Food manufacturers have more clout than they think when it comes to the balance of power with major retailers, and they can succeed if they adapt to the new model, according to the high profile former local head of a multinational food company.
Jean-Yves Heude, the former managing director Australia, New Zealand, Kellogg Company, says regardless of regulatory pressure, the tactics of the retailers, just like their growth targets, are not about to change any time soon.
Heude, who is now a consultant at ChessMate Consulting, which specialises in helping FMCG companies to win in the new retail environment, will be speaking at the Food & Drink Business Live: Industry of the Future Forum 2014 on 11 August.
At the event, he will discuss specific strategies and skills that food and beverage companies can learn if they want to survive and thrive in the new retail paradigm.
“Most companies in Australia have not increased prices for the last four to five years and this is the number one issue in the industry, as it creates progressive suffocation,” Heude says. “Even when companies grow revenues, they tend to give away most of their additional profit to retailers.”
"Manufacturers have the opportunity to strengthen their commercial strategy, which includes assessing and leveraging their true balance of power,” he says.
Heude has created a five-step methodology with this in mind, which he will be outlining at Food & Drink Business Live, which brings together market leaders, independent experts and key stakeholders from Australia’s food and beverage processing sector.
He will also explain why suppliers have more power in the retailer relationship than they realise, and he will demystify some of the more baffling negotiating tactics to emerge in recent years.
Heude has spent the past 25 years in senior leadership roles in blue chip FMCG companies including Mars, Martini and until early last year, Kellogg Australia and New Zealand. He also has five years of management consulting experience with Accenture.
Heude says his methodology was drawn from his experience in growing businesses profitably in tough retail environments in developed markets here and in Europe.
“One part of my consulting work involves introducing companies to new processes and strategies, and another part is to help change the mindset of the team, and to rebuild faith, as well as to ensure internal alignment right up to the top of the business," says Heude.
“Nothing is more costly than a key account manager who no longer believes they can win, or is not sure they are fully supported by their top management.
"When a company has been hammered for three to four years and they've given away so much money, you often find that nobody believes any longer that it is possible to turn things around, but it is – and that's where I can help, because I did it myself.”
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