Blue ocean strategy in the food and beverage industry

Have you heard of Blue Ocean Strategy? A business strategy that is applicable in all industries at all times. The success stories are many for companies that have succeeded in creating new value offerings and new markets. But has the strategy made an impact in the food industry?

29 September 2020 •

Blue Ocean Strategy is a busi­ness strat­e­gy that involves doing some­thing con­tra­dic­to­ry; name­ly to cut costs and at the same time offer the con­sumer some­thing new and excit­ing. How is that pos­si­ble? In the 1980s, the cir­cus Cirque du Soleil showed the world how to do it. But what about the food indus­try – can Blue Ocean Strategy make a dif­fer­ence there too?

What is Blue Ocean Strategy?

W. Chan Kim and Renee Mauborgne are the authors behind the Blue Ocean Strategy. It is not a strat­e­gy that they them­selves came up with out of noth­ing, but rather a com­pi­la­tion of data where the authors have drawn con­clu­sions and based on that cre­at­ed the Blue Ocean Strategy.

They have exam­ined 150 com­pa­nies in 30 dif­fer­ent indus­tries, by look­ing at data that stretch­es 100 years back in time.

The basic assump­tion is that most com­pa­nies are locat­ed in the red ocean. There, the com­pa­nies’ busi­ness mod­el and prod­uct offer­ing are almost iden­ti­cal. The com­pe­ti­tion is mur­der­ous and the goal is to gain as much mar­ket share as pos­si­ble; either by being the cheap­est – or try­ing to dif­fer­en­ti­ate and offer some­thing that com­peti­tors don’t offer, but at a high­er price.

In the blue ocean, we find com­pa­nies that have man­aged to get from the red ocean to the blue ocean, by cre­at­ing a new val­ue propo­si­tion – that is, offer­ing some­thing new that cre­ates val­ue for cus­tomers – but with­out rais­ing costs. In this way, com­pa­nies in the blue ocean can cre­ate com­plete­ly new mar­kets with non-exis­tent or min­i­mal competition.

The Blue Ocean Strategy includes sev­er­al dif­fer­ent mod­els and tools. One of the most basic is the four action frame­work. Let’s take a clos­er look at it!

buttercup in hands

The Four action framework

With the help of the four action frame­work, you can find out which fac­tors you should reduce and which you should increase to poten­tial­ly get from the red ocean to the blue ocean. The four action frame­work helps you to fig­ure out how to reduce costs but at the same time offer the cus­tomer some­thing new and attrac­tive that has not pre­vi­ous­ly existed.

The tool includes four parts with each ques­tion. The parts are: reduce, elim­i­nate, increase, and cre­ate. Let’s go through them!

Reduce: Which factors should be reduced below industry standards?

These fac­tors may include prod­ucts or ser­vices that you have invest­ed heav­i­ly in to cope with the com­pe­ti­tion. The prob­lem is that these invest­ments can cre­ate high costs that do not pro­vide much val­ue in return.

Eliminate: Which factors that the industry has long competed on should be eliminated?

This is the fac­tors that a com­pa­ny may have invest­ed heav­i­ly in but doesn’t increase com­pet­i­tive­ness and pro­vide lit­tle or no return at all. These may be invest­ments that have pre­vi­ous­ly been impor­tant but have lost their rel­e­vance over time.

Increase: Which factors should be raised above the industry standard?

This is the fac­tors that cre­ate val­ue for cus­tomers, but thus far been ignored by the industry.

Create: Which factors should be created that the industry has never offered?

This is the fac­tors that need to be dis­cov­ered to cre­ate new val­ue for customers.

Strategic tools can eas­i­ly become abstract and dif­fi­cult to under­stand. Let’s put the four action frame­work in con­text by look­ing at an exam­ple from reality.

Historical examples

One of the most well-known exam­ples of Blue Ocean Strategy is found in the enter­tain­ment industry.

The tra­di­tion­al cir­cus indus­try had a hard time in the ‘80s. New pop­u­lar amuse­ments sprang up, includ­ing video and com­put­er games, and peo­ple also began to ques­tion the use of wild ani­mals. Revenues began to decline at the same time as the costs of run­ning a cir­cus were high. As if that was not enough, the tick­et prices were fair­ly cheap, which cre­at­ed bad margins.

