Yes, dear small and medium food manufacturers, the retail market is great, but other markets can help you sustain your growth!
The retail market is a compelling reason by itself to start a food business. After few years, if you do your job well, you could have a great market position. In retail, sales can grow quickly once you find the right Kotler mix, right product, right place in a national program within a major retailer, right promotion right price, and speak the retail market language including good category management best practices…
However at some point, you could become trapped in a no-growth and mature zone. First, domestic food competitors and rivalry (as Porter would write it) will easily find out about your latest food retail products, or store promotions, and in a matter of few weeks counteract your latest moves. They will copycat your marketing program or your new products and/or recipes. Second, sooner than later, you will deal with over concentrated retail buying power within your local market. Your best retail customers forgetting about all these years of common growth, and sometimes based on a new buyer’s arrival, start to demand the impossible from your company. That’s when « having all your eggs in one basket » (i.e. the retail channel) becomes a big problem. Too often you even end up with one retail customer weighting way too much in your portfolio.
Other markets are available to your retail only business. But you need to start on building a strategy to develop these other food channels as soon as you can. Based on available resources, and your food product know-how, you could easily design a product development and sales campaign in other channels, i.e. Export, Food Service, B to B, even Specialized retail could be addressed without changing fundamentally your core food manufacturing process.
Yes, these markets have their own genetics and codes, but once you understand them and adapt to their specific needs, you could balance your sole retail sales revenue, and help sustain a long-term growth for your company. It won’t take huge resources and won’t be that long to penetrate these other markets. Obviously for that, you will need to put in place the right process. Once it is done, the potential rewards are huge. Not even in the short term with added new sales, but in the long run strategically, as your business has a much more diversified sales channel revenues.
In the following posts I will present these other food markets and their genetics.