Global Food Model | Why
Global Food Brands: declining dire straits or just moving in new directions?
All global food brand operators face some huge really game changing developments:
(developments that could wash out the soil under their current business model)
(by this the operators that react not in a timely matter will decline in volume/value)
(but those that understand what’s happening and anticipates smartly will thrive enormously)
First: the rise/victory of retail chains brands
- retail chains own branding has reached par in content quality and packing layout quality
(delivering them imago)
- the retail chain own branding don’t are burdened by the costs of marketing and advertising
(delivering them the combo of lower prices and margin)
- the retail chains can use their own distributed media and use instore marketing/advertising at almost no cost
(delivering them new user binding for free)
- the retail chains own branding gets the best store shelf spaces as the margin is better for the retail chains
(convenience that delivers them much sales)
- the retail chains own branding can test new products at no costs
(delivering them a huge innovation advantage and cost advantage and maybe better product lines)
Second: the changes in retail chain market shares
- in the Global West the middle class targeted retail chains are in dire straits (more and more people switches to discount chains)
- purchase power spending in discount chains are lost for ever for the global food brands (as they have no access there)
Third: the margins that are slipping away
- the only way to get exposure (and maybe even sales) is giving discounts that than are promoted by the chains
- discounts that are burdening the margin spread significant
- that the power has gone from the brand towards the chains is old news (and clouds the margins)
- the margins of the past are there certainly no guarantee for the future
- not only the sales party is clouded: the margin party is even more difficult to get realized
- for the near future: Monsanto’s DNA ‘taxes’ are growing rapidly as threat in the margin spread
Fourth: the changes in general knowledge level
- the knowledge level of the consumer has risen significant: the consumer of the 20th century is not the consumer of the 21st century
- the information access barrier has gone to close to zero due to the internet access and search engines like google
Fifth: the changes in the media landscape
- the media consumption landscape has changed dramatically: it has been fragmented further than it ever before
- the media operators landscape has changed dramatically: the market share of corporate media declined sharply (blogs have become as important)
- the media content generation has changed dramatically: user content drive the media these days (blogs, posts under blog items, facebook, twitter, etc)
- dictating the perception of a brand is no longer possible: the active part of the consumers are in the driver’s seat
Sixth: the changes regarding to transparency
- a result of both above described general knowledge level changes and the media landscape changes
- the old advertising model (‘we live, you buy’) collapses due to this all
- marketing needs more and more relations with a certain general knowledge fact base
- the theories/practices of Edward Bernays and David Ogilvy that facts don’t matter at all are no longer valid
Seventh: trust is no longer the default status
- due to transparency the consumer gets its share of atrocities in the food sector
- this has to do with ingredients (derivated trust: a brand is an ingredient trust proxy)
- this has to do with DNA (Monsanto is getting hatred each day more)
- this has to do with production environments/morals
- brands will over achieve in control: trust will become an even more important part in the mix of main brand spec
- trust grows like a coconut and could fall like a coconut too
Eighth: the consumer’s view on food is changing at fast pace
- healthy food is becoming mainstream (has broken out of the subculture)
- healthy food is promoted by celebrities (with bodies each woman would kill for without any conscience barrier)
- fast food is out, slow food is in (the satisfaction people found in shopping, the now find in cooking)
Ninth: the time spend on food is rising again
- this contrary the main volume of current products (that are targeted on fast cooking)
- due less jobs the consumer is getting more time (also to cook)
- due travelling (in the past) the consumer is getting more exotic (delivering a huge to explore potential as upside: see below)
- owning things is getting replaced by experiencing things again
Tenth: the ‘care taker’ (mom/dad) will do anything (and certainly change food behaviour) for their family / the ones they love
- they want health above anything (is what they live for…!)
