Consumers are looking for premium brands and premium brands are the most successful worldwide. Premium products grew by 21% in Southeast Asia, by 23% in China between 2012 and 2014 and 26% in the USA from Apr 2015 to Apr 2016 across the home care and personal care categories, (Nielsen, 2016a). Different factors helped the growth of premium products:
- Economic growth of middle class: Middle class is massively growing especially across emerging countries (Brazil, China, India, Indonesia, Mexico, Malaysia, Thailand, Vietnam, etc) and by 2030 (Reuters, 2012) will almost count 5 billion people worldwide (two times the current middle class population). This will encourage people to access a many different products and to expand their shopping basket with highest probability to trade up for premium products.
- Urbanization: many people will move from the countryside or rural areas to cities and towns (from the current 2 billion to 5 billion by 2030, Nielsen, 2016b) gaining access to more services who will help to raise the premium products consumption. For instance, even more people will access Internet to be informed and buy and even more people will access convenience store or specialised stores to purchase premium products.
- Digitalization: At the beginning of 2017 more than half the global population uses a smartphone, almost two-thirds has a mobile phone, more than half of all mobile connections are now ‘broadband’ and arond 20% of the world’s population shopped online in the past 30 days (We Are Social, 2017) Thanks to this data and thinking about the massive digital future growth more and more consumers will be affected by the effects of the omnichannel. The combination of different and many touchpoints any time and anywhere will make information more accessible and, as a result, many consumers more influenced by advertising, educational information, promotions, etc.
- Wider offer available (private labels and brands). If in the past only manufacturers offered premium brands in last 10 years we saw a new phenomenon showing how even retailers could launch premium labels on the market moving from aggressive promotion and discounting to better and higher quality in their offer (especialy on food and beverage).On top, we can also talk about the rising of local brands and smaller countries which, although a different impact depending on the countries and regions, massively contribute to increase the percentage of premium products on the market.
1. What are consumers looking for?
According to Nielsen (2016a) many reasons encourage consumers to buy premium products. Results are different across different countries, regions and consumers generations:
- Overall there is no always a correlation between highest incomes and premium products purchase rate. Indeed, the study (Nielsen, 2016a) shows how in many countries and regions a better salary doesn’t always influence the attitude to spend more.
- Price is not the only attribute consumers link to premium products. Only 31% of global respondents declared to think about a premium product when the price is high. On the other hand quality and performance are considered a plus. Quality and performances change depending on the product category we are talking about. For food quality is made by the ingredients used to make that product, while for a home care product by the effectiveness of a formulation. Other factors are the design or the brand name. The bottle design for a detergent or the brand awareness might be decisive to encourage consumers to purchase a product in a certain category regardless the quality and the performance. Even sustainable attributes are relevant especially among the youngest generations (Millennials and Generation Z).
- Social aspirations and status are important: many respondents, especially in emerging countries, declared that buying premium products increases their self-esteem, feel them better or more confident about themselves as individual or as members of social groups.
2. Private Labels vs brands: what’s the status?
The relevant growth of the premium fmcg products on shelf has been also facilitated by the launch of premium private labels. From the report (Nielsen, 2014) we can see how Europe, North America and Oceania, are the main region wolrdwide in terms of private labels presence. In Italy (Il Sole 24 Ore, 2016) premium and bio private labels products generated €1.32 billion (13.2% of the total private label segment value of the market in Sept 2016, respectively + 14% and +16.1%, vs Sept 2015). On the other hand low cost private labels lost share (-22% in value vs Sept 2015) only representing 2.6% of the total private label segment.
Figure 1: Premium Private Labels products in Italy, branded “Top Esselunga”
Local retailers massively invested in brand management and innovations in recent years building a high brand equity across different categories, with the main goal of creating store loyalty and getting better trade terms conditions vs manufacturers. However, there are categories (such as personal care) showing highest and similar value share across different regions around the world.
For brands the premium fmcg path is almost mandatory. Brands should continue to raise investments in brand management through marketing investments in communication and innovations, to better communicate the uniqueness of their value proposition and make their brand equity stronger. In order to do so, heavily marketing research investments looking for new and unmet needs among consumers are required to get the right consumer insights.
However perception of brands vs private labels even for premium products changes depending on the region and on the country. In Europe, Latin America, North America and Oceania, there is a high qualitative perception of private labels, considered as key SKUs able to drive brand differentiation and store loyalty. On the other hand the situation is completely different in Africa, Asia and Middle East, where consumers show the highest willingness to pay premium prices for brands. Most of the respondents still consider buying private labels too risky.
3. Management Implications
- Only some products can be upgraded (Nielsen, 2016a): Personal Care is the main category across many regions showing highest differentation and innovations rate vs other products categories. Regardless this trend, differences and opportunities across categories are different depending on the country and on the region. Premium perceptions are not the same worldwide for all products and categories.
