Blog: International success - like nailing jelly to a wall
Dean Best | 25 February 2008
True international success is a grand ambition for the titans of the food industry but sometimes it can be as easy to achieve as nailing jelly to a wall.
Going global is often seen as a panacea to problems at home – US meat processors have been urged to look overseas for growth, while Hershey’s over-reliance on domestic chocolate-lovers is well-documented.
However, in the last fortnight, we’ve seen just how tricky it can be to succeed in foreign lands. Two weeks ago, we saw problems in Asia take the gloss off results at French food giant Danone. Sometimes, conservatism at home can stifle a company’s international ambitions before they have had a chance to bear fruit – witness the ongoing battle between New Zealand dairy giant Fonterra and its farmer members over the company’s future strategy.
And last week, the challenge of doing business abroad was brought sharply into focus at US group ConAgra Foods. The company was one of a slew of large US packaged food firms who gave an upbeat trading update to the analyst community last week. However, not all is well at the company. The performance of ConAgra’s food brands has been lagging behind its commodity business and, in a bid to revitalise its portfolio, the company is scaling back its operations internationally. Jobs are to go across Asia and in Europe, where cuts will be made in the UK. Brands like Slim Jim meat snacks, popular in the US, have not exactly proved a hit overseas.
But fear not. With the right mix of brands and investment in high-growth categories, international success can be achieved. Last week, Nestle unveiled a robust set of figures for 2007 with all its regions contributing to an almost 13% rise in annual profits. Input costs may be on the rise but the Swiss food giant has proved growth can be achieved in a number of markets despite a challenging economic environment.
In retail, Asda has also proved growth can be won despite concerns over consumer spending. The UK retailer’s buoyant sales gave parent Wal-Mart a boost last week and the company thumbed its nose at the notion that a slowing economy is not the best backdrop for bold measures. Asda is planning a wave of expansion in the UK, moves that will lead to the creation of 9,000 jobs.
As predicted, Asda looks likely to gain most from government moves to inject more competition into the UK grocery sector. It is an interesting time to study the UK grocery landscape but just how does it compare with the retail scene in Europe?
The UK is seen as a retail-friendly environment for the largest grocers and, in the last week, we have looked at how the sector compares to markets across the English Channel. There are signs of a more liberal retail environment emerging in some European countries but how far that trend is indicative of real convergence across the continent remains to be seen.
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