Top Global Food and Beverage Companies: Strategies for Success

Publication Date	January 2009
Publisher	Packaged Facts
Product Type	Report
Pages	295
ISBN Number	not applicable
Product Code	PKF00145

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Summary

Global branding in the food and beverage consumer packaged goods industry has never been more challenging. Manufacturers are undoubtedly used to working in a 'fast moving' industry but in recent years the pace of change has accelerated. In many Western major food and drink markets, the level of competitiveness has been elevated by low volume growth and reduced margins, brought about by market saturation and the rising cost of raw materials. Added to this, retailers have been hugely successful at building premium offerings that compete head on with brands in terms of quality and value. The quest for innovation is becoming harder, forcing businesses to rethink the way they do business, formulate strategy and deliver on consumer expectations.

One of the most notable industry catalysts has been servicing a consumer with increasingly sophisticated tastes, preferences and power. Today, consumers are highly marketing-savvy and have greater expectations of brands not just in terms of quality and service, but honesty and transparency in how they run their business. Global brands are now confronted with a consumer that is willing and able to voice opinions about a brand and spread it like wildfire via online communities.

Health and convenience remain two of the biggest mega trends confronting manufacturers and play a significant role in shaping product strategy. Environmental concerns are rising, however, and the 'green element' is opening up a new set of issues manufacturers need to deal with, notably with regard to packaging and transportation. Devising and executing a robust corporate social responsibility strategy that deals with these issues is becoming a key requirement for global food and beverage brands.

Faced with limited volume growth in major developed markets, high-growth developing markets are becoming much more important to the bottom line. Mergers, acquisitions and partnerships are on the rise as food and drink brands look to establish and build their brands in international markets.

In response to these challenges, global brands are investing heavily in becoming better innovators, focusing more closely on using data and insight to drive strategy. As a consequence, there is a shift to becoming focused around a core mission or smaller set of brands, on which the company can build its foundations and evolve. Innovation is moving quietly into new avenues, where science can create real product differentiation.

From a communications standpoint, new and exciting avenues are being pursued as marketers embrace a wider range of media - offline and online - and build more targeted and intimate experiences for their customers. The power of digital platforms is creating new opportunities for food and drink marketers to build brand awareness and converse with consumers well away from the point of sale, but very much part of an integrated communications strategy.

Top Global Food and Beverage Companies: Strategies for Success explores the features and strategies of eight companies that have played a key role in shaping the global food & beverage industry. The report showcases the strategies that have underpinned the success of these companies and their brands, along with the highly complex challenges they face for the future. In addition to eight in-depth brand profiles, the report discusses the commonalities and distinguishing features of global brand strategies, from product development and innovation, through to marketing communications and distribution. The eight companies are: Anheuser-Busch (InBev) Coca-Cola Danone Heinz Kellogg Kraft Foods Nestl
Wrigley (Mars) Report Methodology The information in Top Global Food and Beverage Companies: Strategies for Success is based on primary and secondary research. Secondary research entailed data gathering from relevant sources, including industry and association publications, trade press, company literature and corporate annual reports. Primary research consists of a series of in-depth interviews with brand experts, associations and consultants to the CPG industry, in order to more closely understand the challenges brands face.

What you'll get in this report Top Global Food and Beverage Companies: Strategies for Success contains a unique mix of consumer, market and industry insight with international scope. It highlights the international strategies employed by some of the most successful leading brands in the industry and discusses the challenges faced by companies both now and in the future.

How you'll benefit from this report This report will serve as a benchmarking tool for companies and brands either looking to grow their industry presence on a domestic or international level or for smaller brands with big ambitions. The report provides a comprehensive overview that cannot be found in a single source, including insight from multiple products categories and markets.

This report will help: Marketing managers including brand, product and communication specialists to identify industry challenges, market opportunities and help formulate marketing strategy in multiple areas.

Business development executives and entrepreneurs in the food and beverage field to understand the landscape, the competitive set, and act as guidance to develop a 'go-to-market' strategy.

Research and development professionals stay on top of competitor initiatives and explore demand for food and beverages.
Marketing and branding agencies working with clients in the food and beverage industries understand the issues affecting them and identify insights to develop messaging and creative ideas that resonate with the target audience.
Business and information researchers that require valuable insight to pass on to in-house market researchers, business managers and other employees.

