CPG companies leaving GMA ‘more predictable’ than Amazon’s acquisition of Whole Foods, says Rabobank

By Douglas Yu contact

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Rabobank said GMA members' dropouts represent a breakdown in the consensus on how to approach the changing consumer and food landscape. Pic: ©GettyImages/anyaberkut
Rabobank said GMA members' dropouts represent a breakdown in the consensus on how to approach the changing consumer and food landscape. Pic: ©GettyImages/anyaberkut

Related tags: Food, Nutrition

Large CPG companies’ recent dropouts from the Grocery Manufacturers Association (GMA) including Mars and Nestlé were ‘more predictable’ than Amazon’s acquisition of Whole Foods last year, wrote Rabobank in its recent report.

The report, titled “The Big Surprises in 2017,”​ summarizes some of the major food industry changes, including large companies upping their innovation by acquiring emerging premium brands, and the changing retail environment.

Nicholas Fereday, senior analyst of consumer foods at Rabobank, said it appears that during the post-Amazon era, “the e-commerce channel could no longer be ignored and is now a serious topic at all FCMG companies”​ after the online retail giant sealed the $13.7bn deal​.

“The bricks-and-mortar move by Amazon amazed everyone, especially at a time when all the grocers are trying to build their e-commerce capabilities. Once the dust had settled, it made lots of sense as soon as you looked at it, including acquiring a credible private-label food brand (365) and noting the cost is almost insignificant – at less than 2% of Amazon’s market cap,”​ Fereday said.

Food companies declare policy independency

Unlike Amazon’s “jaw-dropping”​ purchase of Whole Foods which baffled many industry players as in relates to retailers’ future, Fereday pointed out Rabobank was able to “connect the dots at least as far back as 2012”​ to predict big CPG companies’ recent disassociation with the GMA.

“[From] California’s Proposition 37 failed ballot measure on GMO labeling running through Michelle Obama’s ‘Lets’ Move’ campaign to tackle childhood obesity, to General Mills’ Cheerios going gluten-free in 2015, and Campbell Soup’s voluntarily labeling of GMOs at the start of 2016,”​ he said.

Fereday added Nestlé and Mars’ leaving GMA late last year was a “clear signal”​ by food companies that they “want to be more transparent and more independently decide their own policy destinies.”

“It also represents a breakdown in the consensus on how to approach the changing consumer and food landscape… [However], the GMA has traditionally been a defender of the status quo, and opposed to any moves to label GMOs, trans-fats, and added sugar,” ​he said.

Most recently, Hershey​ also decided to drop out of the DC-based association, according to this site. However, GMA previously told ConfectioneryNews that these companies who are no longer part of it were “leaving for different reasons.”

Fereday explained, “The advent of social media as a means for grassroots issue-based organizing and the spate of acquisitions of natural and organic brands by large players, as well as reformulations of their existing portfolios, the decision by companies to leave seems more like a natural progression.”

He added other food industry associations, such as the American Cheese Association and the US Poultry and Egg Association, have been notified for the need to change, “or face a similar fate if they are not aligned with their members and ultimately the needs of the changing consumer.”

Related topics: Markets, Chocolate, Candy, Biscuits

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