Entrepreneurial Lessons In Focus For Big Food

Over the past few weeks we’ve witnessed several prominent portfolio restructurings across the industry: Big Food is trimming the fat (or, in Marie Kondo terms, selling off assets that no longer “spark joy.”)

This week, one of the market’s biggest mergers in recent memory officially unraveled as Kraft Heinz announced plans to split into two separate businesses focused on sauces, spreads and seasonings, and grocery staples, respectively.

But Kraft isn’t the only one portioning off assets. Post Holdings offloaded its recently acquired pasta business, and B&G Foods sold premium canned vegetable brand Le Sueur – its latest in a series of divestitures.

And now PepsiCo is facing pressure from one of its biggest investors to streamline and simplify, citing a lack of focus and discipline that has led to “poor operational results, sharp stock-price underperformance and a meaningfully discounted valuation.” A big chunk of that push focused on retooling its manufacturing footprint and reducing broad-reaching flavor arrays of some of its leading brands.

An emphasis on supply chain synergies and strategic manufacturing relationships (two common elements many entrepreneurial brands have been seeking via investments and partnerships, as of late) seems to be coming for Big Food.

On Wednesday, The Campbell’s Company emphasized its intention to realign manufacturing relationships to mitigate the impact of tariffs. Portfolio focus and operational complexity reductions are also the cornerstones of Kraft Heinz’s divorce, and the cutting up of Kellogg Company that came before it.

These stalwarts are struggling under their own weight. In the age of trade wars, elevated costs, supply chain challenges and shifting consumer behaviors, is diversification still a solid strategy?

Many of the entrepreneurial efforts of large food conglomerates have flopped with the amputation of venture and accelerator arms (take Kraft’s Springboard or General Mill’s Gold Medal Ventures, as evidence) in the past few years.

These companies – often challenged by their slow ability to innovate against consumer-driven trends – are now being forced to look inward, figure out how to patch their ships with what’s already on board, and throw dead weight overboard when they can.