Innovation strategy for food producer

Background
This producer of food products established its various brand positions as purveyor of happiness and indulgence. New trends on health, sustainability and convenience seemed to limit growth and margins. However, the economics between the factory and the consumers mouth were not very transparent. Commercial conditions with vendors such as retailers and out-of-home channels were often complex and confusing due to promotions, kick-backs, block discounts, combination pricing, and other special incentives.

Our mission and approach
We jointly developed a new compass for no regret innovation. We started by making a thorough analysis of the real net-margin per elementary transaction. Hereby the building blocks were formed to combine transactions into full contract economics and customer (segment) profitability. Further breakdown of the product portfolio showed pockets with extraordinary high margin potential. This unveiled key success factors for product innovations, pointing towards characteristics such as specific ingredients, packaging, portioning and ease of preparation for end-user. We supplemented this work with a quick scan of the consumer and vendor market – and unravelled how local consumer demographics should determine the commercial strategy per retailer throughout the country.

The success
Together with commercial management, we jointly discovered opportunities where commercial correction occurred. Products matching with consumer health trends also showed most opportunity for profit sustainable growth in an otherwise lukewarm market segment. Innovations aimed at new customer values proved to go hand in hand with higher profitability. Using these insights for guidance, the company has expanded its product range and directed its product development.