It’s not news that consumers drive retailer decision making with their purchasing dollars, or that this, in turn, drives the sourcing, production, and distribution of the entire food chain. What is news-making are the ever-evolving trends that drive consumer spending. What do consumers want today? Following are some of the movements and trends that are most impacting the food industry and both uniting and dividing generations.
TRANSPARENCY. The demand for transparency is impacting the food industry to such a great degree that it is becoming a buzzword of traceability (see Technology and the 3 Ts). This is driven primarily by consumers who expect food packaging to provide complete and accurate product information — with product transparency influencing the purchasing decisions of 71% of the respondents to the Label Insight’s 2016 Food Revolution Study.
Add to that the current penchant for organic, gluten-free, and presumed “healthy” foods, and it becomes clear that not only are consumers reading labels and seeking specific characteristics, they want to know that the labels are trustworthy. That, whether or not they are gluten-intolerant, whether or not an organic or GMO-free product is healthier — if they choose to consume gluten-free, organic, or non-GMO foods, they can trust that the designation is true, all the way back to the source. And if you can prove it — all the better.
It is a trend to which manufacturers need to pay attention, as sales in all three categories are continuing to climb, regardless of the accuracy or misconception of the consumers’ reasoning behind their choices. According to a 2016 USDA report, “Organic food sales in the United States have shown double-digit growth during most years since the 1990s, and this trend shows no sign of slowing.” An article from the American Council on Science and Health states that sales of gluten-free products “significantly outpace those in other grocery categories” (while noting that gluten-free doesn’t mean healthy), and a recent USA Today headline touts “Non-GMO demand growing despite report that says GMOs are safe.”
These also are movements that some see as quickly reaching the tipping point — adding an unknown into the decision as to how far a manufacturer should take this focus. But one area which manufacturers should consider, that is, in essence, the root of them all, is that of corporate responsibility, including the focus on sustainability.
As noted in the 2017 Harris Poll RQ Summary Report and depicted in the graphic on page 68, consumers pay attention to corporate reputation. “Far beyond just product information, the public is interested in how a company engages with the world. They increasingly serve as advocates and saboteurs, presenting a level of complexity (…and unpredictability, …and messiness, …and importance) to reputation managers that is unprecedented.” Consumers are talking about, advocating, and making purchasing decisions based on a company’s reputation. As such, the report notes, “The business value of a company’s reputation has never been higher.”
And intricately amalgamated in that reputation is how and from whom the food producer sources its ingredients, how socially responsible the company is, and whether or not it allows the consumer to see behind its doors. Consumers want to know about the food they are eating — no matter what their generation.
GENERATIONAL PURCHASING. Baby Boomers (those born from 1946 to 1964) can be quite a contradiction for food manufacturers attempting to assess their wants. It may come as a surprise that it is this generation which, according to the Hartmann Group, was at the leading edge of the demand for fresh, less processed foods and beverages. At the same time, however, an NPD study shows that Boomers eat ready-to-eat snack food 20% more often than Millennials do.
The report, Shopping by Generation from Colloquy (www.colloquy.com), shows further contradictions of the Baby Boomer and explains why brand marketers should be paying more attention to this generation of greater disposable income and purchasing clout than Millennials (approximate birth years 1977-1997) who tend to get more attention today.
- Baby Boomers want convenience, and they tend to be a more demanding consumer than any other generation.
- 84% prefer to shop in-store, but it is the only generation that doesn’t find shopping to be relaxing.
- Only 12% said they rely on family and friends to help them decide on a purchase. But when purchasing something with which they have little experience, nearly half are influenced by the popularity of the item.
- They are the only generation that doesn’t prioritize buying the brands they used while growing up. However, only 37% are likely to look around the store for new products.
That’s not to say that Millennials should be ignored. This generation will continue to grow in influence. With the expectation that it will account for 35% of all purchases over the next 15 years, it is definitely making its voice heard through its purchasing power. But companies have to work for their dollars. According to the 2016 Gallup Report “How Millennials Want to Work and Live,” this generation has the lowest level of loyalty to a brand than any other generation, yet they are the most likely to make impulse purchases and shop “for fun.”
Additionally, the report, “The Millennial Consumer” from The Boston Consulting Group, identified four behaviors and attitudes characteristic of this generation that impact their purchasing:
- Millennial speak: “I want it fast, and I want it now.” Speed, ease, efficiency and convenience are critical to this generation that has become accustomed to instant gratification.
- Millennial speak: “I trust my friends more than ‘corporate mouthpieces.’” Millennials prefer to refer to the expertise of friends and peers rather than that of professionals or academia, but they will consult multiple sources — asking friends, conducting online research, and reading user reviews and online forums. The reach and accessibility of social media and mobile devices has made “crowd sourcing” a popular form of gathering collective intelligence.
What it means to manufacturers: A company not only needs to keep tabs on everything that is being said about it and its industry, but needs to participate in the conversation. Additionally, the report states, “It may also be time to reevaluate whether current brand endorsers are credible and effective with this audience,” because the wrong advocates can be detrimental.
- Millennial speak: “I’m a social creature — online and offline.” Millennials use technology to connect frequently with large networks of people in real time. In fact, they feel out of the loop if they’re not up to date with their social media and “they feel validated when the community ‘likes’ their posts.” This large network extends offline as well, with Millennials more likely to shop in groups.
What it means to manufacturers: Companies that are a part of this generation’s network, that are easy to access through mobile sites, Facebook, etc., are more likely to be favored. Additionally, online and off, the old adage of one person telling his or her experience to 10 friends who relays it to 10 friends and so on, is vastly expanded when a typical Millennial has 200+ Facebook friends with the potential to see a single “tell.”
- Millennial speak: “I can make the world a better place.” Of all generations, Millennials focus on environmentalism and participating in causes to better the world.
What it means to manufacturers: Millennials care what you are doing for the world — they “expect companies to care about social issues and will reward those that partner with the right causes.” They buy from brands with sustainable practices, fair trade principles, and fair worker treatment. They will voice the rights and wrongs they see — across their digital sphere, encouraging others to support their cause.
What it means to manufacturers: This generation is always in a hurry, so they’re unlikely take the time to comparison shop in a grocery store — in fact, they are twice as likely to just stop by a local convenience store instead. This means that manufacturers need to find non-instore ways to develop brand-loyalty among this group (preferably digital, please). While they also value quick meals — whether from a fast-casual restaurant, convenience packaging, or home delivery program, they also want it to be tasty, nutritious, and traceable to its sustainably produced, humanely treated, environmentally sound source.
CUP HALF EMPTY/HALF FULL. Even with these generalizations, however, there is some contradiction in consumer spending. The Gallup report states that spending has declined since 2008, with today’s 19- to 35-year-old Americans spending an average of $85 per day, compared to the same age group having spent $98 per day in 2008 — costing the U.S. economy at least $949 million per day.
On the other hand, a 2017 IRI Consumer Connect Survey states that consumers are showing a willingness to pay more for quality and convenience because of an optimistic outlook toward their finances. While the optimism varies by generation, with more younger adults expecting improved finances than those of the older generations, the positive outlook is fairly consistent across income levels.
The most pronounced areas in food which are seeing consumer willingness to splurge for what they deem to be beneficial features are natural and organic products and foods and beverages with additional benefits (e.g., antioxidants).
Not everyone is optimistic, however. According to the report, 33% of those surveyed are concerned about their finances, so seek to manage their money by buying private label and lower-priced brands; comparison shopping through mailers and websites; and shopping at multiple stores.
The author is Editor of QA magazine. She can be reached at firstname.lastname@example.org.