Consumer Demand: Unlocking Hidden Growth

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Growth Solutions Group Market Strategy Research Brand & Communication Level 11. 99 Queen Street Melbourne. Victoria 3000. Australia T. +61 3 9670 4700 W. www.gsg.com.au Reason meets Imagination This document is not to be copied without permission Consumer Demand: Unlocking Hidden Growth 2010 RWTA Conference 30 August 2010

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Refrigerated Warehouse & Transport Association Conference 2010. Graeme Chipp shares his thoughts on consumer demand and its impact on the food industry supply chain.

Transcript of Consumer Demand: Unlocking Hidden Growth

Page 1: Consumer Demand: Unlocking Hidden Growth

Growth Solutions GroupMarket StrategyResearchBrand & Communication

Level 11. 99 Queen StreetMelbourne. Victoria 3000. Australia

T. +61 3 9670 4700W. www.gsg.com.au

Reason meets Imagination

This document is not to be copied without permission

Consumer Demand: Unlocking Hidden Growth2010 RWTA Conference

30 August 2010

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Food retailing more fragmented, more competitive, more demanding

Forces at play

Changes in Retail structure

Consumer Trends

Investor Demands

Export & Global Market Pressures

Retailer Responses

• Supermarkets stretching into new categories to protect revenue/growth

• Reduction in supply chain costs• Consolidation of suppliers• Improved logistics• Passing SC management

responsibility back to suppliers

• Growth in private label – tiers of value

• Localisation – ‘my’ grocer, baker, in-store greeters, etc

• Information & resource offer around healthy eating

Source: Foodmap: A comparative analysis of Australian food distribution channelsDepartment of Agriculture, Fisheries and Forestry

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…with more pressures on the Supply Chain

Source: Foodmap: A comparative analysis of Australian food distribution channelsDepartment of Agriculture, Fisheries and Forestry

Forces at play

Changes in Retail structure

Consumer Trends

Investor Demands

Export & Global Market Pressures

Retailer Responses

• Supermarkets stretching into new categories to protect revenue/growth

• Reduction in supply chain costs

• Consolidation of suppliers

• Improved logistics

• Passing SC management responsibility back to suppliers

• Growth in private label – tiers of value

• Localisation – ‘my’ grocer, baker, in-store greeters, etc

• Information & resource offer around healthy eating

Supply Chain pressure

Manufacturers

• Growth pressure

• Relationship pressure

• Margin pressure

• Increased costs

• Increased competition

• Increased difficulty to recoup costs on investments

Fresh Product Suppliers

• More demand for products to meet retailer specs

• Demand for better product performance

• Greater competition

• Information pressures

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Success has been about getting it right for your customers

Business Business

You Your customer

Value=

On time

Quality

Flexibility

Service

Responsiveness

Cost

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Business

Your customer Their customer

Consumer

Value=

Convenience

Quality

Usefulness

Experience

Service

Price

5

Success has been about getting it right for your customers

Business Business

You

Value=

On time

Quality

Flexibility

Service

Responsiveness

Cost

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Today’s Presentation

1. Real ‘demand’ starts before the shelf

2. A visit to Consumer Land – Macro trends

3. Consumer Driven Improvements – Case Studies

4. Implications for the future

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The voice of the consumer is getter louder

“I’ll tell you what I want, what I really, really want”Spice Girls, 1996

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The voice of the consumer is getter louder

“I’ll tell you what I want, what I really, really want”Spice Girls, 1996

NOTJust about asking them what they want any more, or demand monitoring at the shelf.

BY UNDERSTANDINGWhat Consumers want through their behaviours, attitudes and opinions, even before they get to the store.

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Getting behind the data

What are they buying

When are they buying

How are they buying

Supply chain response

Why are they buying?• How are they feeling?

• What else are they doing that is related to this?

• What and who are influencing their choice?

• What needs do they have? Or will they have?

Monitoring Demand at the shelf

Demand Planning is a powerful management process…but can we look beyond demand to macro level influences?

