Industry Editorial: The Shrinking Industry and Other Myths
The frenzy was either driven by or in anticipation of a similar pattern in retail. Regional grocery chains went on a buying binge. They had to, what with Wal-Mart selling everything from padlocks to ham hocks. A handful of companies now run most of America's supermarkets in coast-to-coast integrated networks of efficiency. And the food manufacturers who supply them are bigger than ever.
While this has brought about efficiencies of scale and the resources needed to create and build brand equity, it has not come without a price. Or so goes the conventional wisdom.
"The industry is no longer competitive," you'll here people say. "The big players are not nimble enough to respond to consumer whims." And of course: "it's impossible for a smaller company to compete, or even get to market."
Well you know what they say about conventional wisdom.
A colleague at our sister publication, Food Engineering has often remarked that food industry consolidation is a myth. When two companies merge, product lines are spun off, plants put up for auction, services outsourced, staff downsized. The plant doesn't disintegrate and a 20-year professional with a head full of ideas doesn't disappear into the ether.
When a parent company shutters the weakest store in a local grocery chain who moves in? A second-generation Italian grocer who now carries Hispanic items? How about the locally-owned natural and organic store that's looking for a second location? Midwest cheese offers another example-small and mid-sized plants that used to make barrels of cheddar are now making mozzarella, or gruyere.
The poultry and meat industries have seen tremendous consolidation. But new companies have emerged to offer natural chickens, free range eggs, organic pork.
Our March issue features our annual Ice Cream Outlook. The story begins with an anecdote about a pair of entrepreneurs who are selling products to several substantial retailers across a good part of America's heartland. They overcame the hurdles of inexperience and undercapitalization, and get this-they haven't paid a dime in slotting fees. Oops, there goes another one!