- global food brands are not that good in delivering health (with as positive exception: Unilever’s soups with extra vegetables)
Eleventh: the concept of economic democracy is rising at fast pace
- the consumer wants to use the purchase power they have also to change the world in the direction they want it to develop
- this has a lot to do with the collapse of trust in governments and aid organizations
- not in the fake way a brand like Pampers do ($ 0.05 for one vaccine on a $ 10 purchase: this already backfires to them)
- not attached, but embedded: the product itself should make the world a better place
- neutral is no longer enough: the product has to deliver a better world (there’s a sales/margin potential in this)
Twelfth: the spread between healthy and enjoyable is still very wide
- nor the consumer, nor the brand operator knows yet how to bring them more together (but it will find its way)
- Nestle has a super slogan: good food / food life (although they sell mainly not that good food)
Thirteenth: the changes due to the decline of general prosperity in the Global West
- the global food brands are historical substantial/almost focused on the Global West
- in the Global West inequality increases sharply (smaller layer of top incomes, bigger reservoir of havenots)
- in the Global West the middle class (the historical customer volume of global food brands) is getting squeezed out at fast pace
- in the Global West declining household income levels are used increasingly to pay of household debt accumulated in the last 20 years
- the collapse of purchase power in the Global West is dramatic and is still in free fall (see all the recent mall related chain bankruptcies)
- the Global West has had artificial credit driven ‘growth’ on credit for 20 years (and they must be paid back the next 20 years)
- the Global West had forgotten what non-credit-based but real economic growth was (and they must be re-figured out in the next 20 years)
- the Global West is too old, too spoiled, too much based on economic colonialism, too high hearted (beside the still many advantages they have)
Fourteenth: the changes due the rise of general prosperity in the Global East and Global South
- the rise of prosperity levels in the Global East and Global South are not that easy to harvest (they’re quiet different worlds)
- cultural/historical barriers are still huge (even although the Global West is worshiped a lot in the Global East and Global South)
- the Global East and Global West are just different in taste (and for China: even in food structure)
- the recipes popular in the Global West don’t work that well over there
- the climate is different (a lot of street food consumption)
- the wages are lower and less taxed (eating in restaurants is cheap)
- the worshipping of the Global West is declining (as we economic/moral decline and the self esteem of the Global East and Global South rises)
- in the Global East and Global South lower ratios of every purchase power dollar could be harvested by this all (it’s not the Global West)
- the Global Food Model could increase this Global East and Global South purchase power harvesting
Fifteenth: the rise of online sales (direct consumer contact)
- in food still rather insignificant
- this can change by the rise of new online community based brands (online distribution costs have dropped significant)
- online sales and retail sales within the same brand can’t be combined that easy (retail will not be happy with it)
Sixteenth: global food brands are also their own enemies
- everybody sees the world as we are (so everybody has not a clear view on the world as it is: we’re always blurred by our own perceptions)
- global food brands their historical core is the push model (we know, you buy: a corporate centred model: not serving, but determining)
- global food brands are not that good in the pull model (but these days the consumer is at the driver’s seat: that’s quiet an other world)
- what has made you strong is also what makes you weak (applies to everything anytime: also to global food brands)
- a good example is the focus on retail chains (while online sales grow, but not yet in the retail chain products that much)
Seventeenth: there’s an elephant/cancer/volumedemandingthirdprocess growing in the margin spread
- DNA patents are a huge threat to global food operator’s margins
- third parties (like Monsanto) grow into the position of margin deciders
- they will deciding what each part of the chain in a product may earn
- there’s no place to hide (see the wording of TPP, TTIP, etc)
- they have got the right to seize any container that they like on the suspicion of not paid patent fees to them
- they will ruin any free flow of good by this (no transporter will move any load or container without patent paid documents)
- a cancerous/parasitic process will eat any perspective on profit that’s interesting
- the DNA patent rights model delivers dead ended streets in innovation (stagnation)
- the DNA planters’s breeding rights model make innovation on top of innovation possible (progress)
- the DNA patent model will deliver high risk / low performance / high chemical monocultures
- the DNA patent model is based on extortion of free family farmers (loads of proof of it is easy to find on the internet)
- the effects of the DNA patent model are very much overrated by smart marketing efforts
- fighting Monsanto’s claws on margin could be something of the most importance for margin security (no third party should dictate the margins)
- fighting Monsanto’s global (!) monocultures could be something of the most importance for supply security (monoculture trend to fail sooner or later)
Eighteenth: the development towards less processing
- in the past more processing is what gave products more added value
- today less processing is what gives products more added value
- more processing used to be a sign of less risk (health), more processing has developed into a sign of more risk (health)
- other technologies have replace processing (like a) computer attached camera driven grading per item and b) packaging in modified atmosphere)
Nineteenth: urbanization or suburbanization
- all food brand prognoses are based on massive urbanization
- maybe this prognosis is not that right
- air qualities in cities are very low
- cities are getting more and more expensive
- cities are getting more and more better connected by intra city transport
- ocean based growth centers will face competition of land locked growth centres
- cost differences will lead the inland developments
- rivers are perfect inland development infra (container transport)
- intra continental rail schedules/extensions will draw a new silk route economic trail trough continents
Twentieth: the need for an attached story
- the purchase power declines the market for emotions rises
- products with a real/true story attached will grow significant
- products with not a story attached are judged more by the price/quality combo
- getting ‘in-line’ with the realm of consumers is getting more important every year
There are more cloudy facets and more details of those and the above, but those 20 and their described details do the job in paving the way i.e. emphasizing the need for new alternatives that are resistant i.e. bypasses to the described developments (like the by us described Global Food Model).
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