In this scene from the Designer Foods War Game, the GSK team presents a strategy where it inserts one of its successful drugs, such as weight-loss supplement Alli®, directly into foods. The pushback on the part of the judges came swiftly. They questioned GSK's ability to succeed with such a strategy.
The Annual Strategy War Game National Championship, "The Battle for Designer Foods," was organized by Fuld & Company on April 8, 2011 in Cambridge, Massachusetts. Abbott Labs, Danone, GlaxoSmithkline, and Nestlé were represented by business students from Dartmouth's Tuck School, MIT Sloan, Northwestern's Kellogg School, and Yale School of Management. The nutraceuticals market, which includes nutritionally-enhanced foods and beverages as well as supplements, is expected to exceed $250 billion by 2015, driven by consumer demand, demographics, and health trends around the world. So which industry -- food or pharmaceuticals -- and which companies are best-positioned to win "The Battle for Designer Foods?"
This year's game predicted that consumer packaged goods firms will prove more adept and more aggressive than their pharmaceutical rivals by many measures in winning market share of the nutraceutical foods market - projected to be worth over $250 billion in just a few years. "We are confident about this prediction as past competitions have accurately forecasted events and competitive activities in a number of industries," commented Leonard Fuld, Fuld & Company president. In addition to the above general prediction, other key insights emerged, including:
1) "Measured steps," not "high science" will win in the market for the short term. Consumer product group companies, especially the major ones, have been very adept a micro-segmentation, producing niche products, accompanied by effective branding -- while pharma companies have relied heavily on blockbuster products. Food companies could begin to incorporate a variety of specialized ingredients that are already available -- fish oils, plant sterols and stanols, herbal extracts, vegetable and dairy proteins, probiotic and other beneficial bacteria.
2) Simple products that can build a "public health case" will forestall regulatory interference and win in the market. Consumer products companies have a track record of creating nutritional value in relatively simple functional foods, such as dairy products, which have long established their case with regulators by selling a food (dairy) that already has gained wide acceptance. In contrast pharmaceutical companies, are challenged as embedding a drug into a food to create a "functional food" will likely trip regulatory alarm bells.
3) Mergers will increase but collaboration is the hidden trump card for market success with consumer companies appearing to hold a competitive advantage here: They understand how to make such mergers work as well as appreciate the need for collaboration. For instance, competitors will be forced to collaborate in order to succeed -- by building on each others' brands rather than acquire the brand. (e.g., Unilever and Starbucks). Competing teams and judges discussed how companies must tap into "adjacencies," or related areas of science and technology. The day of only-invented-here is over, all teams acknowledged. Breakthroughs will come through university and government laboratory collaborations.
Fuld's public War Games have made successful marketplace predictions each year. In previous years, war game competitions have stress tested strategies in the Internet search industry, digital entertainment, social networking, the wireless Internet, healthcare information technology, and China's Smart Grid.
For more information on this war game or about Fuld & Company, please visit www.fuld.com
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