The Food and Beverage Manufacturers Perspective

Food and beverage manufacturers are under great pressure from both the external environment and the markets. Here is what you need to know and do in order to succeed.

Slow market growth both locally and nationally, raw material price fluctuations, international agreements, the strength of the dollar, health and environmental standards requirements, new technology, provincial, national and international policies, among other factors, have a profound impact on the food and beverage manufacturing and distribution sector, which is Canada’s second largest industry .

COMPLEXITY
Businesses are facing growing worldwide competition. Consolidation has given the retail and wholesale distribution channels significant leverage over small and medium businesses, and consumer tastes and demands are changing rapidly, giving rise to new and even more widely scattered market segments.

Manufacturers must constantly assess the effects of these factors and, furthermore take advantage thereof. Successful entrepreneurs will understand how their companies can benefit from seemingly insurmountable obstacles and turn them into opportunities.

In fact, opportunities abound, but is your company prepared and ready to stand out so as to be able to reach its business goals?

Since time and money are scarce and non-renewable resources, a strategic planning exercise and initiative involving an organization’s managers and directors will help minimize strategic errors, thus avoiding operating blindly and without a roadmap. A strategic planning exercise allows for making fundamental decisions on the company’s future. The business environment is more complex and profitability is often elusive; in Canada, the industry has posted an average annual growth rate of 2.6% from 2004 to 2011, with an average net earnings increase of 2.7% per year.

INNOVATION
Clearly, the complexity of today’s business world requires companies to develop a strategic vision to help them stand out, often based on their approach to innovation. Competitiveness depends in large part on the ability to offer innovative products. At the MNP Round Table organized in collaboration with CTAC , food industry leaders reiterated the importance of innovation and emphasized the importance of greater collaboration.

How will your company position itself? In what markets? With what kind of products? What are the available resources? What opportunities would benefit your company in the current environment? The following examples offer avenues for consideration:
• Innovation lies at the heart of the process of adapting to new realities; it can focus on products, processing methods, distribution, marketing, etc.
• The rigorous food safety standards our companies must comply with certainly provide us with a competitive advantage in several external markets.
• Many countries offer good opportunities for growth; China represents a very promising market for some products, Russia and Mexico for others, etc.
• New niche segments, focused on ethnicity, convenience, pleasure, non-GMO foods, health, gluten-free, trans fat-free, etc., are all experiencing solid growth in several markets.

Once strategic planning is complete, it’s important to make sure the plan can be executed. Implementation remains the cornerstone of any strategic planning process. Success depends as much on the quality of the planning as on the practicality of its execution. Is your company able to adapt to change? How can you mobilize your human resources? Is your current business model viable given today’s reality?

Given all these factors, how can our companies not only survive, but grow and prosper? The answer is as follows: First, you need a clear vision of your role, your position on the world stage and your goals; then it’s a matter of planning and putting into place an innovative plan that will help you stand out. In short, it’s up to you to position yourself accordingly.

To learn more, contact Henry Rosenblum at 514.228.7916 or [email protected], or Lucie Chouinard at 514.228.7841 or [email protected], or your local MNP Advisor.

N.B. This text was originally published in L’actualité Alimentaire magazine (volume 11, number 1).

1) 1.9% of GNP, 15.4% of manufacturing production, Industry Insight, Food & Beverage, BDC, Spring 2013
2) Industry Canada, Canadian Industry Statistics, Manufacturing Production: Food Production.
3) Conseil de la transformation agroalimentaire et des produits de consommation (CTAC)