Market and competitor insights / strategy development

Global food company seeking to understand drivers of its competitors’ superior performance in a key category

Key question

• What is enabling certain competitors to win in the category, and how should we change our business model to compete effectively against these winning players?

Approach

• Stamford Partners gathered information on four selected competitors - two multinationals and two local players - from public sources and through interviews. We then modelled each company’s economics and identified drivers of performance. Having communicated the elements of a winning business model to the category team, we worked with them and the business units to develop category strategy.

Findings

• The two multinationals had consistent records of profitable growth even outside their home markets.

• Both were committed to delivering consumer value at an affordable price point, maintaining high advertising investment and securing wide distribution, funding this pull model through a relentless focus on cost and efficiency.

• Both were managed tightly by family owners, and this was a key driver of success and of efficiency. However, private company status per se did not result in economic advantage.

• One of the local players was partially avoiding taxes, and therefore bolstering its profitability and enabling continuation of its low price strategy.

• The other local player was winning via a powerful route to market in its home market, where it was a food and retail conglomerate, but had not been successful in expanding geographically.

• The winning multinational players typically responded to threats from local players by reinforcing their pull models, accepting a short-term profit impact.

Recommendations

• The category team should devote significant attention to business model, seeking to instil winning practices in the business units, rather than merely focusing on product innovation.