Yesterday, I blogged about new statistics from an IRI MarketPulse™ survey that found shopper sentiment is on the rebound thanks to more optimism over the employment market, improved economics and lower gas prices. This bodes well for the food and beverage industry, as consumers are spending more at the retail level and allowing some tasty indulgences back into their monthly budges.
Susan Viamari, editor of Thought Leadership, IRI, cautioned that while CPG marketers should find relief in the continued improvement in shopper attitudes, sharp withdrawal of value-focused programs would be a mistake. “Conservative mindsets still prevail and, in the near term, purchase behavior and loyalty will be strongly influenced by products and programs that meet or exceed consumers’ expectations for great quality and strong results at a reasonable price-point," she said.
A new report from Technomic echoes this sentiment and notes today’s major retail and restaurant brands, along with their suppliers and distributors, face the unenviable task of recognizing consumers’ changing preferences and responding to more diverse consumers and their rapidly changing expectations. At the same time, companies must remake their businesses to leverage emerging channels and technology platforms.
According to the “Food Industry Transformation: The Next Decade" report, the coming upheaval in the food industrywhich will grow by more than $700 billion to surpass $2 trillion in annual sales by 2025will touch every facet of the business, from farm to fork, including sourcing processing, distribution, operations and marketing.
The report contains new “FIT Models" to help brands reinvent themselves in response to the challenges of labor, food production and distribution, consumer psychographics and demographics and the economy in the years to 2025.
“To grow their share of industry sales, food providers need to continually reimagine, reinvent, and reallocate resources to align their offerings with the evolving technology-enabled supply chain and the changing needs of consumers," said Technomic Executive Vice President Bob Goldin.
The report found traditional retailers, such as supermarkets and supercenters, will lose 10 points of market share to nontraditional retail channels by 2025, and consumer trends over the next decade will be less favorable to the largest restaurant chains. What’s more, significant expansion will also be seen for fresh prepared foods at supermarkets, a segment expected to grow at 7.5 percent annually.
The entire supply chain must be retooled to respond to or preempt consumer and regulatory demands for foods that are good for people and the planet. The winning products of 2025 will include not only those that can legitimately be labeled as “natural" or “local," but also those with clean labels, fewer ingredients, less processing and a favorable carbon footprint.