|
Are Global Food Leaders Big Enough to Survive?
By Cory Galbraith, President, Galbraith Communications
Mark McCauley, Vice President of Marketing for McCain Foods, is worried. As time goes on, consolidation is increasing in the food distribution business to the point where only a few companies control most of the market.
He wonders if McCain Foods, a global leader in food products, will be big enough to survive.
Just how big do you need to be to make it in global food manufacturing? McCauley points to the latest figures showing that 65 grocery retailers now operate outlets outside their home country. He further notes that only four companies control 44 per cent of the world's fast food industry.
Increasing the pressure a few points higher is the fact that traditional food companies are no longer the only players. Wal-Mart, the world's largest retail chain, is also the fastest growing grocery distributor in North America with plans to double its food operation in the next three years. What does all this consolidation mean for North American companies like McCain? He observes that worldwide retailers increasingly prefer to deal with suppliers who can meet demand on a global scale. They also want world-class service. "At McCain, we have an office in Chicago just to service McDonald's."
"You need to be number one or two on the retailer's shelf," he notes.
It can be an intimidating environment, but with the right planning, there is hope. For one thing, regional protectionism has to come to an end, because, says McCauley, "it impedes the ability to ship products."
North American manufacturers need to be global players with the same input costs as companies elsewhere in the world. "If our costs in North America are double, then we are uncompetitive. Production will go where input costs are lowest."
McCauley is also calling for a national strategy on promoting North American food products. In southern Ireland, he notes, "they've labeled themselves the bread basket of the world even though our exports are twice as much. We have the world's safest supply of food but how many people know that?"
Cory Galbraith has been a writer for 30 years, specializing in economic and rural issues. This article, published by the Canadian Farm Business Management Council and Canadian Federation of Agriculture, is reproduced here with permission. For more information on farm management, consult their web site www.farmcentre.com. For article feedback, contact Cory at: info@galbraithcommunications.com
|
