As food manufacturers look to adapt to the challenging economic environment, just-food has put together a recession survival guide with some of the top tips for weathering the storm.
1. Optimising trading performance
Food companies must look to make their existing infrastructure and assets work harder in order to maintain or grow market share with reduced resources. Priorities could include reducing complexity, leveraging existing marketing spend, reducing SKUs and cutting non-essential workforce.
2. Sourcing strategies
As the economic climate becomes increasingly uncertain, it is ever more important that food manufacturers look at supply base viability. Are any key suppliers likely to go bust and can they be replaced? There may also be supply chain savings to be made.
3. Strengthening the balance sheet
As lenders become increasingly unwilling to issue new loans and refinance existing ones, heavy debts have become a serious risk. Add to this the difficulties of generating sufficient cash flow to cover outstanding debts as consumers cut spending, and the need to strengthen weak balance sheets becomes clear. FMCG companies saddled with high debt levels have looked to raise cash by issuing new equity and selling off non-core brands.
4. Adapting marketing messages
Food groups must adapt both their marketing messages and how they are delivered in order to preserve existing customers and appeal to new ones. Discounting will become increasingly important in marketing campaigns, but manufacturers must also closely examine the positioning of their brands. A focus on price alone is not enough – brands must deliver good value for money.
Changing consumer priorities and expectations mean that food companies must focus on providing new products to meet these needs. In bad times as in good, innovation remains key.
For a more in depth look at various strategies to ride out – and, indeed, prosper in – the global downturn, check out our analysis of the situation.