Milling & Baking News - March 26, 2019 - 7

Editorial

The peril of oversimplifying food industry woes

n the aftermath of a $15.4 billion write-off by The food and beverage company can claim a five-year track
Kraft Heinz Co., two lessons identified by many record of consistently strong top-line and bottom-line
observers were that a cost reduction strategy alone growth. Cost reduction, innovation, acquisitions, incubais insufficient for generating sustainable growth for tors, portfolio reconfiguration, headquarters relocations,
packaged foods companies and that the introduction capital investment, distribution model shifts and personof new products is what is required for success today.
nel shakeups are among steps the industry's companies
Given the ongoing changes in consumer tastes evident have taken and continue to take in a sometimes frenetic
in the food market, it is clear success moving ahead will effort to reposition their business for growth.
be impossible without successful innovation. Still, this
The vigor with which companies are seeking to unseeming choice between cost reduction and innovation or lock the secret for achieving growth was in full view
even the manner in which Kraft Heinz has been charac- during Natural Products Expo West in Anaheim, Calif.,
terized may be simplistic to the point of being unhelpful. in early March. Companies large and small showcased
It is true that deep cost cutting stood at the heart of initiatives aimed at satisfying evolving consumer tastes
the approach taken by 3G Capital when it acquired H.J. and customer requirements. Indicative that this annual
Heinz Co. for $23 billion and then merged the business event is more than products aimed at fringe segments
with Kraft Foods Group in 2015.
of the public was the presence of Tim
Still, no major packaged foods comCofer, executive vice-president and
In 2019, virtually no
pany, including Kraft Heinz, has igchief growth officer of Mondelez
major food and beverage
nored the importance of new prodInternational, Inc. In an interview
company can claim a
ucts. Less than a year after the Kraft
with Food Business News, Mr. Cofer
five-year track record of
merger, the company announced a
consistently strong top-line described SnackFutures, a business
series of innovations the company
operating as an independent unit
and bottom-line growth.
showcased as key to its future. Afwithin Mondelez aimed at disruptter reformulating its flagship macaroni and cheese to ing the traditional consumer packaged goods model.
eliminate artificial preservatives and replace artificial Mr. Cofer conceded the established model for the
colors with a blend of natural spices and annatto, man- consumer packaged foods business "is not working."
agement described "big bets" the company was mak- Mondelez continues to see extraordinary potential in
ing with several of its products. These included the in- snacking, but growth will need to come from beyond
troduction of macaroni and cheese under the Cracker the company's "mainstream portfolio," he said.
Barrel brand, organic Capri Sun beverages, Kool-Aid
The same dynamism evident at Natural Products
Jammers drink pouches and a premium Classico Riser- Expo West is reshaping innovation in the baking inva line of pasta sauces. In the years that followed, new dustry as well. New product introductions profiled
products or other innovations were unveiled for Oscar in the annual Bread Product Perspective in this issue
Mayer hot dogs, Maxwell House coffee, Velveeta and showcase a variety of paths taken by bakers to appeal
other brands. The company also has made acquisitions to younger audiences. New product features include
and launched Springboard, an incubation platform the elimination of flour enrichment by one baker in the
aimed at identifying and developing emerging, dis- name of clean label, smaller package sizes and an everruptive food and beverage brands.
increasing number of products geared to consumers
The other problem with the cost reduction/innova- drawn to artisan bread. Economic conditions for packtion debate is it wrongly suggests there is a formula for aged foods companies are not expected to magically
success within grasp for food and beverage companies turn positive in 2019. Still, companies making the effort
ready to take the appropriate steps. In fact, food indus- to realign their business with marketplace changes will
try struggles are far too complex to believe a recipe for be well positioned in coming years when this trough in
success is so simply followed. In 2019, virtually no major the food business cycle finally passes. MBN
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7 / January 2, 2018
Milling & Baking News

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Milling & Baking News - March 26, 2019

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