Content

Chapter 1: Executive Summary
Scope and Methodology
Scope of Report
Report Methodology
Global branding in the CPG food and beverage industry
- Figure 1-1: Global revenues of leading CPG companies 2007-2008 (in billions of dollars)
A new age of complexity
- Figure 1-2: Key external issues driving the food and beverage industry forward
Economic challenges
Consumer empowerment
The innovation challenge
Build global mega brands
Providing multi-tiered brand value
- Figure 1-3: Comparison of food benefits by geographic markets When making food purchases, which, if any, of the following factors do you consider today?
Thinking globally, acting locally
Expanding the global footprint
Mature market pressures
Securing a greater share of high-growth markets
- Figure 1-4: Consumer expenditure comparisons in selected global markets, Spending on food, beverages and tobacco as % of total country consumer expenditure, 2007
Building international scale
Placing health & nutrition at the heart of the business
Advertising and promotion
- Figure 1-5: Advertising spend on major media by region, 2007 (in millions of U.S. dollars)
Retailers raising the bar
- Figure 1-6: Leading global grocery retailers by net sales revenue, 2006-2007 (in millions of dollars)
Chapter 2: Introduction To Global Branding
Defining the global brand
The emergence of globalization
Globalization in the 21st century
The downside of globalization
Defining features of a global brand
Introduction to consumer packaged goods manufacturing
- Table 2-1: Top 10 most profitable industries based on the Forbes Global 500, 2007 percent return on revenue; revenue on assets (latest years available)
Chapter 3: Mega Trends
Trend 1: Consumer empowerment
Products that meet an eclectic' set of needs
Higher expectations
A louder collaborative' voice
Harder to reach and engage
Trend 2: Health and nutrition
Globesity
- Table 3-1: The rise of adult globesity' across selected markets, 1960-1995 (people with a BMI = 30 kg/m) (percent rate by gender)
- Figure 3-1: Obesity and Overweight Prevalence in Selected Industrialized
Nations (percent 2005/ people with a BMI = 30 kg/m)
Child obesity
Taking action
Trend 3: Supply side issues
- Figure 3-2: Global commodity prices 1998-2010, Based on world price indices (U.S. dollars/tonnes)
Looking at prices in context
Trend 4: Global shifts in consumer expenditure - rise of the BRIC economies
- Figure 3-3: Consumer expenditure comparisons in selected global markets, Actual expenditure on food, beverages and tobacco, 2007
- Figure 3-4: Consumer expenditure comparisons in selected global markets, Spending on food, beverages and tobacco as percent of total country consumer expenditure, 2007
- Figure 3-5: US Consumer expenditure 2007 (percent of total expenditure) Difficult times in mature markets
Trend 5: Sustainability and the green' movement
- Figure 3-6: Municipal waste management in the European Union Corporate impact
- Figure 3-7: Key external issues driving major food and beverage companies
Consumer propensity for green and sustainable products is growing
Sustainable approaches
Trend 6: Convenience
Broader societal changes
- Figure 3-8: Number of hot meals cooked in the Home 1991-2005
Chapter 4: Corporate Analysis
The brand portfolio
- Table 4-1: Global brand comparisons, by revenue and brand portfolio (in billions of dollars)
Brand differentiation
Glocal branding
Building the umbrella brand
Evolving the brand
Innovation-led
Research & Development
Mergers, acquisitions and ventures
Building around the core product portfolio
Creating a diversified CPG company
Creating a health halo': driving the health and wellness agenda
Sustainability and CSR
Specific company CSR developments
Benefits
Building a global footprint
Creating a global geographic presence
High-growth market: China
High-growth market: Russia
Chapter 5: Brand Development Trends
Strategy #1: Evolve to meet consumer demand globally
Global innovation challenges
- Figure 5-1: US mass-market volume sales, by key category, 2003-2007 (in millions)
In pursuit of ground breaking innovations
Strategy #2: Create affordable luxuries
Price competitiveness
Premiumization
- Figure 5-2: US mass-market value sales, by key category, 2003-2007 (in millions of dollars)
Strategy #3: Build global mega brands
Heinz Ketchup
Wrigley's Orbit and Extra
Kellogg's Special K
Kraft Philadelphia
Nestl's Nescaf
Strategy #4: Provide multi-tiered brand value
- Figure 5-3: When making food purchases, which, if any, of the following factors do you consider today?
Product quality
Health, nutrition and wellness
Functional health solutions (nutraceuticals)
Nutrition
Weight management
Well-being
Taste
Convenience
Sustainability
Intangible value: Design & Appeal
Chapter 6: Advertising & Promotion
The global advertising landscape
- Figure 6-1: Global advertising spend by region, 2007 (percent share of expenditure)
