Blog: Resilience and renovation
Dean Best | 23 February 2009
Resilience and renovation. Those were the central themes as the food industry's leading lights flocked to Florida to discuss how the sector was faring amid the global economic downturn.
The mood at this year's Consumer Analyst Group of New York (CAGNY) conference was downbeat compared to recent years – but it was also determined.
Consumer caution has led to questions over how the food industry's big brand-owners will fare in a business climate seen as the worst in decades. Rising unemployment and the squeeze on personal credit has hit spending and prompted shoppers to look for greater value – and often fall into the arms of private label.
Nevertheless, the multinationals behind global brands like Kellogg and Heinz believe they can withstand the worst of the recession and indeed thrive as the downturn causes the world's food giants to review their business and refresh what they offer consumers.
ConAgra Foods used the CAGNY conference to outline how it plans to tap into the consumer clamour for value with a series of launches in frozen food, while Sara Lee signalled it would offer new versions of its products at lower prices.
That said, CAGNY heard some bullish statements on the threat of private label. Kraft boss Irene Rosenfeld insisted her company was less vulnerable than some of its rivals to retailers' own-brands. JM Smucker, meanwhile, was adamant its portfolio of brands from Crisco cooking oils to Jif peanut butter could also withstand growing consumer demand for private-label lines.
However, behind those belligerent tones were signs that brand-owners are changing tack to fight for market share. JM Smucker admitted it had reduced prices on its oil and baking products, Kraft revealed it is "pruning" its portfolio to scrap under-performing lines and Heinz said any new products would be focused on its core categories.
Nevertheless, those at CAGNY saw signs that some of the industry's big players still believe that value is not the only route to succeeding in the downturn. Campbell Soup Co., for one, said it would continue to target demand for healthier products with plans to reformulate some of its lines.
However, the most intriguing piece of innovation to emerge from CAGNY was unveiled by PepsiCo, which is looking to target female snack-lovers. Next month, PepsiCo will launch a snack developed for women as it looks to tap into a market that it believes is worth US$650m in the US alone.
For those looking to survive in the downturn, looking at price may be right but, as some at CAGNY hinted last week, it is unlikely to be the only answer.
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