Grupo Bimbo pursues new model

18 August 2011

MEXICO CITY: Grupo Bimbo, one of the world's largest packaged food groups, believes firms from emerging markets could benefit from adopting different strategies to their more established rivals.

The company, covered by a Euromonitor profile here, is the biggest global baker, and has seen sales grow five times over from 1997 to 2010, now topping $10bn, and it is currently present in 17 nations, selling 150 brands and 7,000 products.

Speaking to McKinsey, Daniel Servitje, Grupo Bimbo's CEO, argued its approach as a "Latino" or "emerging market champion" is distinctive from many American or European multinationals.

"We're ... looking at things from a different perspective – a little bit, probably, more humble, more focused on the economic uncertainties of our countries," he said.

This kind of model followed on from repeated periods of fiscal instability endured in Mexico and other similar markets during the 1980s and 1990s, which made short termism an inadvisable policy.

"Sometimes we take a longer view of things, and we're probably not as focused on what's happening at the quarter, and basing our decisions on that circumstance," said Servitje.

Grupo Bimbo's pursuit of such a tactic was shown by its Mexican snack business, which lost money for ten years but is now witnessing strong demand, increasingly extending into health and wellness lines.

Flexibility is an equally vital element of Grupo Bimbo's bid to tap a mix of channels, from pressing into advanced economies like the US to reaching "mom and pop" stores in Guatemala and Brazil.

"Consumers are looking for value, but they do prefer also branded products in many cases," said Servitje. "So what we are trying to do, and do in many places, is really segment our product portfolio in the different channels."

In the US, Grupo Bimbo started by purchasing brands aimed at Hispanic shoppers and is now seeking to acquire Sara Lee's bakery arm, but while acquisitions also defined its approach in Brazil, this has not been the experience in China.

"In China, it's a different ballgame. We've been able to sort of replicate our business model," Servitje said.

"I thought it was going to be much more complicated for a Latin American company to develop its business in China, and surprisingly it has been not as difficult."

Data sourced from McKinsey; additional content by Warc staff