It’s all or nothing – consumers’ increasing requirements for food products create growth opportunities
We at Marketing Clinic are passionate about growth and the food industry. Across the Nordic markets, we see that consumers’ changing requirements for modern food products create growth opportunities for Nordic food manufacturers and retailers.
Food, eating, and buying it, are deeply rooted in our daily lives. Food is no longer just about nutrition; it is about making sense of the world and building identity. But there are tensions between everyday realities and desires: do I buy minced meat or plant-based products, do I prefer cooking to a fast on-the-go lunch from a grocerant? All this tells me and others who I am as a person. At the same time, many also want to make an impact on the sustainability of the food value chain.
Consumers want food products that suit their needs and lifestyles – that is, less tension. Now, a modern food product is healthy, tasty, sustainable and convenient – all at the same time. This demand is reflected, for example, in Nielsen’s 2020 food innovations: radical innovations rise from combining contradictions, so winners combine e.g. ‘better for you and the environment’ values with convenient use.
The need to reduce tension around food and especially its purchase offers delicious growth paths, but it also results in various new demands on consumer insight, innovation, and commercialization capabilities for both manufacturers and retailers.
Food manufacturers and retailers: understand the whole customer journey
Think about different channels and opportunities for lunch: cook something in the kitchen, buy meals to go at the grocery store’s salad bar or from the restaurant, use Foodora or pre-order, just to name a few.
This servicification of food has led to both the manufacturer and the retailer needing to understand the whole path of acquiring and consuming food, as buying and eating are intertwined in a new way.
For example, understanding the customer journey of buying baby food can reveal an unmet parent need of adapting their modern lifestyle into how and what they prefer to buy for their babies and children. Following the path to purchase could demonstrate that the pain point is larger than the lack of relevant product – e.g. several parts of the journey may be missing; inspiration from a category captain, trust in brands, appropriate sales channels with subscriptions etc.
Successful companies understand and create smooth customer journeys, and work to design the required changes. They create differentiated experiences by tirelessly removing pain points in physical and digital environments. They address consumer needs on different levels, from functional through lifestyle to purpose-driven.
Manufacturers: create value both for consumers and retailers
Food manufacturers must have arguments for both questions why buy and why sell.
Creating the why buys for the consumer is an extensive process because food links to our identity; through the why buys, the food product links to lifestyles.
Halo Top, a top American success brand, is an excellent example of understanding lifestyles and combining healthy, tasty, and convenient. Named as the brand of the year in 2017 in Time magazine, Halo Top is not only low in calories, but it is the right form of calories for today’s shopper – high on protein and low on sugar and fat – while still managing to keep the decadent taste. Besides, it consists of only a few ingredients that are easy to understand. A great example of why buy for consumers; it’s all about the indulgence, but with a healthy mindset.
More and more often, facilitating the moment of choice in the retail environment comes up in the discussions with consumers. For example, a narrower selection can make a choice easier, or a bigger cap on a juice pack can make the difference.
Towards the retailer, a food manufacturer must answer the question of why sell, that is, what value they can provide to the retailer.
Successful why sell arguments do not focus on the product, but more broadly on understanding the retail environment dynamics, from strategy to execution. The food manufacturer must be able to state in what way his activities:
Retailers: from products to service-driven platforms
Customers demand more personal and curated shopping experiences as they bounce through different channels on their shopping paths.
Retailers need to get customers excited about the store, not just about the products. Grocery stores need to create platforms that enable multiple networks, supplier collaboration, and integrated services to improve customer experience and generate revenue outside traditional commodity groups.
A grocerant – a hybrid of a grocery store and a restaurant – is an excellent example of this. They offer freshly prepared, ready-to-eat, or ready-to-heat foods inside a store setting and serve a wide variety of customer types.
In some hypermarkets, the fish department is like diving into the sea. With sounds, materials and standing out displays, buying fish has been made like a fishing trip.
Inorganic growth through networks and partners
Food is a very mature category, and the shelf space will not increase. It is right to focus not only on what is being sold but how it is being sold; acquisitions, new types of business models, distribution collaboration or data utilization can grow a business faster and more efficiently.
Recently, even investors have also become interested in value-adding food companies; small agile companies take a continuously larger share of the annual growth contribution, opening for mergers & acquisitions or cooperation in new ways for the larger companies to build new growth areas. We will see pioneering collaborations where the food manufacturer allies with new types of commercial expertise.
We are passionate about food and the evolution of the industry. Many years of experience in the food sector from the perspective of the consumer, retail, and various channels have provided us with the ability to understand and anticipate the critical drivers of success.
Do you want to develop and commercialize successful food products, or sell them more efficiently? Please connect with us – we are happy to help you!