With it’s $20 billion acquisition of Bestfoods, international giant Unilever, has among other things, delivered a massive wake-up call to under-performing players in the foodservice sector. According to Unilever one of the advantages of the deal will be “leveraging Unilever’s large range of spreads, tea and tea based beverages and culinary products through Bestfoods excellent foodservice channel.” In the view of specialist consultancy, Promar International this is one aspect which carries enormous weight.
“With growth in the foodservice sector in key mature markets outstripping traditional retail by more than 3:1, Unilever has at a stroke added massive capability for accelerating top line growth. But much more importantly it can benefit from Bestfoods’ skills in managing the foodservice channel effectively, something that few players can boast,” according to Catherine Morton, Promar director.
“As foodservice continues to take increased share of stomach it is the profitability question which is key. With a very powerful stable of global brands and their knowledge of sophisticated consumer base the new Unilever could take a lead in forging close partnerships with the major foodservice operators to further enhance channel profitability,” Morton adds.
Promar’s warning is that this will also shake up the competition in the foodservice channel, forcing others to improve focus or exit. Morton insists that, “The cautious approach in foodservice is dead. The growing foodservice operators are demanding more co-operation and the opportunities are clearly there to deliver exciting consumer offerings. Those engaging at arms length will only see poor earnings fall further, dragging down overall performance.”
Promar is currently undertaking a strategic study on Profitability in Foodservice, due for completion July 2000. For further details, please contact Sandy Livingstone, Promar International.