Food businesses’ structural needs summarised
- Without structural changes, many CPG companies believe they can’t continue
- More than half of companies report a disconnect between financial reporting and structure
- Traditional departments such as finance, sales and operations are outdated
- Cultural inertia can block ground-up transformation
- Businesses must embrace new capabilities like agentic AI to continue
What is the biggest challenge to the food industry? Is it climate change reducing crop yields? Is it declining consumer interest due to the rise of GLP-1s? Is it inflationary pressures on key products?
While not as well-known as these, business structure is key to food businesses, and structural problems can be an existential threat.
A recent report from professional services network PwC suggested that nearly half of CPG business executives do not believe that their businesses will survive the next decade in their current structure.
Despite this, around 29% of leaders asked said that they aren’t planning to make the necessary structural changes to deal with this.
What’s going on with structure in food and beverage businesses?
Discrepancies between reporting and structure
One of the key issues found with the CPG companies in the survey is that there are often discrepancies between how a business reports financial data, and how it is operationally structured, explains Carla DeSantis, partner at PwC.
While this is not a new phenomenon, the issue is now widespread: more than 60% of companies report differently from how they’re operationally structured.
In practical terms, this often means that in order to create the numbers in financial reports, numbers must be aggregated from different geographies or departments.
Putting together financial reporting data from a large company can be very cumbersome, especially when collected in bit parts from different departments. People within a business often end up structurally siloed, disconnected from the broader whole, which makes the issue worse.
This becomes a particular problem at the local level, further away from the centre of the business.
“If I’m trying to operate at the speed of light and be on top of what we all know – to be true dynamic consumer environment in an evolving channel and retail environment – then I need a better way to manage that,” says DeSantis.
She predicts that many businesses will not be structurally viable even five years from now. The traditional way of structuring a business is no longer fit for purpose.
“Finance separate from sales separate from operations is no longer the way to play . . . When you think structurally we are still very much talking about a finance function, an operations function, a sales function.”
Louis Bedwell, business unit lead at business network Future Food Movement, suggests that many businesses are frustrated with structural issues.
There is “consistent frustration . . . where the system doesn’t support what needs to be done in the business to move it forwards”.
Disrupting business structure
Some of the businesses PwC spoke to are already trying to change this, but there is a long way to go.
Businesses must reimagine how they operate end-to-end, tapping into “disruptive” areas of capability in order to stay ahead of the curve, says DeSantis.
Agentic AI is one of the key elements that can bring about this disruption, but there are others, she points out.
The future of business structure means “new and different partners . . . new and different forms of partnership . . . new and different ways in which I respond as a business in terms of operational agility and segmentation and concepts like that”.
Taking advantage of the sum of the parts of a business’s parts – mobilising those who are part of it – is also important, suggests Fast Food Movement’s Bedwell.
One of the things that blocks businesses from transforming in the way they need to is “cultural inertia”. “Misalignment” within corporate structures can hold them back.
“Change does not come from slides. It comes from leaders working across functions, building shared ownership from commercial to supply to sustainability. This is why insider mobilisation matters. When companies unlock it, they not only move faster but create cultures that attract talent and strengthen performance.”
Does business focus need to change?
Many CPG companies have large chunks of market share, dominating parts of their space.
However, these well-established companies are becoming less secure as consumer attitudes towards certain foods change, explains Clive Black, director at investment group Shore Capital.
Consumers are flocking to healthier options including fresh and whole foods, moving away from the fare that such companies traditionally provide and making growth more challenging for them.
Businesses have a choice – do they double down on market position through acquisition, or try to change the makeup of their portfolio by going after brands with a better health profile?
Structure is integral to how a business operates. The departments, geographies and brands within a business are like regions in a state or cells in a body – their arrangement within the whole is essential for its functioning. Sometimes, changes need to be made.