Figure 2: Premium’s Value share per Category across different global regions (Nielsen, 2016a)
- Think global act local: Differences are relevant depending on the market and the region we are taking into account. This implies how even marketing strategy should be locally adapted to support the launch of a premium product on the long-term, depending on the market area to be served.
- Focus on digital and optimize your in-store visibility: In order to get highest results and makes the product successful an excellent quality, distribution or price are not enough. Firms and professionals need to find the right communication. Depending on products peculiarities firms need to find a balance between touchpoints showing highest awareness and trials (typically TVCs and high store visibility) and touchpoints showing a high degree of persuasion (e.g. digital). In many cases both brands and private labels are still struggling to achieve these goals.
Il Sole 24 Ore (2016), Private Label, la corsa è premium, December, http://www.ilsole24ore.com/art/impresa-e-territori/2016-12-09/private-label-e-corsa-premium-110740.shtml?uuid=ADFrDIGC
Nielsen (2016a), Moving on Up, December
Nielsen (2016b), The Dirt on Cleaning, April
Nielsen (2014), The State Of Private Label Around The World, November
Reuters (2012), The Swelling Middle, http://www.reuters.com/middle-class-infographic
We Are Social (2017), Digital in 2017: Global Overview
Top 10 food trends in Europe:
Dried vegetables, protein-rich yogurt, burger without beef. These products are not only the core of organic shops, they become alternatives increasingly popular with consumers who aspire to a generally healthier diet … even if sugary is still a venial sin assumed. Overview of these top 10 food trends observed in Europe with Innova Market and Nielsen insights.
1 – Go with Transparency
27% of Europeans would like to stop eating transformed products. Consumers want a clear list of ingredients and transparency of the recipe. Some supplier don’t hesitate to highlight the recipe. In France, Marie made the brand name of one their product “All Simply “, where the ingredient list intends to be as short as reassuring. In US, for jerky products, local producer, Wild Merman, highlights the nutrition facts.
2 – Go with Flexitarian
The soft vegetarian which consume meat in small quantity, has grown by 25% between 2011 and 2015. Vegetable Nuggets for kids, vegan salami and other alternatives are under expansion. Retailer like Carrefour adopted this trend with its private label “Carrefour Veggie” in France. In US, Hilary’s Mediterranean vegan burgers were recognized as a lighter and healthier version of a fried falafel.
3 – Go with“0%”
There is now 12% desired gluten-free products, with an increase of 30% between 2011 and 2015. If these customers still a niche, the image is such that some products naturally gluten or lactose, even boast of his absence! The offer is growing, Innova Market’s insights noted, indeed a huge 26% increase of products bearing the words “without” the last four years. Recently in UK, Coca cola launched its new brand ‘Coca Cola Zero Sugar’ to highlight the fewer calories. In 2020 they target more than 50% of their sells from Diet coke range. Bjorg, widely known for their Gluten-free assortment, are present in 1/3 home in France.
4 – Go with Natural Process
Key success is to enhance naturalness of the products, betting on natural and ancestral manufacturing methods. Fresh prepared goods are highly valued by retailers. Nestlé yogurt brand “La Laitière” use this image of ancestral fabrication indicating that only the fermentation participated in rendering its dairy product. Private label as “Carrefour Lunch Time” highlights this natural made image.
5 – Go with Vegetables & Fruits
These plants have never been so good news! If their benefits are globally well communicated, its hegemony is now spread in many product categories. For example fruit juice, a quarter of new products marketed in 2015 has at least one vegetable in their composition, against 16 % in 2011. Another trend that follows, the soup acquires acclaim . In Spain, the cold & hot soups are increasingly premium, like the brand Tio or Mucho Gazpacho
6 – Go with Labels
The origin is a new recurring motif in the marketing of food products. Recognized labels linked to the origin of products tend to comfort consumers. The development of protected geographical indications (PGI) help brands to seduce shoppers. In France, as each year, Herta (Nestle) and Fleury Michon still the most loved brands, their labels play a large part of this success.
7 – Go with Local
Local taste preference dominates: Local companies often have a deeper understanding of consumer tastes in their market and can respond more quickly to changing needs. Local products are a great way through which to differentiate, able to reinforce the link with local farmers and producers and provide a guarantee of food security. Retailers know how to link local farmer to shopper mostly through private label. Carrefour has one especially for Italy (Terre d’Italia) and France (Reflets de France). Virginia Tea company is a popular start up which promotes the American East Coast tea with an exclusive local sourcing.
