for the traditional big brands.”

Long term view

Sensing this shift, he said some big brands were buying little brands but leaving them to run completely independently but warned with more entrepreneurial activity went more product failure.

“There’s no guaranteed way of making sure a product works…What looks like a big opportunity can turn out to be a much smaller opportunity. So any consultant who comes along and says I have a guaranteed way that you can always make your products work is kidding themselves and you."

"It is still extremely difficult and you have to take everything case-by-case and you have to have a long term view.”

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