Industry perspective: Daniel Servitje — Grupo Bimbo | KPMG | BE

Industry perspective: Daniel Servitje — Grupo Bimbo

Industry perspective: Daniel Servitje — Grupo Bimbo

Grupo Bimbo CEO explains the baking group’s recipe for success.

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What are Grupo Bimbo’s core businesses?

We’re a baking and snack company. We probably have as big a share of our business in developed markets as in emerging markets. We come from an emerging market economy in Mexico, and we’re the leaders in the baking industry globally, but we see many more opportunities to build market share in emerging economies.

What has been the biggest impact of digital technology on your business?

E-commerce has been growing fast but from a very low base. Digital technology can help us simplify our business and take out cost. We’re mostly focused on leveraging technology to have the greatest impact on the cost of distribution, and in parts of our logistics operations.

Does being in an emerging market help?

In emerging markets, companies can have a better understanding of the complexities, the risk, the way to go to market. They tend to be more patient about the outlook and the opportunities.

How do you expect to grow the business?

By developing each market whenever we can and allowing each country to seize the opportunities in their core business. We try to stick with the industry we are in, because we are still in a very fragmented market and, even as leaders, we have less than 5 percent of the market globally. Our focus is organic growth, but we have been quite aggressive with acquisitions in the past 10-15 years.

Is your competition changing?

The big companies face similar challenges. I haven’t really seen the big CPG companies making a lot of changes in their model. Trendy businesses, like the US organic food companies, are being bought by CPG firms or companies investing in venture or private equity type deals, but it’s on the margin. It’s not as significant as a new business model.

Consumers are more likely now to change products or try new brands. Why is that?

It’s a reflection of more information, and customers’ willingness to try new things because they have read about them and experienced them with friends. You see it everywhere. The amount of choice in packaged food and prepared foods in all countries is expanding significantly. As they have more choices, they become more adventurous in trying new things.

What are Grupo Bimbo’s key challenges?

Understanding changes in how consumers think and act, and how technology can allow us to win. We see a lot of opportunities in our industry, especially in emerging economies where products like ours are not as developed and the industries are not as mature in terms of the way retailers are organized. I believe we have a substantial organic growth path in these countries in the next 10-15 years. We base our business on long-term plans, and that gives us more patience to overcome ups and downs.

How culturally specific is baking?

How we view the world now – with mobile phones, sharing information, and the globalization of restaurants and news – has influenced taste. If you had asked me 10 years ago, I’d have said, ‘food is very local’. Now it’s not necessarily the case. So we’ve been able to develop products in one market and launch them elsewhere. We’re also looking at the penetration and frequency of consumption of cakes, snacks and bread. That’s an opportunity in established markets. We’re trying to execute our offering better at stores, keep our products relevant and ensure our business model is as low cost as possible, so our products remain affordable.

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