Food Industry Summit 2012
I attended the Food Industry Summit at Saint Joseph's University… Eat With Us . . . . Leveraging Digital Opportunities for Profitable Meals . The well known Saint Joseph's University Food Marketing Program hosted the sixth annual Food Industry Summit focusing on how digital marketing is changing the food and beverage sector.
Saint Joseph's University Food Marketing Program is celebrating their 50th anniversary this year so the emphasis on digital was a great juxtaposition to when they first started.
The summit featured industry thought leaders and this article features Todd Hale, head of Consumer & Shopper Insights at the Nielsen Company focused on Tracking Trends That Matter - Food Competition Heats Up. Let's cover some of the highlights that will be affecting the food & beverage markets as well as expected changes in consumer behavior at supermarkets and food service.
Nielsen statistics show the wealthiest 1/5 of consumers, those earning $100K or more, have exited recession whereas the remaining 4/5 of the population still struggling. Those making $40K to $49K annually have reduced their shopping trips by -4% and are spending about -3% less 2011 vs. 2009. Consumer Polarization is affecting which retail channels are doing well and suffering.
Mass Drug Chains are lukewarm on same-store sales, Walgreens is down -4% and CVS is only up a bit more than +2%. Mass Merchants are mixed… Target seems fine, 10 consecutive months of positive sales and up 4% from 2008 but Walmart is struggling at less than 2% same stores sales growth and may continue to be affected by higher gas prices, leading some analysts to conclude that this trend will reverse. Nielsen believes much of Target's growth has to do with the rollout of PFresh food departments in over 875 stores… Target sees this as a revenue driver since it spurs fill-in shopping behavior.
Small Format Retail Trends - Walmart Takes the Lead
Small Format Retail is getting traction… Drug and C stores lead store unit growth, Walgreens taking the lead at over 1700 stores from 2007 through 2011.
Walmart clearly takes the lead here with Walmart Express, Neighborhood Market and their Walmart On Campus stores. Walmart Canada in Toronto is opening Urban 90, a 15,000 sq ft. small-format store that has a focus on specific merchandise down to the neighborhood level (some in the industry call this micro-merchandising). Whole Foods is looking to open smaller format stores to achieve their goal of moving from 317 locations to over 1000 stores. However as Nielsen states, Whole Foods has to rid itself of top-dollar reputations. I am sure you have heard the phrase "Whole Foods… whole paycheck!"
Food is the New Social Network
Not convinced? Well just look at these statistics:
Cookbook sales are up 10% over the past 12 months vs. a -6% decline for regular books.
Food and cooking websites attract anywhere from 66 to 86 million unique monthly visitors.
ShopRite has created YouTube ads showing people how- to recipes to create value meals and driving a higher basket size.
Whole Foods sold 1 million $20 vouchers for $10 on LivingSocial in less than 12 hours.
Grocerants Alive and Well
Supermarkets are striving to be exciting shopping environments and trying to merge the grocery store with the restaurant… the Grocerant!
Schnucks is experimenting with Culinaria, adding a 2nd floor restaurant to their stores. Kroger has the Bistro with fun events like monthly wine tastings. Wegmans has their new Pub (even though this has been kicking around for a while, the customer may be finally ready). HEB in the Montrose section of Houston, will be using its parking lot to host weekend concerts, movies and HEB's first food truck.
Upscale Fast Food Trends - No Longer Under the Radar
Upscale Fast Food hamburger places like Five Guys and Smashburger are growing because people want great tasting burgers and are less concerned about healthy… this epitomises affordable indulgence.
White Castle, the originator of the slider, is looking for growth with 3 new formats. Deckers (Triple Decker Grilled Sandwiches), Laughing Noodle, a menu united around the noodle, (Teriyaki, Sweet and Sour, Italian Tomato, Pesto Chicken, even Taco Mac & Cheese) and Blazes BBQ . Target sees the trend and partnered with the Pret A Manger sandwich shop chain in the new Chicago CityTarget.
Value menus and value meals may not be helping the QSR industry, since how far can you go in reducing prices? Some brands are not walking down this road. Dominos has created new kinds of pizza selling at a premium, their Dominos Artisan Pizza is but one example and is having a negative effect on the frozen pizza category, down 6% at retail.
Demographics will drive new product development and new product launch. A telling statistic, the 22 top cities majority population is non-white. And approximately 50% of Hispanics live in 10 major population centers. This is driving Winn Dixie Miami to develop concepts focusing on the Cuban segments. General Mills has an online sampling program targeted to Hispanic customers and their site can be toggled from English to Spanish for more customer engagement. All 3 major pizza chains have online ordering in Spanish or English.
More Food Trends for 2012 to Watch
Portion controlled products are focusing on smaller households as baby boomers as a segment increase.
Darden Restaurants expects to grow revenue 50% outside of the US in the future.
More product development in convenient breakfast, batter blaster, lunch and dinner products.
The iPad becomes a sales tool for restaurants, called screened dining, leveraging technology. Dominos is driving sales via their mobile apps.
Vending machines going upscale and Digital exemplified by the Coke Freestyle vending machine serving 100+ options. Coke tracks the combos which may be the basis for future new product development.
Mobile food will grow with more food trucks, kiosks and something new called the "bustaurant" (a double-decker bus with restaurant seating on the 2 nd floor).
Format blurring supplants channel blurring. A Toronto Based Rich Tree Market Restaurant is pioneering a hybrid mini Whole Foods like store and a one stop restaurant.
McDonalds reinventing itself with healthier meals (Wraps) blurring the line between a meal and a snack .