Playing to your strength is easy for some, but in an environment of price-sensitive consumers where margins are eroding due to weight loss and geopolitical events shaking up supply chains it is harder than you think.
General Mills has reduced their sales forecasts just over a week ago due to ‘weak sentiment from consumers, increased uncertainty, and significant volatility.’ Snacks were among the categories that suffered most.
In recent years, Mars Inc.
generated around $30bn of revenue, rather than $19bn from snacks. However, its Kellanova purchase is expected to tilt the balance in favour of snacking, if that happens. You can also read about how to get started. Deliver the combined revenue of $36 billion expected.
In this context, the French multinational Bel Group quietly achieved sustained growth through its commitment to innovation in healthy snacking, particularly in terms of dairy products, fruits, and plants-based snacks.
Analysts predict that healthy snacks will grow at a CAGR of between 5% and 10% in the coming decade. Their value is expected to reach $145 to $200 billion in five to ten years. The growth of the category is supported by trends such as smaller portions, increased satiety and flavour innovations, along with premium snacks.
Winning in a volatile market
Bel’s strategy has been to focus on the products that fit or compliment its existing portfolio, rather than aggressively expand into new markets.
The US launched Babybel, a protein and probiotic-packed portion.
The Laughing Cow also introduced a variety of limited edition flavours, including ‘Hellfire,’ a spicy ‘Dill Pickle’, to attract new customers.
Increased capacity in the US from Southeast Asia
Bel is strengthening its regional presence in key markets by acquiring and expanding manufacturing.
It is increasing capacity in its cheese factory in Vietnam. Bel has a strong presence in Vietnam, which is the largest Asian market.
However, there are other strategic reasons for expanding. The expanded facility is expected to boost exports, serving Southeast Asia as well as China, Japan and MEA.
Bel also acquired a minor stake in Garuda Food, Indonesia’s largest snacks and cheese manufacturer.
In the US, Babybel is expanding its South Dakota facility, and another Wisconsin cheese factory was recently added. It’s a strategic move to secure the future: The US, Bel’s biggest global market, generates a third or $1.2 billion in sales per year.
Innovative products based on familiar brands
Bel’s product development has focused on creating dairy substitutes that are more than just ‘good’. “The most important thing to do is be able produce tasty products at the correct level of nutrition”, Bel told us. The company’s portfolio goal is to provide 50% plant-based and fruit products, and 50% dairy.
Natural fermentation is one of the ways to create plant-based cheese, while precision fermentation can be used to produce dairy-free casesin. AI also helps to determine ingredient combinations and recipes.
Bel has good reasons to continue doing the things it is already doing, while making calculated decisions that will enhance its product line strategically rather than radically.
The core brands have helped to deliver growth in volume for eight quarters in a row in March, that is two years in a row. This has resulted in sales totaling EUR3.83bn.
The net profit was EUR107m, compared to EUR53m (an increase of 101.6%). Operating income (+32.1%), the operating margin (6.1% as opposed to 4.8%) and the recurring operating income ($260.2 million) all contributed towards a strong financial performance.
Bel also spends more. The company spent EUR214m on strategic initiatives last year. This included digitalisation.
This is EUR22m over the previous year, and shows a firm with a comfortable, but not excessive liquidity.
Bel, however, is betting on boosting capacity, improving efficiency and supporting innovation, all of which are crucial for growth over the long term.
This strategy has been executed well, as evidenced by the consistent results of this French multinational.