Blink and you’ll have missed it. Kraft Heinz abandoned its takeover bid for Unilever, the move surviving for just one weekend. While the brevity of the attempt isn’t a great look for the Buffet-backed Kraft Heinz, the move has had a wider impact on the industry, as Unilever illustrated Wednesday when they committed to boosting profits after shareholders started to query the prompt rejection.
Will there be an act two before the year is out? With inviting takeover conditions created by the devaluation of the pound it might be hard to walk away for good, despite the negative coverage from act one. Any attempt would have to properly account for Polman’s long-term approach, which is widely admired – though the strategy is under pressure from shareholders, it’s still an asset for the company.
But it’s not just takeover drama swirling around the food and drink industry. On Friday Morrisons announced a plan to recruit more UK-based suppliers, in an attempt to manage some of the uncertainty surrounding the global food supply chain, after a report warned of the combination of severe weather events and political changes injecting volatility into global trading relationships.
UK consumers have already suffered from a ‘courgette crisis’ this year, as some retailers struggled to keep up vegetable stocks due to weather affected crops in Europe. Though resolved fairly quickly, it’s indicative of issues coming thick and fast down the line as the global supermarket system of year-round produce comes under pressure from climate change and inflationary pressures.
While some consumers laughed about the fresh-produce shortfall, it’s the kind of inconvenience that can rapidly turn into a crisis as they’re deprived of something formerly ubiquitous. Then there’s continuing brand price and volume changes taking effect across much-loved products in an effort to counter post Brexit market conditions – ‘shrinkflation’ as Monday’s Dispatches broadcast coined it.
Throw into the mix the threat of health-related issues such as the emergency government measures preventing the spread of bird flu (thousands of ‘free range’ eggs may need to be re-labelled). From shareholder pressure to pricing pressure, the industry have a full cart of issues that all have the potential to confuse, irritate and even enrage today’s disloyal, value-driven British shopper.
Against this backdrop, retailers and producers need to be scenario planning. Communications strategy alongside business strategy. In some cases, given the potential for consumer backlash, the former steering the latter. And while anticipating risk and response, also identifying where there’s potential to take advantage of emerging opportunities.
Agility and transparency will be key. With action and message needing to resonate with consumer on a deeper level, appealing to both rational and emotional needs, in a clear and compelling way. Collaboration will also ease the pain. Where issues are universal across supply chains, convening a united voice will at times be more productive than going it alone.
In such febrile conditions, failing to plan for a crisis will end badly. Whether it’s a customer with a short fuse or an impatient shareholder, reaction to the unexpected can set off a chain of events, and before you know it the pressure will be critical and you’ll be wondering how on earth you didn’t see it coming.
Cody Want, Senior Account Executive, Corporate
Find Out More
January 21, 2021