- Figure 6-2: Advertising spend on major media by region, 2007 (in millions of U.S. dollars)
Multi-media communications strategies
- Figure 6-3: Global distribution of advertising expenditure by major media, 1998-2007
Online advertising
Social media
Branded Utility
Big ideas that travel
Importance of in-store marketing
Sponsorships
Advertising backlash
Marketing to children
CPG companies embrace self-regulation on marketing to children
Consumer groups seek global code of contact to reduce marketing to children under 16
Chapter 7: Global Retailing Analysis
International retail trends
- Figure 7-1: Leading global grocery retailers by net sales revenue, 2006-2007 (in millions of dollars)
- Figure 7-2: Top 10 global retail grocery markets, 2005 (percent)
Growing power of supermarket retailers
Retailers raising the bar on innovation
Private label creates stronger competition for global brands
Growth in premium private label
- Table 7-1: Top 19 take-home private label ranges, Great Britain, 2007-2008, 52 weeks ending April 20, 2007/08 (in million and percent)
Implications for global brands
Chapter 8: Company Profiles
Budweiser (Anheuser-Busch InBev)
Overview
Anheuser-Busch InBev
International presence
- Figure 8-1: Anheuser-Busch beer sold by brand, 2007 (percent volume sales)
Market Performance
- Table 8-1: U.S. Mass-Market Sales of Bud Light Domestic Beer/Ale, 2003-2008 (in millions of dollars and percent)
- Table 8-2: U.S. Mass-Market Sales of Budweiser Domestic Beer/Ale, 2003-2008 (in millions of dollars and percent)
Financial Performance
- Table 8-3: Anheuser-Busch - Financial analysis, 2003-2007 (in millions of U.S. dollars and percent)
Product development
- Figure 8-2: Anheuser-Busch new product launches, 1998-2007
- Table 8-4: Anheuser Busch - New Beverage Product Development by
Category Product and SKU data, 1998-2008
Corporate Responsibility
Marketing Communications
Interactive marketing
Coca-Cola.
Overview
International presence
- Figure 8-3: Coca-Cola: Percent volume share by key geographic regions, 2007
Market performance
- Table 8-5: U.S. Mass-Market Sales of Classic Coca-Cola, 2003-2008 (in millions of dollars and percent)
- Table 8-6: U.S. Mass-Market Sales of Diet Coke, 2003-2008 (in millions of dollars and percent)
- Table 8-7: U.S. Mass-Market Sales of Coke Zero, 2006-2008 (in millions of dollars and percent)
Financial performance
- Table 8-8: The Coca-Cola Company - Financial analysis, 2004-2007 (in millions of dollars and percent)
The manufacturing (bottling) system
Innovation-led
Product development
- Figure 8-4: Coca-Cola New product launches, 1998-2007
- Table 8-9: The Coca-Cola Company - New Beverage Product Developments by Category Product and SKU data, 1998-2008
Global product development trends
Packaging innovation
Corporate social responsibility
Marketing communications
Interactive marketing
Sponsorships
Danone
Overview
Repositioning as a pure health' company
International presence
- Figure 8-5: Danone: Percent revenue by Region (Q1 2008)
Market performance
- Figure 8-6: Danone: global sales by business unit, 2007
- Table 8-10: U.S. Mass-Market Sales of Dannon Activia Yoghurt (standard version only), 2003-2008 (in millions of dollars and percent)
- Table 8-11: U.S. Mass-Market Sales of Dannon Light n Fit Yoghurt, 2003-2008 (in millions of dollars and percent)
Fresh Dairy Products
Waters
Baby Nutrition
Medical Nutrition
Financial performance
- Table 8-12: Danone - financial analysis: Net revenues and operating income, 2003-2007 (in Euros and percent)
- Table 8-13: Danone - financial analysis: Net revenues and operating income, 2006-2007 (excluding biscuits business) (in Euros and percent)
Research & development
Product developments
- Figure 8-7: Danone/Dannon New Product Launches, 1998-2007
- Table 8-14: Danone: New Beverage Product Developments by Category
Product and SKU data, 1998-2008
Global new product developments
Corporate social responsibility
Marketing communications
HJ Heinz & Company
Overview
- Figure 8-8: Heinz: Sales by major product category, 2008 (percent sales revenue)
History
International presence
- Figure 8-9: Heinz sales revenue by geography, 2008 (percent share)
Strong, local organizations
Market Performance
- Table 8-15 U.S. Mass-Market Sales of Heinz Ketchup, 2003-2008 (in millions of dollars and percent)
Financial Performance
- Table 8-16: Heinz - financial analysis: Net revenues and operating income, 2004-2008 (in millions of dollars and percent)
Innovation-led
Product development
Health & Wellness products
- Figure 8-10: Heinz New Product Launches, 1998-2007
- Table 8-17: Heinz - New Product Developments by Category Product and SKU data, 1998-2008
Packaging innovation/trends
Corporate social responsibility
Marketing communications
Interactive marketing
Sponsorships
Kellogg Company
