The food and beverage business is transforming, becoming more oriented towards the emergence of new production technologies and trends of healthier habits. Such developments are revolutionizing the market and shifting focus to consumer health. This comes off the back of using new technological platforms. Such developments are constantly influencing and transforming consumer buying habits.
This article is the first in a series from Sebastian Jaimes about the transformation of the food and beverage industry. Connect with Sebastian here.
Changing Business Practices
Over the second quarter of 2021, United States online grocery sales increased to 34%, up from 24% in 2019. This trend is also evident in Mexico, Latin America and other parts of the world. Today, digital platforms drive everything increase in food purchasing, the marketing of new products and offers through alternative channels such as the internet and technological apps. Not only that, but they also directly influence purchasing habits through brand positioning in social networks.
The transformation of consumer characteristics and preferences has led companies to react and adapt in various ways. In order to stand out in a highly competitive industry, companies have needed to define a strategy that helps them anticipate changes in the market in an agile way. They need to incorporate their knowledge about the consumer’s new ways of thinking and habits and innovate in their processes. Ultimately, this reflects a total understanding of the new market’s needs. This will allow organizations to gain consumer trust, demonstrating their ability to create positive long-term relationships with a captive market.
The US Market
According to the IFT, numerous food trends are sweeping the already massive US market. These include chefs with brands, ghost kitchens, emphasis on packaging, new and ethically sourced ingredients, and affordable, attainable food items. There’s no doubt that the American market is a global leader in many aspects. This means that impacts on the local American mass consumer market will inevitably have a ripple effect towards the rest of the globe. We see a particular need today for American consumers to transform their habits and preferences as they look for balance in their lifestyles. Due to this establishment of America as a global focus, international organizations consider the US market a key area of focus. Therefore, the US is the best environment to help grow their brands and transform global business trends.
As the pandemic caused people to hyperfocus on their health, brands followed suit. Many of them increased the availability of their “No & Low” options, most commonly in regards to sugar or alcohol. For example, Suntory Food and Beverage Company expanded their range of Lucozade offerings to include a ‘Tropical Zero’ option. Consequently, Britvic launched a Tango Sugar Free Dark Berry option to complement their soft drinks business portfolio. In the spirits realm, huge brands are developing 0% alcohol options for those trying to cut down on their booze consumption. These include giants of the spirits business like Martini and Gordon’s.
Concern for the environment
As environmental awareness becomes more widespread, food brands are adjusting accordingly. Many are revamping their packaging or trying to source their ingredients more sustainably. For example, Unilever is expected to trial paper-based containers for its laundry detergent soon.
Low brand loyalty
We are also in an age of low brand loyalty – consumers place less stock in a ‘brand name’ than they used to. For example, many younger consumers have no problem purchasing the off-brand peanut butter from the supermarket rather than a more expensive brand name.
Importance and awareness of packaging and labels
Up until not too long ago, it was still legal not to include nutritional information on food labels. Not only is this necessary, but brands are going out of their way to cram as much information as they can onto their labels. We’re even seeing the rise of smart packaging. This is where a label incorporates a QR code that will lead the customer to further information about the product. Napolina is one such company – scanning the QR code on its tomato tins will allow customers to track how the tomatoes have made their way over from Italy into their hands.
Particularly when COVID-19 left chain supermarkets devoid of stock, the public’s attention turned towards local produce and shopping locally. The importance of supporting the small economy became apparent and this trend has stuck around as the world returns to a pre-pandemic lifestyle.
Globalization of tastes
Immigration, digitalization, and increase in worldwide shipping and trading routes have also led to a globalization of tastes across regions. Multiple cuisines are present in most major cities and people find themselves familiar with dishes from across the world. This has resulted in brands adapting to reflect such desires. They are expanding their ranges and reach, like at Woh Hup Foods. The company is introducing more Southeast Asian flavors into their products to appeal to a wide consumer base. Their eyes are now set on expanding massively into the Indian and American markets.
Despite a hyperfocus on health and nutrition, fad diets still remain popular among the public. They are especially more prevalent owing to the ease of dissemination through social media. They are not necessarily recommended by health professionals, but may be endorsed by celebrities or influencers, which encourages the public to follow suit.
Availability and speed
Globalization has led to a dependence on just-in-time supply chains and almost instant gratification when it comes to buying products. The pandemic obviously threw this for a loop. However, as the economy begins to recover, we are seeing a gradual return to this instant gratification as a norm.
Companies have reacted and adapted their business models to this new reality and have developed value offers that aim to get to know their consumer in detail. This allows them to compete with fresh and innovative products, with healthy/natural attributes, and create a sustainable, friendly brand without sacrificing the value they generate for their market. Some are adding new products to their portfolios, others are choosing to buy brands that are positioned as natural, and some are changing the ingredients and presentations of their products to make them healthier. Innovation is key!
Be sure to follow Proco Global on LinkedIn to stay up to date with all the latest trends and developments across the supply chain. To get in touch with Sebastian Jaimes or another consultant, click here.