Distracted by CEO departures and financial struggles, Specialty Foods Association President Phil Kafarakis says large CPGs have focused on “operational efficiencies” instead of innovations and shoppers’ evolving choices.
Food industry veteran and advocate Phil Kafarakis is president of the Specialty Food Association, an umbrella organization representing 3,700 innovative, entrepreneurial member companies in the food and beverage industry. Follow him at @PresidentSFA.
With increasing pressure to show earnings growth, founders-driven Top 10 companies like Coca Cola and General Mills have been going through changes. Lots of changes. The consolidating, streamlining, and refocusing that they’ve been implementing has surely been a contributing factor in a number of recent executive transitions. But can new leadership build success in this time of marketplace disruption?
We seem to be in the eye of a Category 5 storm of transformation for big food companies. Many CEOs are transitioning as their corporations come out of a decade of consolidation — a decade during which they focused on building their brands in ways that appealed to shareholders and retailers, while also concentrating on building suppliers’ power over buyers. In all this, they missed the signs of the burgeoning consumer interest in food innovation, and therefore missed the mark with consumers.
It seems to me that since firms like 3G Capital entered the picture a few years ago, companies have been re-engineering themselves away from a true strength: selling products that offer a satisfying emotional and visceral appeal to consumers across demographic lines.
The new crop of incoming CEOs has some heavy lifting to do, because in the flurry of building new efficiencies and selective cost-cutting, too little attention has been paid to the innovative side of the business that appeals to consumers. And let’s face it, if consumers aren’t interested in products, those products aren’t worth much.
Just look at some of these big homegrown food companies. I call them “homegrown” here not only because they’ve been around a long time, but because their cultures have tended to nurture internal succession, yielding many decades-long and storied careers. They’re also companies with a history of founders with strong values — values that launched them into success but may have been left behind.
Irene Rosenfeld, a 30+-year veteran at Kraft, was appointed CEO there in 2006, only to step down as CEO of Mondelez — which was formed from former Kraft brands when it merged with Heinz — this year. John Bryant retired in September after just six years as CEO at Kellogg. Denise Morrison, CEO since 2011 at Campbell’s Soup, resigned from President Trump’s Manufacturing Jobs Initiative this past August — but is the writing on the wall for her at Campbell’s as well?