Many of the most successful products and concepts in the healthy nutrition business worldwide have been brought to market by fairly small companies. In general, little is known about Nordic SMEs active in functional foods and health ingredients.
This project has worked with the commercialization challenges small and medium sized companies (SMEs) face in the area of nutrition and health.
During the project, we have been in touch with some 100 SMEs all over the Nordic countries, representing food processing, technology, R&D, dietary supplement and service companies. There is no distinct profile of a Nordic SME working with healthy nutrition. The companies vary in size, form, earning logics, background, age, nature and goals. The diversity is striking.
A question has however risen: Are they a dying breed? During the year, we have e.g. seen the acquisitions of a number of well-established medium-sized companies that have been successful within their niche markets. A natural progress it is indeed - large companies are always eager to buy successfully proven business concepts and integrate them into their own processes. What strikes us as worrying is however the successors. Where are they? Where are the approx. 50-70 employee growth-oriented SMEs determined to make a success of their endeavors in healthy nutrition? When applying a stricter definition of SMEs, which says a SME is considered autonomous only if less than 25% of the capital or voting rights are held by another enterprise – our ranks grow even thinner, also among the smaller companies.
The commercialization and marketing competence in Nordic SMEs is low. Many lack an informed understanding of the market and have for the most part little knowledge of consumer behaviour related to health, and the role of marketing and branding in creating value for the firm.
Nordic SMEs keep up a high rate of product development despite their small size and limited resources. To a certain extent, we found that this rat wheel approach is exhausting the companies.
Particularly small businesses need to learn more about the management of the commercialization process and what it entails. A main conclusion from this project is that many SMEs struggle to manage it professionally and keep their commercialization activities in balance. As a result, many experience a constant lack of resources and time, hindering them from meeting their targets.
How can we improve the marketing and commercialization skills? The companies themselves need to bring in brand developers and marketing experts with knowledge about health marketing into their organizations, and allow them to make a change. At the same time, support measures need to start focusing much more on means to elevate the marketing and commercialization capabilities and implementation activities in the SMEs. They need to be well directed, hands-on and valuable to the SMEs. Due to their goal-oriented and entrepreneurial approach, many small business managers need assurance of clear and concrete beneficial and commercial outcomes as a result of participation.
Nordic SMEs believe in their possibilities to be successful. They have an international reputation of being innovative within healthy nutrition – to keep this up the market needs further success stories.
Project duration: September 2006 – November 2007