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Beverage NewsCarbonated Soft Drinks

Rabobank reports that big brands need to take action

How Food & Beverage Brands Can Remain Relevant to U.S. Consumers

June 1, 2015

Many of America's largest food and beverage (F&B) companies are in trouble, Rabobank, New York, says in its new report, "Dude, where's my consumer?" Iconic brands are increasingly out of favor with U.S. consumers, whose preferences and priorities have evolved, Rabobank says. Rabobank analysts predict that unless large F&B brands take bold action, they run the risk of following baby boomers (once their core consumer) into retirement.

How can America's big brands reconnect with the U.S. consumer?

Rabobank says repositioning the core brand may improve the situation, but there is a need for new brands and products that better respond to the demands of today's new consumers. Consumer tastes are shifting, but not so fast that companies cannot capitalize on them, it says.

Nick Fereday, senior global consumer analyst for Rabobank, said, "We propose five key recommendations based around acquisition strategies (i.e., buy, not build) and in-house innovation (i.e., build, not buy),” in a statement. The five recommendations are below:

1. Say hello, wave goodbye.
Although most companies are no longer in public denial about the change in consumer trends, many haven't fully digested the implications: the corporate culture needs transformation so that it welcomes new ideas, brands, and riskier strategies, while also permitting iconic brands to exit stage left.

2. Buy small or pay high.
For those companies who have lost their R&D mojo, Rabobank's advice is to continue to outsource innovation by buying companies, but at an earlier-than-normal stage in the life cycle, thereby reducing the risk of paying too much.

3. Room to breathe.
The big players have learned the hard way not to mess around with their shiny new purchases. To maintain the culture and integrity of these acquisitions, they need to be nurtured, not suffocated.

4. Step up the innovation.
Companies who pride themselves on their R&D capabilities need to focus on bolder and more disruptive innovations. Going forward, no more 'innovation-lite': product reformulations just won't cut it.

5. If it ain't broke...
This isn't a total meltdown, and not every brand is in trouble. There are lessons to be learned from iconic brands that remain irreverently relevant and laugh in the face of today's health and wellness trends, including Jack Daniel's, Lunchables, Oreos, Twinkies, Domino's Pizza and Popeye's.

"These strategies are not mutually exclusive, and many companies are actively pursuing both 'buy, not build' and 'build, not buy' strategies – depending on the need they're trying to fill, how much time they think they have, their appetite for risk, and the strengths and weaknesses of the company itself,” said Stephen Rannekleiv, spirits and wine analyst for Rabobank,, in a statement. ”We don't believe one strategy is preferable over the other. There are multiple drivers behind changing consumer preferences, and it would be naive to assume there is a single solution.”
 

KEYWORDS: consumer trends

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