Assumptions That Can End You

Last week we posted regarding assumptions and how they can lead to a company’s demise. We got a large example of this right after our post, when Dean Foods filed for bankruptcy. Dean is the largest milk company in the US, and their failure to accept and adapt to changing consumer trends doomed them.

The NY Times published a piece on Dean which included this excerpt: “Long ago, the public figured out that diets do just fine without milk and no, we don’t have to drink three glasses a day,” said Marion Nestle, a food studies professor at New York University. “Maybe plant-based milks are the coup de grâce, but this industry just can’t seem to keep up with changing tastes.”

Did arrogance play a part in their missteps? Don’t know, but if not that, how can you miss the trends that have been going on for years, unless you just don’t talk to customers or pay attention.

And Dean is just one example. The Times cites Kraft Heinz as well. “Like Kraft Heinz, Dean Foods has watched from the sidelines as smaller rivals dominated the growing market for trendy alternatives, like almond milk and plant-based dairy products. In fact, in 2012, the company started spinning off its units that made such alternatives — a move that in retrospect looks like a strategic error.”

In addition, channel concentration has caused these companies to also have to deal with private brands and their increasing power. Again, not a surprise, if one talks to customers and accepts what the market is showing.

Other trends that were easy to spot if one was not blinded by arrogance were the shift away from cereal for breakfast to breakfast bars, which aren’t consumed with milk. Yogurt has seen an increase in consumption, something Dean does not produce, and Starbucks shifted to almond milk for many of its customers who prefer it. The signs were there.

As we said last week, if you listen to the customers trends are obvious. If not, your successors will deal with the fallout.

Mitch & Neil

This entry was posted in management, Spending time with customers, strategy and tagged , , , , , , , . Bookmark the permalink.

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