THE JOURNEY OF MARGIN EXPANSION AMD GROWTH DURING COVID-19 TIMES

The case study analyses how the management, and Courageous Minds got a regional company to expand its margin and grow stronger after a tough year behind COVID-19.

BACKGROUND
A regional Food business was predominantly present in two countries, with most of the business in its country of origin. The company started to make some profit in the country with the second largest operations (though cumulatively, the country was loss-making), while two other markets were making a loss as their scale in the market was small. I joined as an advisor at the start of COVID-19, an unprecedented period.

Like the entire food industry, the client's business suffered as people adjusted their habits. Eating out was discouraged to protect from COVID-19, and as such many HORECA businesses closed shop or suffered heavy losses. The consumers were eating at home, and the focus from luxury and fashion moved to the core needs and cash preservation. It was a challenging time that needed crisis management, strategy renewal, and talent development to ensure the team could survive and thrive in the new post-COVID-19 times.

ACTIONS
As COVID-19 spread and lockdowns started globally we knew that it would be impossible to deliver FY2020, so we began to work on strategy renewal and training remotely the top management to work on a mindset change to prepare them for growth in the new world heavily dependent on digitization. The most significant changes were in the 'go to market' as people started to eat at home by ordering online, hygiene became a massive requirement for food, and remote working became a norm. The focus during lockdown was on protecting and supporting the employees and their families.

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We revised the strategy to

• Make digitization a priority and, as such, start the online food business (DTC).

• Opening the first protein stores (cash and carry concept) was another strategy to bring small kitchens and home shoppers to buy all their protein requirements under one roof.

• Another meaningful change was in the organization's design to cut the slack and make sharper focus on the core activities that could drive growth.

• Governance, an opportunity in the past, was strengthened by developing delegations of authority, segregating the responsibilities of the Board, shareholders, and management, developing KPIs and linking the bonuses to performance.

A key aspect of the new strategy was to surround the shopper 360 degrees so they could purchase all their food and hygiene requirements from the same supplier. To make the strategy work, we developed alliances, as doing everything yourself is neither accretive nor helps build mastery.

RESULTS
The result was that the business regained growth post the first year of COVID-19. Strong digital businesses grew sales and margins, and a solid and capable organization could adapt to the changes well. Recovered outstanding funds, improved working capital significantly, strengthened controls, developed own brands, and leveraged strategic revenue management to offer the best solution for different channels and customer needs. For example, the company developed a brand and service portfolio with branded products and best services with high margins served to high-end customers and generic brands for wholesale and traditional trade channels.