Food businesses follow millennials and big data
Formerly, as in real estate, location, location, location was the key component for enticing shoppers to buy products. Knowledge of what is in the package is now the driver.
At a recent expo in Milan, Italy – Feeding the Planet, Energy for Life – methods were displayed for using technology to promote sales. The exponential growth and availability of data will have an impact on grocery shopping far beyond the nutritional label. Everything short of a fast- forward video showing the planting of the seed to the arrival at the market will be available for consumers to really know the origins of the product.
Carlo Ratti, a professor at MIT stated that, “Every product has a precise story to tell.” Beyond the source, information on the health aspects is also important to millennials, which represent a growing and future segment of consumers. Additionally, the impact on the environment of the production process has its own story to tell.
Many retail chains are conscious of the fact that millennial shoppers are particular about what they eat and how their spending habits impact the planet. Millennials are driving food trends and are willing to try products baby boomers have not. Locally produced and hand crafted attributes also cater to millennials and serve to promote community.
Josh Scherer writing in a take part blog, reported that “big-box” retailers are reformulating their store-sets to better emphasize the placement of organic and other “healthy” food items. Target, for example, recently hired a new CEO to revitalize the food sales segment of its stores. One strategy Scherer employed was informing major prepackaged food companies that their shelf space would be lowered, both figuratively and literally. Promotion of healthier, fresher foods, it is thought, will attract buyers for other Target store offerings. The new Target CEO, Brian Cornell told the Wall Street Journal, “Consumers are looking for more small-brand and organic options.”
Well-known brands like Campbell Soup Company for instance have seen its canned soups sales drop 13 percent since 2005. National Business Reporter, Jeff Daniels, argues that many of the old line food companies may go into retirement along with the baby boomers that grew up on them. He offers two paths out of this “early” retirement for big food and beverage companies: innovating or acquiring. Introducing innovation to a large company with an established culture can at best be described as “turning an ocean liner on a dime.” Acquisitions, on the other hand, are an easier way to reposition the company.
Quite profoundly for example Kraft foods purchased Back to Nature, Coca-Cola purchased Honest Tea. Not to be outdone, Pepsi purchased Naked Juice and Heinz acquired Celestial Seasonings. Interestedly Dean Foods has a strategic alliance with “The Organic Cow of Vermont”.
Campbell Soup Company is in the process of reshaping its portfolio to respond to changes in consumer tastes, Daniels reports. The acquisitions of fresh fruit and vegetable juice producer, Bolthouse, the and organic baby food maker, Plum, and most recently, Detroit-area Garden Fresh, a maker of fresh salsa, and related products.
Rabobank research indicates that smaller food companies have the ability to recognize trends and move faster to exploit emerging markets. Rabobank also notes that trends are being driven by millennials and more importantly their use of social media.
Wanting to take advantage of your keen sense of just what is trending in the food and beverage market place? Need some help navigating the legal requirements to become a producer? Is putting your “business plan” on paper a problem? Perhaps the Michigan State University Extension educators working with the MSU Product Center could help.
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