Where to next for European F&B players feeling the squeeze?
Innovation, availability and sustainability – these worldwide macro trends are redefining the food and beverage industry. Today’s consumer demands almost instant access to new, healthier products, produced sustainably and available – or delivered – at a level of convenience never before seen, and F&B players are scrambling to meet these needs.
Adapting to these new pressures can prove difficult, as start-ups stir up a challenging competitor landscape and add to growing financial pressures in the industry, where margins continue to be squeezed, sandwiched by economy private label products and agile start-up premium brands.
Despite F&B being the largest manufacturing sector in the EU with a €1 trillion turnover, consumer demand for entry-price products, increasing costs, tariffs, trade barriers, and global events such as Brexit are generating higher levels of economic uncertainty.
Strategic alliances: a viable alternative?
So how can F&B brands keep the competition at bay and profit from the huge opportunities that changes in the industry now present? Traditionally, large multinationals would look to mergers and acquisitions (M&As) as a viable alternative to investment in new product development. As a way into the health and well-being market segments, they might be willing to pay a premium to widen their product offering in this way.
However, this approach still represents a significant investment cost and the benefits tend to be long-term. As M&As also present a highly complex undertaking with an inherent risk of failure – at a hefty price – we now see a waterfall effect, where strategic alliances can present an attractive solution to the many challenges faced:
The attraction is clear. As a lower-cost, lower-risk alternative to traditional M&A activity, strategic alliances can deliver a short-cut to product innovation compared with in-house R&D investment. They can also realise a host of mutual benefits for both parties throughout the value chain, offering far-reaching and transformative impacts on a company’s future, not to mention their short-term bottom line.
A successful alliance strategy must include four crucial elements:
- A business strategy which shapes the design of the alliance
- A dynamic view to guide the management of each alliance
- A clear approach to manage the alliance firms
- An organizational infrastructure to build and support the ability of the alliance.
In this report
We look at the opportunities and potential pitfalls presented by strategic alliances, with real-world examples and contributions from prominent market players.
The report includes:
- Analysis of demand for innovation versus growing margin pressure in the F&B sector
- How strategic alliances can be executed throughout the value chain
- Strategic alliance case study examples from across the EMEA region
- AlixPartners survey data from Food Summit 2019, Parma, Italy
- C-suite viewpoints on F&B alliances