This report investigates the various strategies employed by staple foods companies in the current tough consumer spending environment. Attempts by major producers to grow volume sales face a significant challenge across this fragmented industry, while consumers are increasingly happy to seek out lower cost options such as private label. In addition, strategies must accommodate overarching trends, such as concerns over processing, potential tariff impacts and climate change hitting supply.
This report comes in PPT.
As companies adjust to a global food market increasingly characterised by high interest rates and rising food prices, they are moving from seeing revenue increases (due to prices) to focusing on recovering or increasing their volume sales. For some, this means a focus on premiumisation, or increasing private label capacity, while for others it means a change in pricing strategy to maintain profit margins.
Staple foods leaders are dealing with instability in the grain supply chain, a critical commodity that impacts many categories of staple foods. As a result, many are opting for one of two strategies: restructuring the supply chain for near-shoring or localisation, or choosing to enhance their ingredient diversification to offset shortages.
Many major players are invest in emerging markets, although not all are making this an overall expansion strategy. For some players, a focus on developed markets yields better financial returns in the current economic situation. As a result, there is no common strategy regarding market expansion in staple foods.
Due to the nature of staple foods production, many of them are susceptible to being labelled “ultra-processed food”. To avoid negative connotations, industry leaders are investing in research alliances that highlight the benefits of modern production and the healthy nature of their ingredients, and are focusing on clean labels as much as possible.
Industry dependence in processed meat categories can lead to higher distribution costs and less agility, because of the specialised supply chain needed for different staple food categories. This is exemplified by vertical integration in processed meats and in cereals. The greater the need for vertical integration, the higher the odds for total industry dependence among leading players, which can hinder expansion to other categories.
NOTE: Couscous, polenta and quinoa are excluded from staple foods.
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