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Top 20 Food Trends

11. Super-fruits (acai, goji, mangosteen, purslane et al)

12. Organic produce

13. Culinary cocktails (e.g. savoury, fresh ingredients)

14. Micro-distilled/artisan liquor

15. Nutrition/health

16. Simplicity/back to basis

17. Regional ethnic cuisines

18. Non-traditional fish (Arctic Char, barramundi etc)

19. New cuts of meat

20. Fruit/vegetable children’s side items

1. Locally grown produce

2. Locally sourced meats and seafood

3. Sustainability

4. Bites size/mini desserts

5. Locally produced wine and beer

6. Nutritionally balanced children’s dishes

7. Half portions. Smaller portion for a smaller price

8. Farm/estate-branded ingredients

9. Gluten-free/food allergy conscious foods

10. Sustainable seafood

Source: US. Restaurant News (www.nrn.com) US Chefs

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Immediately relevant

Source: US. Restaurant News (www.nrn.com) US Chefs

11. Super-fruits (acai, goji, mangosteen, purslane et al)

12. Organic produce

13. Culinary cocktails (e.g. savory, fresh ingredients)

14. Micro-distilled/artisan liquor

15. Nutrition/health

16. Simplicity/back to basis

17. Regional ethnic cuisines

18. Non-traditional fish (Arctic Char, barramundi etc)

19. New cuts of meat

20. Fruit/vegetable children’s side items

1. Locally grown produce

2. Locally sourced meats and seafood

3. Sustainability

4. Bites size/mini desserts

5. Locally produced wine and beer

6. Nutritionally balanced children’s dishes

7. Half portions. Smaller portion for a smaller price

8. Farm/estate-branded ingredients

9. Gluten-free/food allergy conscious foods

10. Sustainable seafood

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Macro Trend 1: Health / Well-being are part of life

An ageing population, who are still young at heart…plus a national focus on obesity / diabetes / heart disease will influence consumer choice (and brand messages)

• Ingredients matter – choose natural

• Supplements are ok if it’s about enrichment / advantage

• Smaller portions

• More fresh options in pre-made

• Endorsements or ‘ticks’

Mellentin’s 10 Key Trends for 2010 are :

1. Digestive health – a mega-trend moves beyond the tipping point

2. An intrinsic health benefit that’s also convenient

3. Feel the benefit – the most powerful marketing message

4. Energy – a world of untapped opportunities

5. Fruit and superfruit – the future of food and health

6. Antioxidants – big in America, dead in Europe?

7. Weight management

8. Healthy snacking

9. Packaging and premiumisation

10.Bones and movement

Julian Mellentin: Industry Expert, Nutritional Foods

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Preshafruit

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Macro Trend 2: Where it comes from matters more

Consumers are placing increasing importance on…

• Knowing who’s behind the product (maker)• Fresh is best, even better it’s local• Authenticity – farmer’s markets• ‘My’ grocer, butcher, baker etc – dealing with

people who care about food• Frozen food with locked-in freshness

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Macro Trend 3: Good food that’s easy to get

Trading off quality & convenience is no longer necessary, or acceptable.

Retailers and the media are constantly illustrating how we can achieve simple, good food for under x dollars, in under x minutes.

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Yarra Valley Farms – Branding in Food Service

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Aussie Farmers Direct - Back to the future

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Macro Trend 4: Green is good

Consumers want brands/retailers to take more responsibility

• Carbon footprint• Green / environmental standards• Fairtrade / ethical supply – Cadbury & Nestle

response to consumer backlash on palm oil

(But most will still trade-off for price)

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Macro Trend 5: Polarization of behaviour

Source: IBM – The Consumer Driven Supply Chain

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Angus Burger – Premium Pricing

Angus Burgers$6.45 - $6.75

Big Mac$4.45

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Macro Trend 6: NOW technology

“WHAT, WHERE AND WHEN I WANT”

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Less Is Best: Haagen-Dazs – Especially for you

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Less Is Best: Haagen-Dazs – Especially for you

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The Retailers under pressure to deliver change