Overview
International presence
- Figure 8-11: Kellogg Company: revenue share by key geographic regions, 2008 (percent)
Market performance
- Table 8-18: Leading Kellogg brands in the breakfast cereal category: Great Britain - Take Home/Retail: 2007-2008 ( sales - 52 weeks ending April 20, 2007 and 2008)
- Table 8-19: Leading U.S. Kellogg brands: Mass-Market Sales Breakfast Cereals, 2006-2008 (percent value share)
- Table 8-20: U.S. Mass-Market Sales of Special K and Special K Red Berries, 2008 (in millions of dollars and percent)
Financial performance
- Table 8-21: Kellogg Company - Financial analysis, 2003-2007 (in millions of dollars and percent)
Innovation
Product development
- Figure 8-12: Kellogg New Product Launches, 1998-2007
- Table 8-22: Kellogg - New Product Development by Category Product and
SKU data, 1998-2008
Packaging innovations/trends
Corporate social responsibility
Marketing communications
Interactive marketing
Sponsorships
Kraft profile.
Overview
History
Three-year turnaround strategy (2006-2009)
International presence
Localizing marketing strategy
Ten brands in ten markets
Market performance
- Table 8-23: U.S. Mass-Market Sales of Kraft Philadelphia (brick, soft, whipped), 2003-2008 (in millions of dollars and percent)
- Table 8-24: U.S. Mass-Market Sales of Oscar Mayer (sliced luncheon meat),
2003-2008 (in millions of dollars and percent)
- Table 8-25: U.S. Mass-Market Sales of Nabisco Oreo Cookies, 2003-2008 (in millions of dollars and percent)
Financial performance
- Table 8-26: Kraft financial analysis: Net revenues and operating income, 2003-2007 (in millions of dollars and percent)
Product development
- Figure 8-13: Kraft New Product Launches, 1998-2007
Health and wellness
The king of convenience
Premium taste
- Table 8-27: Kraft - New Product Developments by Category Product and
SKU data, 1998-2007
Corporate social responsibility
Marketing communications
Online marketing
Sampling & events
Education and information
Nestl
Overview
History
International presence
- Figure 8-14: Nestl: Revenue by key business unit, 2007 (percent)
The creation of a global multifocal organisation
Market performance
- Figure 8-15: Nestl: Revenue by product group, 2007 (percent)
US market performance of selected brands
- Table 8-28: U.S. Mass-Market Sales of Nescaf Tasters Choice Instant Coffee, 2003-2008 (in millions of dollars and percent)
- Table 8-29: U.S. Mass-Market Sales of Nescaf Clasico Instant Coffee, 2003-2008 (in millions of dollars and percent)
- Table 8-30: U.S. Mass-Market Sales of Friskies Fancy Feast Wet Cat Food, 2003-2008 (in millions of dollars and percent)
Financial performance
- Table 8-31: Nestl financial analysis: Net revenues and operating income, 2003-2007 (CHF million and percent)
Innovation and renovation
Product developments
- Figure 8-16: Nestl New Product Launches, 1998-2007.
- Table 8-32: Nestl - New Product Developments by Category Product and SKU data, 1998-2008
Beverages
Confectionery
Infant Nutrition
Healthcare
Dairy
Prepared dishes and cooking aids
Packaging innovation/trends
Corporate social responsibility
Marketing communications
Interactive marketing
Sponsorships
Wm Wrigley Jr Company (Mars Inc)
Overview
- Figure 8-17: Wrigley Sales Revenue by Geography, 2007 (percent)
International presence
China
Russia
India
Market performance
- Table 8-33: U.S. Mass-Market Sales of Wrigley's Extra Sugarless Gum, 2003-2008 (in millions of dollars and percent)
- Table 8-34: U.S. Mass-Market Sales of Wrigley's Eclipse Sugarless gum, 2003-2008 (in millions of dollars and percent)
- Table 8-35: U.S. Mass-Market Sales of Wrigley's Orbit Sugarless gum, 2003-2008 (in millions of dollars and percent)
Financial performance
- Table 8-36: Wrigley financial analysis: Net revenues and operating income, 2003-2007 (in millions of dollars and percent)
Retail expertise
Innovation-led
- Figure 8-18: Wrigley New Product Launches, 1998-2007
- Table 8-37: Wrigley - New Product Developments by Category Product and SKU data, 1998-2008
Product development
Packaging innovations
Corporate social responsibility
Marketing communications
Interactive marketing
Sponsorships
Chapter 9: Future Challenges
Highlights
Accelerating pace of change
- Figure 9-1: Key issues driving the food and beverage industry forward
Economic downturn to continue into 2009
Health concerns will play a more dominant role in strategy
Convenience
- Figure 9-2: Which of these aspects of packaging would you be prepared to give up if it meant that it would benefit the environment? (percent of global respondents, based on a global average)
Creating stronger global entities
- Table 9-1: Forecast consumer expenditure data on food, beverages and tobacco, 2007-20012 (in billions of dollars and percent)
Sustainability and the CSR agenda
Responding to an empowered consumer
Retailer power will remain strong