Dan Malovany: Same old problem
BakingBusiness.com, Aug. 1, 2012
by Dan Malovany

Problems are like viruses. Any time you come into contact with someone who has one, there’s a good chance of getting infected.

In the business world, one company’s sniffle can become another business’ flu. That’s especially true if the company is as large as Supervalu, one of the heavyweight grocery chains with 4,400 stores. It recently acknowledged it needs to become a much leaner operation. It also contended it must find some way to halt the decline of customer traffic that’s affecting many conventional supermarkets as consumers shop more at mass merchandisers, dollar stores and other value outlets.

Unfortunately, the chain seems to be pursuing the same old solution. The company suggested it may price products even more aggressively in response to its competitors’ actions. If the price war in the grocery channel escalates, that’s going to make some baking and snack operators feel even queasier.

Perhaps a more fundamental problem among retailers is the dreaded one-size-fits-all mentality. When independents and regional grocers became part of national chains over the years, many of them lost their neighborhood identity as these major retailers replaced local products with same-old brands that essentially blurred the point of differentiation among their various stores.

During the past decade, consumers began shopping more at locally owned grocery stores, regional chains and savvy national retailers —

including the much-touted big-box stores — because they offer not only competitive prices but also a plethora of smaller branded products in the center of the store, in special displays and in their in-store bakeries.

As the saying goes, when everything’s the same, price becomes the game.

It’s not surprising that scanning data now show declining unit volumes in many bakery and snack categories. Consumers aren’t necessarily eating less bread, cookies or potato chips. In my opinion, they are shopping less at those chains that have become less relevant.

This marks an opportunity for the baking and snack industries. During the past few months, we’ve written about several innovative mid-sized companies that succeed by offering new ways to get retailers to reconnect with consumers.

Now this month, we’re featuring two of the “biggest of the big” striving to be the best as well. We give kudos to Milling & Baking News for its exclusive interview with Grupo Bimbo’s CEO Daniel Servitje and thank our sister publication for allowing us to share its extensive report on the world’s largest baking company.

Additionally, find out how Tyson Mexican Original, the nation’s second-largest tortilla producer, may increase the size of its Portland, IN, facility over the next few years as it expands and diversifies in the food service channel.

Unlike the not-so-healthy players in the industry, these two companies continue to reinvent themselves and their product portfolios.

As another saying goes, same-old just gets old.