Tuesday, October 27, 2015

Category Management: The Lean Strategy Of Global FMCG suppliers

Interesting era right now form FMCG suppliers. For years, FMCG Leaders like P&G, Mondelez, Unilever, or L'Oréal were keen on growing their brand portfolios in order to master their categories and getting bigger to be more cost efficient.

But lately, a new era has started: downsizing. 
Why? In order to focus on more profitable activities, especially focused on global brands, such as Pampers or Always for P&G, or Milka for Mondelez. 

Moreover, as P&G CEO has previously explained, maybe we have come to a stage where it is too complicated to manage so many categories and different brands to be efficient, and customers are willing to limit their choice in order to be more efficient in store.

Today, we are facing a very interesting time of the FMCG world. Indeed, those structures are changing, and there are 3 potential outcomes:

  • We may see emerge new global actors, that will be able to thrive with those brands for sale.
  • We may see potential mergers of those actors, that will be leaner and therefore it would be easier to see a venture, to create new tycoons.
  • We may have less and less global companies, like Nestlé, Unilever or even Mondelez, focused on several categories at the same time, to have real champions on only one business.
But as a matter of fact, we can clearly see that the strategies of those companies are clearly dictated by stock exchange markets, eager to cash back as much as possible, without a clear industrial view. 

Moreover, we can see more and more a reverse strategy from global to local. And local brands, even though numerous, could be very profitable, and more adapted to customers needs. Probably a lot of potential for new comers or company that will seize the opportunity.