The road less taken: What food businesses can learn from Kerry Group’s Covid-19 strategy
A look at the ways that the Kerry Group has forged their own road to success
In the midst of a true crisis in the food business, with widespread reports of milk being dumped down drains, unsold eggs being smashed, crops ploughed back into the ground, meat factories furloughed, and the world’s restaurant businesses facing questions over what will be left when we emerge from the Covid-19 crisis, it is hard to find an example of food suppliers whose entire focus at the moment is not on survival.
The world, however, doesn’t need another story about the problems of the food industry, so I have been searching for examples of positivity. The Kerry Group is the best example I have found – through its early commitment to its employees, and the way it has helped its customers through the threats which Covid-19 presents to their businesses and their future.
Kerry Group’s rise and rise to global leadership in taste and nutrition, now a leader in its space, from the relative obscurity of its origins as a small regional co-operative, has been well described. The book ‘The Kerry Way’ showed its early path, but in recent years, the acceleration in its growth, and growing global footprint, shows new vigour and an organisation embracing its global role and purpose.
Kerry’s customers are reaping the value of this, and as such, the Kerry Group’s approach is a case study of how to make advances during this time of turbulence and crisis.
Empathy for Employees
Any organisation that doesn’t appreciate the real concerns, and sometimes outright panic, of their employees in the face of a media onslaught describing in vivid detail the negative consequences of a global pandemic, will struggle to survive.
It may seem obvious that understanding and sympathising with the real concerns of your employees and a willingness to stand by your staff has value during Covid-19. It is estimated that one billion people have jobs related to food production – from farming to retail – and 144 million of those have been impacted by the current crisis. Restaurants have been worst hit.
About 91 per cent of restaurant workers have been laid off in the US in the past four months. Sympathy is one thing, but empathy is deeper. Kerry has distinguished itself already during this pandemic by understanding that their own people need to see their organisations’ commitment to their needs first, and not secondary to a focus on the business and profits. They did this during the Covid-19 crisis through early consultation with employee groups, redesigning work rosters and addressing real and perceived safety concerns in their factories.
In addition, Kerry has raised substantial charitable donations to support the communities in which they are present such as Ireland, the UK and Italy. Businesses that genuinely appreciate the difference between empathy and sympathy for their employees earn the right to survive now and thrive in the future.
The Trusted Partner
Sales and marketing tomes are replete with examples of the importance and value of becoming a trusted advisor to customers. By providing information, you can deepen the relationship to understand and align your offering to their strategic needs. The Covid-19 virus has challenged orthodoxy in the most brutal way possible. It is no exaggeration to say that the number one concern to most suppliers to the food business is self-preservation in a turbulent and unpredictable environment and not necessarily deepening the relationship they have with their customers.
In contrast, Kerry created a dedicated Covid-19 page on its website, full of accessible advisory blogs and podcasts explaining ways for food businesses to deal with the challenges of Covid-19. The information was based on Kerry’s internal and external research, expertise and specific experience from China. The web portal includes information and advice about the impact the pandemic can have on consumer behaviour and trends, outlining the impact it would have on food service companies, grocery stores, deli counters and prepared foods, the market for meal kits, bakeries and how restaurants can innovate and adapt within the new paradigm. Equally the page hosted content (written, audio, video) on how to change customer engagement, identify food and nutrition opportunities segmented based on new categories created by Covid-19 – elderly diets, socially isolated, immune-compromised, mental wellness.
Finally, there has been a willingness to reverse previous predictions – for example, showing how the pre-Covid growth in mocktails and meat alternatives was halted as consumers during lockdown, have re-embraced the comforts of alcohol and meat. This is part of the value of being a trusted provider of the best and most accurate information during a dynamic situation.
Insights on Customers (& the customer of the customer)
To describe Kerry as customer-centric is an understatement. The degree to which they understand consumer behaviours, current and future demand and the influence that events will exert is extraordinary. In my own experience with the world’s global media, Kerry is one of the first places food journalists contact before penning an article. They know that they will get an accurate insight as to where the consumer is going.
Kerry’s unique market data, especially from its considerable presence in the Chinese market, allowed it to project the full consequences of the Covid-19 virus. The China experience is of huge value because their Covid-19 experience is four to six months ahead of Europe and the US.
