Dynamic Explanations of Industry Structure and Performance

Table 1: Evolution of the Food Industries in the U.S. and Europe

Competitive
environment

Control of supply
chain

II. National	Rise of large	Move to national/
Consolidation	manufacturers via	major regional
1920-1945	publicly owned connections with many small processors and retailers	level in one country Limited export

III. Internationalization Mix of publicly owned	Multinational
1945-1980 Manufacturing	expansion of major
oligopolies, retailer	manufacturers with
chains concentration,	significant increase
and many smaller entrepreneurs	in turnover

Best example of 'perfect' competition after farming, entrepreneurial	Run by regional wholesalers
'Imperfect' competition and start of acquisition activity. Food manufacturing an important factor in national economies	Run by national manufacturers with wholesaler and retail chain support
Golden Age of manufacturer branding and mass marketing.	National manufacturers dominate but some retail challenge resulting from concentration

Degree of
marketing
sophistication Consumer demand

Limited branding, Food a major part of

mainly commodities disposable income -
up to 50% in some
countries

Rise of national Rise in per capita
branding, sales,income and demand

advertising and
R&D private label
appears

for wide range of
branded convenience
foods

IV. Globalization	Polarization of	Manufacturers
1980-2000	manufacturing and retailer structures via concentration, acquisition and divestment	extend globally and retailers go multinational

Retailer branding
increases level of
penetration and
begins to challenge
manufacturer
branding. Both now
'oligopolistic'

Supply chain in
Europe run by
retailers and
challenging for
dominance in North
America

Brand management at national and international level. Increased demand for market data/information	Food expenditure declines as Percentage of disposable income. Move to larger retail outlets. Growth of eating out
Major manufacturers	Turnover in
identify core	foodservice now
categories. Super-	challenging for
stores, retailer	leadership as slow-
brands, address	down in food sales
rising vertical	at retail

coordination issues
in a concentrated
channel, Internet Grocers

Adapted from: Ramsey, ed., 2000. p. 7.