So, does the complexity of the sector get in the way of an overall strategy?
The market is complex. Canada's innovation strategy must not only cover the product complexity, but also ensure sound environmental performance in the entire value chain as well as cost effective, high-quality foods (think Lean/Six Sigma) to enable us to beat our competition.
Exporting & Importing
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food and beverage sector
As I reread my last article (Market trends that will drive our national food strategy, March 3, 2015), I kept thinking of how complex the whole food and beverage sector is. I was reminded of two other books I had read. The first was published back in 2005. It is Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant by W. Chan Kim and Renee Mauborgne.
The authors make the case that tomorrow’s leading companies will succeed not by battling competitors, but by creating “blue oceans” of uncontested market space and getting out of the bloody “red ocean” of rivals fighting over a shrinking profit pool. It is an interesting but very challenging idea, and difficult to do in the food sector. It’s worth a read however.
The second book was Winning in Emerging Markets: A Road Map for Strategy and Execution by Tarun Khanna and Krishna G. Pelepu published in 2010. Here the authors speak to a method of achieving scale and rapid growth in emerging markets by moving beyond the top segment of the market and serving the large and growing middle class. This book does have clear application to the food sector as we begin to export value-added food and beverage products to the emerging markets…definitely worth a read.
The complexity issue is a large one for Canada Food Inc. We have six or so major consumer market trends. As we showed in the last article, the Healthies and the Greenies are very much in line with the general market trends we spoke to. Namely, the increasing population, climate change, globalization generally, are all leading to more consumer focus on sustainable business practices in environmental and corporate social responsibility issues.
At the same time, the focus on healthy foods, not just food safety as we often think about it, but foods that have health and nutrition benefits and claims, is also a fast-emerging sector of the market. The globalization trend is leading to the Foodies wanting more ethnic foods and the Newbies (recent immigrants to developed markets like Canada) leading to ethnic foods appearing on store shelves here. And those two groups are also leading to a new “global fusion cuisine” incorporating a variety of ethnic components in one meal.
And then there are the Speedies looking for ease and speed of preparation, both at home and on the foodservice scene. And there are the money-constrained Cheapies that just want food they can afford.
So the market is complex. Our innovation strategy must not only cover that product complexity, but also ensure sound environmental performance in the entire value chain as well as cost effective, high quality foods (think Lean/Six Sigma) to enable us to beat our competition.
We also need to decide if we are just going to defend our Canadian market place from emerging rivals like China, Brazil, and others and developed rivals like the U.S. and the E.U.
Or, are we going to build our market by getting more into value-added exports and develop a positive trade balance in food and beverages? If we make that decision, do we go after the developed markets like the U.S., E.U., Japan and so on, or do we target the emerging markets with their growing middle classes, or both? The top 10 emerging markets listed in a recent report from the Global Intelligence Alliance that I recently saw are, in no particular order: China, India, Mexico, Brazil, Argentina, Vietnam, South Africa, Indonesia, Turkey, and Russia. Again, this is a very complex decision and complex mix of cultures.
And, as we have stated before, the entire operations value chain, as well as the technical innovation value chain, must be involved in all sectors. The Value Chain Roundtables have done a pretty good job of this at the producer level by including members from the Seed, Fertilizer, Crop Protection, Animal Genetics, Animal Nutrition, and Animal Health industries. Not so much in the Food Processing Roundtable where one should find the Packaging, Logistics, and Machinery/Equipment industries. And what about Energy (electricity, natural gas, and fuels), labour (how will we ensure adequate labour?), as well as the Research community, the Financial sector, and the Education sector?
Much more needs to be done and, I believe, can be done. I know we can do it within the framework of an overall Vision for our broad industry value chain, a common set of values, and the correct overall general strategies tweaked for each of Canada Food Inc.’s “business units.”
I know we can! Will we? Innovation, Productivity, Sustainability focuses within the framework of Current Competition and potential Emerging Competition, along with good Leadership and excellent Value Chain Collaboration can make it happen.
Image courtesy of ddpavumba at FreeDigitalPhotos.net