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Growth through differentiation.
The global market for industrially produced and packaged food will show stable long term growth. German manufacturers are leading in their segment with a market share of 22 percent. However, a new study published by Munich Strategy shows: the rules of the industry will change fundamentally. Manufacturers of food and packaging machines are required to realign their strategy.
The study is based on analyses of Munich Strategy’s ‘Mittelstand‘ database comprising more than 3,500 medium-sized companies and on findings drawn from consulting projects in the food and packaging machinery sector. The findings were validated with 42 interviews conducted with market players – manufacturers and users – and industry experts.
Digitization and verticalization as means of differentiation
According to the study, the global market for food machinery will grow by 3.9 percent, the market for packaging machinery will grow by 5.7 percent until 2023. To participate in this market growth, manufacturers need to achieve differentiation from their competitors. As this is becoming increasingly difficult via the manufacturers‘ own products, it is crucial for them to occupy new fields. The study identifies the fields ‘digitization‘ and ‘verticalization‘ where manufacturers can offer additional services to their customers, thus solving problems and creating additional benefits.
Digitization: Platform and data driven business models create highest value
The study shows: machine manufacturers can generate value through digitization, mainly with new business models. Platforms help to connect suppliers with machine users, improving the exchange of information and quality management while data driven models can be used to monetarize machine data directly and indirectly. According to the survey, two thirds of the users are interested in these models and willing to pay for it. Furthermore, many customers require additional features such as performance analyses or a presentation of the results that works for minimum trained users. Digital tools such as remote maintenance, trouble shooting and predictive maintenance are considered positive and necessary.
Verticalization is useful in segments with a high degree of standardization
More than 60 percent of the interviewed machine users from all segments see the advantages of a bundled offer of processing and packaging machines, as the study proves. “One face to the customer“ and the reduction of internal administration work are quoted as most important advantages of verticalization. Verticalization creates more value for customers and is easier to be implemented in segments with a high degree of standardization such as meat products, beverages and dairy products. Crucial factors for a successful verticalization are know-how in integration and application and technical requirements that need to be met. It is essential to find the ideal combination of machinery to create a coherent product and process portfolio.
KPIs of the German market for food and packaging machinery 2017
Forecast: the global market for food and packaging machinery until 2023
Trends in food and packaging machinery
Survey and analysis: differentiation through digitization
Survey and analysis: differentiation through verticalization
Central challenges and recommended actions for manufacturers
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