Grant Thornton: Unlocking growth in Food and Beverage

According to Grant Thornton’s ’Hunger for growth –Food and beverage looks to the future’ global study, when UK respondents were asked whether cost reduction or growth was most important over the next year, seven out of 10 reported growth, with much of this optimism being driven by export opportunities. The key to realising a company’s strategic ambitions is therefore a successful growth strategy, which can include innovation, expansion and acquisition.


New products are the lifeblood of growth. Consumers want new products, improved quality, and lower prices. Retailers, for their part, want the goods that pull consumers into stores and move products off their shelves.

But is your organisation investing enough into research and development (R&D)? Current R&D expenses among food and beverage (F&B) respondents to the Hunger for growth study are a median 2% of sales overall. Median R&D expenses, although a small percentage of sales, also vary significantly by F&B sector, with some sectors spending four times as much as others. You also need to consider whether you are leveraging supplier relationships to enhance new product development (NPD) and using current information technologies and social media tools to target your marketing efforts.

The key to successful innovation is to take the surprises out of NPD. Companies need to understand the innovation process itself. The bulk of whole product life cycle costs are committed early in the NPD process and, in relative terms, the costs of rectification rise exponentially through the life cycle. Getting it right early saves money.

Expansion and acquisition

As already discussed, innovation is a vital component of success in this competitive environment. So too is investing in the business to stretch existing brands, expand the brand portfolio and to move into new categories. In-house development, however, requires investment of time and money into unproven concepts, with no guarantee of success. Many corporates therefore follow a strategy of making acquisitions of innovative products, developed brands and processes.

According to the Hunger for growth study nearly half of F&B executives consider expansion via mergers and acquisitions (M&A) as a viable strategy to strengthen their market positions. But does your company have the internal expertise to identify M&A opportunities, and then conduct effective due diligence? Are you able to secure financing to support investments, physical expansion or acquisitions?

Advantages of expansion via M&A activity:

  • Diversification through expanding the brand portfolio, which can bring the added benefit of leveraging existing distribution channels.

  • The rationale for acquisitions, however, can also often be to acquire innovative capability as well as new products and brands.

  • Taking their brands into new export markets.

  • The rationale is also to use the acquired company’s knowledge and experience in areas where the acquirer has a footprint.


  • Understand why you are making an acquisition. Why buy rather than build?

  • Carry out sufficient due diligence to really understand what you are buying

  • Focus on integration. How does the acquisition fit in with the existing business, suppliers and customers?

“Executives at organisations of all sizes must stay abreast of shifting consumer tastes that can turn into tomorrow’s Food and Beverage trends. Agile entrepreneurs often seize first-mover advantage with innovative new products, while larger players can exploit economies of scale to develop additional products, leverage established distribution channels, and acquire niche competitors.” Said Jim Menzies, Global leader Food and Beverage, Grant Thornton CA.