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A David and Goliath moment in the food industry

Mustafa Koita

Published: Updated:

In the food and beverage industry it’s widely argued that the mass market has an insatiable appetite for lower cost food. Whether beef, chicken or vegetables this assertion is mainly made by the big conglomerates that maximize profits by offering consumers lower quality produce, and lots of it. The problem is, all the evidence indicates the opposite is sometimes true: some people generally are happy paying more for meat and vegetables, readymade meals and cheeses, and other produce, if the quality is good, and sustainably and ethically sourced.

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This has the big food companies in a bit of a dilemma because as they become more aware that not everything comes down to price they need to adapt their portfolio of products, removing the unhealthy, cutting down on salt and additives, while improving the quality.

A few decades ago, taste, affordability and branding played a huge role in consumer decision-making. The brands were smaller companies and not behemoths. They were trusted household names with affordable prices because the natural economies of scale and people like me were loyal to ‘personal brand subscriptions’ - basically my Mom always bought the same bag of potato chips.

There are pros and cons relating to personal brand subscriptions. On the plus side, I don’t have to think or research if the product (or new product flavor) is good or not. If my preferred brand comes out with a spicy flavor potato chip, then I will buy it.

On the downside, the product, brand and company values could change over time - which they all do as food companies tend to get bigger. These company evolutions are small enough for the consumer not to notice, and easily ignored, and this is why my favorite crisps are bought due to convenience, price or pure laziness.

The majority of the people I know, (and maybe it’s the generation), are stuck in personal brand subscriptions. Also, most of those subscriptions are with the big food corporations who can ensure the product is available in almost every store you shop in. With deep pockets they can keep prices low, and strong marketing budgets ensure the product is in clear view all the time, and wherever your eyes may take you.

An Emirati man reads the front of a package of Indian Basmati rice in a supermarket in Dubai on July 19, 2008. (File photo: AFP)
An Emirati man reads the front of a package of Indian Basmati rice in a supermarket in Dubai on July 19, 2008. (File photo: AFP)

Homegrown food enterprises are changing the industry environment, and this shift isn’t a flash in the pan. Small niche brands are attracting growing numbers of consumers and as this trend continues the food majors are trying to replicate products or simply acquire these little firms. The SMEs by design have some distinct advantages. They are quick decision-makers because it’s easy for them to balance their own brand values with the corporate pressure that exists for bigger companies. Typically these small companies will happily use premium ingredients at a higher cost.

If consumer feedback indicates the demand for plant-based variants, the company can pivot to this quickly. It’s also easier to have clear transparency with customers. Of course the little niche homegrown brands don’t have the financial muscle of the international firms, the distribution channels or marketing budgets, but they all share a passion to make a difference rather than just a quick buck. In the past the food conglomerates could manufacture a portfolio with a product range that was appealing to consumers. At this time they basically had control: they dictated what the consumer should have and want. They didn’t need to address changing tastes.

Whether 10 percent of their produce was unhealthy or 90 percent, the lobbyists could protect them, and adjusting the ingredients found in their food and beverage range was never really addressed, unless changing government regulations forced them too. Now they must.

There’s a bit of panic amongst several of the big companies because they’re losing some of the comprehensive control they had over the industry. The competition that exists between the little guy that thought it worthwhile to produce a range of chutneys, and the big conglomerate producing condiments en masse is in comparative terms getting fiercer.

This is a real David and Goliath moment in the global food industry.

Some will say that the enterprises focusing on particular products are simply filling a niche in the market. This is partly true, but many of these small companies are actually helping to create that niche.

In addition, with the advent of social media, the smaller players are also able to reach more people. Once only large companies could reach the public via expensive billboards or TV Adverts. The new generation of SME food company owners are as concerned about what goes into their body, and how it’s affecting the planet. They spend more time researching, asking their friends, reading the labels and trying new products. The definition of ‘brand loyalty’ has shifted irreversibly.

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Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.