This is the first installment in a two-part series on major changes taking place in the US foodservice industry. In this installment we look at some of the key challenges, stemming from current industry practices, that impede optimal performance by manufacturers, distributors and operators in the sector. The second installment will examine converging technologies that are poised to challenge the industry status quo, and present an opportunity to benefit through improved sales and marketing analytics for those who are prepared.
It's a new world for FAFH, but the industry remains stuck in unproductive practices
The foodservice industry, comprised of the food prepared away from home (FAFH) sector of the food & beverage market, accounts for about 46% of all consumer dollars spent on food and beverage products in the US. Over the past twenty years this business has changed considerably as American lifestyle habits, choices and spending propensities have evolved with regard to food and beverage consumption. Yet manufacturers, distributors and operators in the foodservice industry have in many ways been slow to adapt their sales and marketing practices to better serve the evolving preferences of the end consumer. As a result there are considerable inefficiencies up and down the value chain resulting in suboptimal performance for all parties. Trade spend management, campaign marketing and other critical activities suffer from an absence of data-driven input for decision-making, as well as the inability to effectively monitor and evaluate performance. Relations between trade partners are often characterized by mistrust and a lack of willingness to work together for win-win outcomes. Continue reading →
A New Approach to Trade Spend for Foodservice Manufacturers
There is no shortage of quantitative analysis in the trade spend practices of foodservice manufacturers. Unfortunately, very little of this analysis helps give decision-makers insights about the effectiveness of their trade spend programs. The numbers being crunched do not relate to signals about actual downstream demand, but rather to the formidable mountain of claims from their distributors. These claims come in all manner of data formats and accounting entries and it typically takes armies of brokers, salespeople and financial staff to figure them out. After all the cumbersome and error-prone line-by-line calculations to validate claims are said and done, you are no more informed about the profitability or the potential risks associated with any given program. No wonder there is widespread dissatisfaction with the effectiveness of these programs. Over 75% of manufacturers in this sector consider their trade spend initiatives to be inefficient, according to the 2010 MarketIntelligence Foodservice Trade Survey. Continue reading →