Sales in food establishments dropped 93 per cent in China during Covid-19, retail drop 50 per cent and consumers demanding ‘no-touch’ technology to order food as the food business began to re-open.
Communications from Kerry to its customers warned them of what to expect from Covid. Chinese consumers had fled to ‘safe’ and familiar food choice and returned to cooking at home, with ingredients from scratch, in 40 per cent of meals versus 26 per cent before. China embraced all-in purchasing online, including by new customers over the age of sixty.
Kerry used these insights to correctly assume the same would occur in the west, and this has been borne out as on-line grocery purchases rocketed from 13 per cent to 31 per cent overnight. Kerry also predicted the possible growth in ‘alternative’ meats, as consumers associated the origins of coronavirus to meat, and a real interest in immunity-enhancing nutrition and nutrients. Summarising these trends concisely demonstrated to Kerry’s customers how they could enter new markets, create new product offers and generate value for both.
The Appliance of Science
Scientific leadership in the food industry can be considered analogous to motherhood and apple pie; everyone is in favour of it and most say they are already doing it better than anyone else. The websites of world’s top food ingredient companies all claim to be backed by excellent research, researcher’s and peer-reviewed papers. The perennial challenge for their customers is the WIIFM or What’s in it for me?
Pure and academic research is of no use unless translated into innovations that customers can really use. Since Covid-19, many companies in the food chain have pivoted from a focus on taste and the ‘prosumer values’ of sustainability, welfare and Fairtrade to nutrition and taste.
Outside of rewarding themselves for good behaviour during the lockdown, there is a deepening interest in how food enables the body to resist the full ravages of viral infection. Immunity can be enhanced through certain nutrients; Zinc, Selenium, Omega-3, beta-glucans – all have been shown to provide scientific benefits as immune modulators and aiding the ability to recover.
In addition, the scientific evidence has weighed in showing that avoiding elevated blood pressure and obesity are also critical in a Covid-19 world. In a sector dominated by nutritional supplements, and questionable food ingredients, both big and small food companies need to be seen to use only options founded on solid science. Being prepared for brave new markets, and capable to agilely pivot towards new consumer demands provides a real and economic benefit for Kerry’s customers.
Anti-Fragile Capital
Seeing your businesses ‘boat’ rise as the tide comes in is relatively easy to achieve. Cheap money and record low-interest rates created the temptation to go on an acquisition spree, and few in the food space missed the chance. The enduring strength of demand for food has always made it traditionally a defensive play for investors, but recently increasingly attractive as market values seem low relative to consistent and predictable returns. It has also helped that consumers and ‘prosumers’ interests in the origins and methods of processing of food, and the growing interest in food technology, have made the business sexy again.
This has resulted in mergers and acquisitions (M&A) activity in the Food and Agriculture sector to be amongst the most hyped and active. Patient capital has been defined as being the ability to invest for the long term, but Kerry’s approach might be called ‘patience’ capital or waiting for the right moment, keeping the financial power dry. This appreciably takes forbearance. It prepared the company for the most unpredictable circumstances.
Whether Covid-19 is a Black (or White?) Swan will be a subject of debate (the fact that the movie Pandemic was released in 2016 and the infamous Bill Gate’s Ted Talk suggests the event was entirely predictable) but what is clear is that a food business that was preparing for a Black Swan event would have been wrong 39 out of the last 40 fiscal years. Ensuring that capital investments are ‘anti-fragile’ while competing in a very cost-competitive environment, is nothing less than a trapeze act. The food sector has been traditionally characterized by razor-thin margins, just in time inventory, and a focus on affordability, availability, and safe produce.
By their nature, such businesses have no margin for error, no resources to pivot during periods of exceptionally challenging disruption. Kerry achieved this challenging balance, even when not taking on transformational acquisitions when the timing and conditions weren’t right. Discipline like this prepared Kerry well for the Covid-19 and post-Covid world where capital will be king. Five glasses from one large and bitter lemon is a challenge for any company, even one approaching 10 billion dollars in revenue. Fail to prepare means to prepare to fail, as one contentious Irish sportsman once claimed. Helping your employees, your customers understand the degree of challenges the world faces during Covid-19, and how to get the most out of a precarious situation, makes that point with convincing clarity.