Focus on consumers

Store formats

Retailers

Multi - Channel

Experiences

Branded ingredients

new…Understanding the shopper better

Information resources on food & nutrition

Smaller footprint x increase locations

Aldi, Costco – changing shopping behaviourAFD, The Greenline – direct to consumer

Online entrenched, mobile web emerging

Self-serve checkouts, drive through supermarkets (UK), in-store market spaces

Private label with value-added ingredientsBranding location of origin

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Costco is changing the way consumers shop & eat

Toiletries

Fresh Food

Bakery

Laundry & Cleaning

Frozen Food

Savoury Snacks

Non-alcoholic beverages

Canned Food

0 13 25 38 50

• Collective shopping – multiple families involved

• Takes whole categories out of supermarket shop e.g toiletries

• Bulk food purchase also changing consumption habits – more homogenous meals

• Appeal of unique product formats that can’t be purchased in supermarkets

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Retailers are responding quickly to consumer trends

Consumer trend/demand

Fresh

Local

Natural “Tassie Grown”Woolworths

Woolworths ingredient branding

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Coles - “It’s all about the customer”

Half way through a 5 year transformation process

''The most important factor for us is that we are aligned to what the consumer needs are, and which consumer needs are changing”Ian McLeod, Coles Managing Director

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New channels & experiences are changing the way we shop

Customer has greater control over their shopping experience.

Expectations are changing – customers are demanding more information about pricing and inventory – so they can make better decisions.

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Cold Chain Challenges in responding to the end-consumer

• Lack of visible consumer information

• Different drivers of consumer value by channel

• Increase fragmentation of food service sector, new channels to market

• Competing demands creating increased complexity in solutions

• Closer to source • natural & fresh • convenience • price

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Implications & Opportunities

• Innovation in product and format to meet consumers convenience needs

• Solutions to respond to growth in out-of-home consumption/dining

• Branding/capturing value in the origin or location

• Responding to demands for localised sourcing

• Bringing niche/gourmet to the mass market

• Leveraging technology to get closer to the consumer and add value

• Partnerships and alliances to create one-stop solutions for small/independent food retailers

• Strategic account management to enable value capture

• Greater capacity to support merchandising & shelf management

Responding to consumer needs, through the supply chain

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How do you respond to Consumer Trends?

Macro Consumer Trend:_______________________________

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How do you respond to Consumer Trends?

Impact on your CustomersWhat will their customers demand/need?

How will their industry be affected?

How with their company be affected?

What challenges does it create for them?

What advantages does it create for them?

How will their competitors respond?

Macro Consumer Trend:_______________________________

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How do you respond to Consumer Trends?

Impact on your CustomersWhat will their customers demand/need?

How will their industry be affected?

How with their company be affected?

What challenges does it create for them?

What advantages does it create for them?

How will their competitors respond?

Impact on your BusinessWhat will your customers demand/need?

How will your business be affected?

Which products/services will be impacted?

What challenges does it create for you?

What opportunities does it create for you?

How will our competitors respond?

Macro Consumer Trend:_______________________________

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How do you respond to Consumer Trends?

Impact on your CustomersWhat will their customers demand/need?

How will their industry be affected?

How with their company be affected?

What challenges does it create for them?

What advantages does it create for them?

How will their competitors respond?

Impact on your BusinessWhat will your customers demand/need?

How will your business be affected?

Which products/services will be impacted?

What challenges does it create for you?

What opportunities does it create for you?

How will our competitors respond?

Macro Consumer Trend:_______________________________

Your ResponseWhat problems can your help them solve?

What current solutions can you offer?

What solutions do you need to develop?

Which partners in the supply chain can assist?

Will this help to satisfy the consumer need?

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What does this mean for Cold Chain businesses?

Anticipate

Move

Influence

Not just responding to demand, but anticipating what future demand may be

Being agile enough respond to changing consumer trends

Help to shape consumer demand through supply chain transformation & innovation

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Growth Solutions GroupMarket StrategyResearchBrand & Communication

Level 11. 99 Queen StreetMelbourne. Victoria 3000. Australia

T. +61 3 9670 4700W. www.gsg.com.au

Reason meets Imagination

This document is not to be copied without permission

Thank you.