Article at a glance:

Growing in the food industry

After a decade of high returns, the food industry experienced a steep decline in performance in the early 1990s. The industry responded with some temporary tactical measures designed to prop up earnings, but these will not make for a successful long-term strategy. To create value, the food and packaged goods industry must grow. All three options for growth—acquisitions, international expansion, and enlarging existing businesses—hold some opportunities at the business unit or category level, but they require disciplined thinking and superb execution on the part of management.

The take-away

Profitable growth in the packaged goods industry will probably continue to be difficult. Yet it is possible for a flat business to suddenly take off and achieve remarkable growth, if managers take the right risks and manage them well.