Thankyou Group has announced it has pulled out of the food category in what it described as a tough call aimed at focusing on its other three categories.
In an open letter, Thankyou managing director Daniel Flynn said the social enterprise had decided to quit the food business in order to better focus on the water, body care, and baby care categories.
Flynn said that water, the category that kick-started the company, is also on the decline due to heavy commoditisation in the category, but his innovation team is working on a game-changing idea to turn it around.
"In 12 months we lost 47 per cent of ranging for our food and water range,” Flynn wrote. "Some days you can buy a 24-pack of water on special cheaper than we can make it."
"So, after learning a lot of lessons this year, we had to choose the areas we’re going to give our all to and win in.
"Body care, baby, and water (with the game-changing idea you’ll hear about later next year) all made it through our decision criteria, but food didn’t."
According to Flynn, the food range received good feedback and was compared to the market leaders.
"But if you are only has good as a market leader, we've discovered you're basically stuffed. We failed to differentiate ourselves in a big enough way.
"If you’re not in the top third in a category, you find yourself having to put more money into price promotions to stay on shelf, which eats away at profit (pun not intended)."
At the same time, other Thankyou products had reached market-leading positions, Flynn said, so the company needed to now focus on growing those.
The Body Care range is changing the game, according to Flynn. Since launching three years ago, it continues to overtake major household name brands in the category.
Nappies and Baby Care is on the rise, he said. While it’s a tough category, it’s showing growth signs similar to the body care range.
Taking the Thankyou food range off the shelf, however, means funding for immediate and long-term food aid will wrap up at the end of FY18, but the company said it would still complete funding for all of the projects it has committed to.
“Together, we made three years of positive change through our funding that we can all be proud of,” Flynn said.
“We’re committed to our purpose: to empower humanity to choose a world without poverty, and while dropping food may look like a step back, we believe it’s a step that’s required for us to step up in the future.”