The Forces Shaping The Marketplace

Posted: Mar 09, 2018



CHICAGO — Fifty-five per cent of Americans claim to have little or no confidence in large brands and corporations, up from 36% five years ago, according to A.T. Kearney, a global management consulting firm. This erosion of trust is among several factors creating formidable change in the food and beverage marketplace.

“For so long we have been buying based on value,” Dave Donnan, partner at A.T. Kearney, told Food Business News. “We have gone from looking for free food to now looking for food that is ‘free from’ ... free from gluten, free from G.M.O.s, free from antibiotics. And we’re moving from value to values.”

A.T. Kearney surveyed more than 7,000 consumers in seven countries to examine the behaviors, values and influences driving consumption in tomorrow’s retail landscape. The tenets of traditional marketing no longer hold true, Mr. Donnan said.

“We have gone from affluence to influence,” he said. “We’re seeing a shift among younger generations toward more experiential. It’s not so much about owning a great car but taking a great vacation or going to a great restaurant or making a fabulous meal for your friends.”

Personalization is another force shaping purchase decisions in the digital age, said Mr. Donnan, describing data as a new form of currency driving consumer engagement. Younger cohorts are willing to exchange private information for personalized results, he said.

“People just aren’t buying food for consumption; they’re buying food for entertainment,” he noted.

Packaged food companies must align to these new principles of trust, influence and personalization to succeed in an exceedingly complex consumer environment, Mr. Donnan said. Critical to establishing trust with today’s consumers is building a perception of authenticity.

“Whether it’s a large food company or even a large fashion brand, there’s a feeling that, ‘It’s a big company; they’re not necessarily catering to me,’” Mr. Donnan said. “People want something that fits their values... and the values for food are often things like healthy, free from a variety of chemicals, antibiotics, colors, things like that.”

In adapting to changing consumer tastes, leading manufacturers are reformulating products to remove artificial colors, flavors and sweeteners. Acquisition has become another popular play among the top food conglomerates seeking to capture “some of this growth and authenticity” of smaller start-up brands, Mr. Donnan said.

However, he added, there is no one-size-fits-all strategy.

“If you look at how consumers are consuming food now, it’s not just going to the grocery store, buying a product, putting it into the pantry or refrigerator and then cooking,” he said. “Now I can order a meal kit from Blue Apron or from Kroger. I can go to UberEats or Grubhub. I can go into the local grocery store and pick up a prepared meal already made. The choices are much greater.

“There is a redefinition of convenience. Convenience used to be packaged food or making a meal in less than 30 minutes. Now I can buy it readymade and have it delivered to my house in a variety of ways.”

He added, “Redefining what convenience means and redefining what healthy and nutritious means will be important for large food companies.”

By Monica Watrous
February 27, 2018
Source: foodbusinessnews.net



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