Is a 'total war' brewing in FMCG?

The food sector won’t escape disruption, according to Nils van Dam of Duval Union Consulting. The increase in conflicts within the sector is no coincidence: the entire chain is under pressure, and FMCG companies will have to invest in data to survive.

No safe havens

N.V.D.: “You often hear people say that digitisation won’t impact food all that much. Food is a local product, they argue: people want to see, feel and smell it. And yet the disruption is inevitable, as we have previously seen in music, video, print media, banks and retail… There are no more safe havens left. If you don’t change your own business models, your clients will force you to evolve. Look at what is happening in hyperrmarkets, or with the coming of foreign web shops.”

Van Dam recently left the food industry (AB InBev and Unilever) for the position of global head of food, beverage and food retail at Duval Union Consulting. “I like the environment at Duval Union Consulting a lot. I enjoy helping companies to prepare for the future, both strategically and operationally. In many cases, that future is already here. We are active in various sectors, and some of those are ahead of others in some areas. That inspires me. The mix of young talents and experienced minds is fascinating as well.”

What if Amazon comes along?

To set the tone for the future, Van Dam recently published an e-book in which he describes nine trends that will determine the future of food and beverages. He believes that nothing less than a ‘total war’ is brewing: “You can already see that large retailers are slowly losing some of their market share to digital newcomers and small-scaled initiatives: their margins are shrinking and their costs are rising, so they try to get money from farmers, brands, private manufacturers… The entire chain is under pressure.”

He points out some of the recent conflicts in the industry, in which brands are being boycotted in order to force them into improving their conditions. Carrefour has conducted an experiment by opening some stores in France with a product range that consists mostly of private labels. Even large brands are losing their market share and popularity: they too will have to reinvent themselves quickly in order to survive. ‘Business as usual’ is over, and this is just the beginning: “Imagine what would happen if Amazon came to the Benelux? They would quickly get between 5 and 10 % of the market share, as they are already doing abroad. What would that mean for traditional retailers and their suppliers, especially knowing that Amazon doesn’t even need to make a profit…”

The power of data

Is there a way out? “Perhaps there is: in media we can see that giants such as Google, Facebook and Amazon are drawing all budgets to themselves. As a reaction, local media are coming together to counterbalance that. Would such an endeavour be possible in FMCG: a partnership between food retailers and brand manufacturers in order to create a win-win situation and block the digital players?”

Van Dam stresses the importance of data in this regard, a terrain where digital players are at an advantage. Brands and retailers will have to become data enterprises in order to compete: knowledge is power, after all. “In principle, the knowledge that brands have and the knowledge that retailers have complement each other. Brands have a deeper understanding of their category because of market research. Retailers have a wider view of the shopper, based on transactional data. What if both parties would really join forces?”

Do you want to find out more? Nils van Dam is presenting his vision at the RetailDetail Food Congress on October 3rd in Brussels. Other speakers include Ocado, Delhaize, Deliveroo, Smartmat, Deeleenkoe.be, eFarmz, eFoodbox/Etheclo, PostNL, Colruyt Group…Click here for more information and tickets.