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Topic: Strategy

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What Research Is There Into Fmcg Food Companies’ Responses To Disaggregation Challenges?

Posted by john.baker on 250 Points
Who has done work in this area? What papers/books exist? What examples are there of such responses?

We sell Industry 4.0 equipment to liquid (drinking) milk dairy companies. Their prooduct range fits into 3 categories:
1/ 50% vol, 6 SKUs bulk white milk, branded for supermarkets and sold to supermarkets
2/ 25% vol, 15 SKUs white milk with their own brand, sold through supermarkets and their own ‘route’ trade
3/ 25% vol, 30 SKUs flavoured milk for impulse purchases, sold through both channels

Note the numbers are rough, but they help set the scene.

Our dairy factory customers are facing two challenges, one from each end of their product range.

New entrants are building narrowly-focussed production facilities to pump out the small number of high volume SKUs for supermarkets with cost structures that are difficult to match with a ‘full service’ dairy factory.

Niche players are building small, flexible dairy factories to make premium flavoured milk. This commands a premium and the fundamental driver is marketing excellence rather than control of manufacturing costs.

This is a really tricky environment for incumbent dairy players to operate in. Very interesting indeed (in the spirit of the Chinese curse - ‘May you live in interesting times’.)

Disaggregation isn’t new. What have people done in other industries?


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