Out of these con­di­tions, Cirque du Soleil was born. The ani­mals were elim­i­nat­ed but they kept the sup­port­ing ele­ments of the cir­cus: the clown, the acro­bat­ics and the tent. But at the same time, they cre­at­ed some­thing new; the clown did not become as sil­ly, the acro­bats got artistry and the tent was made more lux­u­ri­ous and cosier.

They took inspi­ra­tion from the the­atre world and Broadway. Instead of doing the same num­ber over and over again, year after year, with only minor changes, they wrote a sto­ry and made dif­fer­ent sets. Simply put, they increased the qual­i­ty of the shows.

Cirque du Soleil cre­at­ed a new val­ue propo­si­tion – a sophis­ti­cat­ed mix of cir­cus, the­atre and dance – which attract­ed peo­ple who usu­al­ly go to opera, the­atre and bal­let. This meant that tick­et prices could be raised quite dra­mat­i­cal­ly. At the same time, they avoid­ed high costs by not hav­ing any animals.

Now you may be won­der­ing what it looks like in the food indus­try. What exam­ples can we find there?

white neon sign with dark background

Ful Foods

The com­ing decades will be about sus­tain­abil­i­ty and envi­ron­men­tal work, which in turn will affect how we eat and drink. This is some­thing that the com­pa­ny Ful Foods has tak­en note of. Ful Foods is a start­up that has start­ed mak­ing bev­er­ages but not just any beverages.

In the Ful Foods prod­uct range, we find sug­ar-free prod­ucts, with­out addi­tives and with a low-calo­rie con­tent. But is it enough to be called inno­v­a­tive in 2020?

No, what real­ly sets Ful Foods apart from oth­ers is the use of the sea pantry; in their bev­er­ages we find microalgae.

Foods with algae are any­thing but a gim­mick. According to Ful Foods, microal­gae have sev­er­al impor­tant ben­e­fits. They pro­duce more than half of the oxy­gen we breathe and are bet­ter than trees at cap­tur­ing car­bon diox­ide. Nor is any arable land required to grow the nutri­ent-rich microal­gae that are rich in pro­tein and vitamins.

Kind to the planet and the people

In Ful Foods drinks, we get a bev­er­age with few calo­ries, low cli­mate impact, no added sug­ar, but which also pro­motes health by active­ly adding pro­tein and vit­a­mins. In sum­ma­ry, by using microal­gae, Ful Foods has cre­at­ed a prod­uct that is kind to both the plan­et and humans.

Listen to the founders of Ful Foods and what they have to say about their prod­uct and Blue Ocean Strategy.

YouTube video

Insects in food

In the same way that Ful Foods uses microal­gae, you can use insects. Insects are packed with pro­tein and vit­a­mins, are inex­pen­sive to breed and have min­i­mal cli­mate impact.

But even if there are good rea­sons to start par­ty­ing on meal­worm bee­tles and grasshop­pers, it is down­right dis­gust­ing for many people.

But what hap­pens if you make pro­tein pow­der from insects, or cre­ate pow­er bars from the pow­der – and also add oth­er use­ful ingre­di­ents such as sun­flower seeds and pea pro­tein and sweet­ness from ste­vi­ol gly­co­sides?

That’s exact­ly what the German com­pa­ny Isaac Nutrition is doing. By fill­ing con­ven­tion­al prod­ucts with inno­v­a­tive ingre­di­ents that are good for humans as well as the plan­et, Isaac Nutrition cre­ates a new val­ue proposition.


Finally, suc­cess­ful com­pa­nies in the blue ocean will be joined by oth­er com­pa­nies and the val­ue propo­si­tion will become main­stream. If com­pa­nies like Ful Foods and Isaac Nutrition are suc­cess­ful, more com­pa­nies will try their luck doing bev­er­ages with algae or pro­tein bars on insects.

Blue Ocean Strategy does not promise end­less hap­pi­ness and pros­per­i­ty. There is how­ev­er long-term val­ue in being a pio­neer and active­ly work­ing with val­ue propo­si­tions and con­vey­ing it in mar­ket­ing activities.

Read more!

If you want to learn more about Blue Ocean Strategy, you can do so at www​.blueo​ceanstrat​e​gy​.com which is the strategy’s offi­cial website.

If you want to read more about busi­ness devel­op­ment in the food indus­try, we have many thought-pro­vok­ing arti­cles on Bayn Magazine – every­thing from why you should reduce sug­ar by stealth to what is impor­tant for the new gen­er­a­tion of con­sumers and much more.

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