Heinz a microcosm of Australian FMCG.

The mulitnational Heinz has been in the news a bit recently.

First, they announce a restructure, which means closing plants, and consolidating production, in this case to NZ, and to a remaining Australian plant that will get a bit of a kick-along. Wonder how long that will last?

Then the worldwide CFO Art Winkleblack  took aim at the retail duopoly in Australia, citing it as a reason for the difficulties Heinz has had, and as a basis of the restructuring decisions.  I bet the local sales management loved him for it, the next time they had to front Coles and Woolies!

In a short period, the challenges of the industry are laid bare, the $A making imports cheaper, the power exercised by the retail duopoly, and the necessity of manufacturing and marketing scale to counter it.

If Heinz, a global business turning over close to a billion dollars in Australia, and many more globally has these problems, put yourself in the position of the SME, with little marketing leverage, a plant that needs capital, banks that are so risk averse, and so  stripped of people who understand small business they simply  choose not to engage, how can the little guy hope to sustain his business?. Pure bloody mindedness and determination is about the only answer you will come up with, mixed in with a spirit of being prepared to really have a go, and screw the buggars!.

We wonder why we have more imports of packaged food products into this country than we produce, the position Heinz finds itself in demonstrates why.

 

About strategyaudit

StrategyAudit is a boutique strategy and marketing consultancy concentrating on the challenges of the medium sized manufacturing businesses that make up the backbone of our economy. The particular focus is on their strategic and marketing development. as well as the business and operational efficiency improvements necessary for day to day commercial survival. We not only give advice, we go down "into the weeds" to ensure and enable implementation.
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4 Responses to Heinz a microcosm of Australian FMCG.

  1. Pingback: Consumers and FMCG retail control | StrategyAudit

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  3. Allen says:

    Housebrands are a huge challenge, and I content, not just to the SME’s who generally suply them,, whe they can also be a lifeline, but t othe retailers.
    As retailers hollow out Australian manufacturing by their actions, what happens when the $A goes back to $US0.70, and the product innovation ceases?
    Retailers are mortgaging their futures to the short term profit as well, probably because their whole business model is about “immediate” and all their incentives are “today”.
    If they can see far enough ahead to now dominate petrol, office supplies, and low cost general merchandise, surely they can see far enough ahead to recognise their vested interest in a strong local manufacturingh sector to supply them.

  4. Essceelle says:

    Spot on. Unless your brand is No.1 or 2 in a category, consider your days numbered, if not over already. Add into the mix the drastic rise in raw commodity costs (wheat/sugar/dairy), the reluctance of the 2 major supermarkets to pass on price increases and the pervasive House Brand push (make your leading product for us too or else) and you have the perfect SME storm. If the big guys are getting slammed (and they are) imagine what is happening to everyone below.

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