𝗧𝗵𝗲 𝗽𝗮𝘁𝘁𝗲𝗿𝗻 𝗺𝗼𝘀𝘁 𝗙𝗠𝗖𝗚 𝗹𝗲𝗮𝗱𝗲𝗿𝘀 𝗺𝗶𝘀𝘀.

𝗣𝗿𝘂𝗻𝗲 𝘁𝗼𝗱𝗮𝘆. 𝗕𝘂𝘆 𝗯𝗮𝗰𝗸 𝗮𝘁 𝟭𝟬𝘅 𝘁𝗼𝗺𝗼𝗿𝗿𝗼𝘄.

→ Portfolio simplification looks clean in year one.

→ By year three, you're paying acquisition multiples to re-enter the space you left.

When shrinking to grow, ask these questions:

𝘞𝘩𝘢𝘵 𝘥𝘦𝘮𝘢𝘯𝘥 𝘴𝘱𝘢𝘤𝘦𝘴 𝘢𝘳𝘦 𝘸𝘦 𝘢𝘣𝘢𝘯𝘥𝘰𝘯𝘪𝘯𝘨?

𝘈𝘳𝘦 𝘸𝘦 𝘤𝘳𝘦𝘢𝘵𝘪𝘯𝘨 𝘮𝘪𝘥-𝘵𝘦𝘳𝘮 𝘤𝘰𝘮𝘱𝘦𝘵𝘪𝘵𝘪𝘷𝘦 𝘨𝘢𝘱𝘴?

𝗧𝗵𝗲 𝟰 𝗲𝘅𝗶𝘁𝘀 𝘁𝗵𝗮𝘁 𝗯𝗲𝗰𝗮𝗺𝗲 𝗿𝗲-𝗲𝗻𝘁𝗿𝗶𝗲𝘀:

𝟭. 𝗗𝗮𝗻𝗼𝗻𝗲 𝗮𝗻𝗱 𝗯𝗶𝘀𝗰𝘂𝗶𝘁𝘀

Sold LU to Kraft in 2007. Focus: dairy and nutrition.

But then, lost on-the-go snacking.

Re-entered via WhiteWave and functional formats.

The occasion didn't disappear. Danone just stopped owning it.

𝟮. 𝗖𝗼𝗰𝗮-𝗖𝗼𝗹𝗮 𝗮𝗻𝗱 𝗲𝗻𝗲𝗿𝗴𝘆

Transferred NOS, Full Throttle, Burn to Monster in 2015.

Launched Coca-Cola Energy in 2019 to rebuild control.

Four years without ownership. The category doubled.

𝟯. 𝗗𝗶𝗮𝗴𝗲𝗼 𝗮𝗻𝗱 𝘁𝗲𝗾𝘂𝗶𝗹𝗮

Sold Jose Cuervo's stake in 2013.

Took ownership of Don Julio.

But lagged behind Patron, 1800.

Missed the US premium tequila run.

Re-entered via Casamigos, they paid to catch up.

𝟰. 𝗡𝗲𝘀𝘁𝗹𝗲́ 𝗮𝗻𝗱 𝗨𝗦 𝗰𝗼𝗻𝗳𝗲𝗰𝘁𝗶𝗼𝗻𝗲𝗿𝘆

Sold US confectionery to Ferrero in 2018.

Exited mass chocolate in the largest market.

Re-entered indirectly via premium and global segments.

𝗧𝗵𝗿𝗲𝗲 𝗶𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗳𝗼𝗿 𝗽𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆:

First: Map demand spaces before you map divestitures.

The brand may be underperforming.

The occasion may not be.

Second: Efficiency gains compound in year one.

Competitive gaps compound in year three.

The CFO celebrates margin improvement.

The CMO inherits the white space problem.

Third: Re-entry costs more than staying.

Acquisitions carry premiums.

Organic rebuilds take years.

𝗧𝗵𝗲 𝗵𝗮𝗿𝗱 𝘁𝗿𝘂𝘁𝗵:

Portfolio pruning is a good strategy when it removes complexity.

It becomes expensive when it removes optionality.

Four of the largest FMCG companies made the same mistake.

They optimised for today's P&L and paid for tomorrow's market share.

Is this the limit of short-term ROIC optimisation?

How are you ensuring that there are no mid-term competitive gaps in your portfolio strategy?