NEW YORK — To buy or to build? It’s a question many leading food and beverage companies must answer to keep pace with changing consumer tastes. From Campbell’s soup to McDonald’s burgers, iconic brands are losing share to a generation of niche startups more closely aligned with a growing preference for less processed, more premium fare. To win back the wandering consumer, companies may drive growth through acquisition, innovation or both.
“We don’t believe one strategy is preferable over the other,” wrote Nicholas Fereday, executive director, senior analyst of food and consumer trends for Rabobank International, in a new report entitled Dude, Where’s My Consumer? Remaining Relevant to Today’s U.S. Consumer. “… there are multiple drivers to changing consumer preferences, and it would be naïve to assume there is a single solution.”
Rabobank recommends several key strategies based on two broad approaches — buy, not build; and build, not buy.
|Nicholas Fereday, executive director, senior analyst of food and consumer trends for Rabobank International.
“As long as a company remains slavishly devoted to its traditional products, brands and strategies, adding new brands to the system won’t fix the problem,” Mr. Fereday noted in the report. “These companies may need to consider de-emphasizing the flagship brands that have been the main drivers of growth for decades. In this scenario, legacy brands have a managed decline, with revenues reinvested in new brands and categories that may even cannibalize their legacy brands.
“This may sound like blasphemy, but the alternative may be a steady crawl toward obsolescence.”