8 – Go with Protein
Rich-protein products keep healthy. These products, originally created to satisfy athletes, are now desired by the mass market. Rich protein yogurt are a good example in terms of diversification as Danone did with Light & fit assortment. In a more local format, Think Jerky got funded in two month in 2015 by proposing a creative and healthy snack offer.
9 – Go with Fun
In 2020, Millennials will be the largest group of shoppers worldwide. Global mobile penetration will be 70% and the main influencing device will be online video. Buzz create an emotional link with the product, well-executed humor appeal, enhances recollection, evaluation and the intent to purchase. Doritos Roulette is a famous case, containing some ultra-spiced chips, makers claims they are the hottest sold in the UK. Jelly Belly is also well-known among younger in this concept, they even created a board game with their candies. In YouTube they are both doing the buzz with more than ten millions views.
10 – Go with Exoticism
Discovering new foreign flavours still a famous trend and constantly renewed. Exotic products remain a niche market which contributes to renew the offer. It’s important for retailer and supplier to find the exotic touch of the moment. As Asian flavours are quite trendy in Europe nowadays, Unilever with his local brand Conimex in the Netherlands and global brand, Knorr Asia.
Source: Innova Market Insights, Nielsen, Kantar TNS, top 10 food trends
Food technology is taking over our kitchens and changing the way of eating and cooking.
Tech giants like Samsung, Dyson and innovative start-up companies are heavily working and investing on it. The focus area is the user. From smart refrigerator to portable food safety checker, food technology aims both at the simplification and at the improvement of a household life. There are four key pillars where food technology devices focus. These are: smart kitchen, digital dining, safe food and healthy diet.
In this article the most promising food technologies are analysed. Firstly, these aim to enhance the life quality of households. Secondly, they all are examples of what a consumer needs representing for the food industry strong consumer trends to be watched out.
1. IKEA Smart table
IKEA smart table brings the future inside the kitchen. Single food items are recognized when placed on the table, suggesting linked recipes. Single steps are projected on the table in real time. It has the function to warm the surface and cook directly on the table. The table consists of a camera and projector above the table with an induction coils underneath the table surface. Put together they are able to recognise objects movement, projecting images on the table used as a screen.
2. Smart Refrigerator
With a Freshness Tracker, this refrigerator can monitor items in the fridge and suggest recipes to be sent over to the oven. Enables users to track the expiration dates of food items and sets reminders so that foods wastage is minimized. Food items can be input into the food management system by voice recognition or scanning the receipt or product bar code on a smartphone. It also offers Smart shopping, which can be done directly from the refrigerator’s LCD panel or a smartphone.
3. Smart knife
The hi-tech utensil calculates dangerous levels of bacteria in food, analyses sugar content and gauges how much protein or carbohydrate is present in food. The idea is to use the sensors in the knife to assess nutritional value and freshness of fresh food products. Delivering accurate feedback in terms of product freshness, it helps the user checking food labeling and eliminate redundant expiry dates.
4. Global chef holographic projector
It connects people around the world through hologram technology to facilitate a social cooking experience that is not limited by geographic location. With the holographic projection technology, the conceptual device conjures up image projections of friends and family or holographic chefs while they shows how to cook daily recipes.
5. Digital taste simulator
The device works via a simulation-game that offers individuals the opportunity to combine a host of different ingredients to create their own dishes. And the dishes can then be tasted. The taste can be simulated as ‘flavor replication‘ and then ‘samplers’ miniature spoon like utensils that send ‘flavor replication‘ signals to the brain placing it on taste buds present in the tongue.
It is a handheld spectrometer scanner that can analyze materials by measuring properties of light, which can help detect risk and hazard in food. After beaming a low-powered laser at an edible product, and decoding the photons that are emitted back to the device, the scanner can detect the presence of allergens and chemicals, and chart calorific composition.
It analyzes air borne data to check beef, poultry, pork, and fish for freshness. The user gets feedback instantly via the system’s mobile app. It uses four different sensors to determine whether or not food has gone bad. One detects volatile organic compounds (VOCs), another gauges ammonia levels, another checks temperature, and one measures humidity levels. The device reads and analyzes the data gathered by the sensors before transmitting it via Bluetooth to th euser’s smartphone or tablet where it can be viewed on the PERES app.
8. Thanko sodium meter
It assess the percentage of salt present in warm liquid and semi-liquid foods like soup, pasta or curry, which helps people to control daily salt intakes. There is a sodium sensor inside it, and the results can bedisplayed on an LED scale within a couple of seconds. This technology is thought for households who, for health reasons, need to have low salt intakes.
For more on food technology read Best 3D Food printers.
A growing population and limited resources are set to shake up the meat industry.
US Bureau of Statistics reports that over the last 5 years retail prices of fresh beef have been increased by more than 40%. Despite the explosion of “fresh” grocery stores; Trends show that consumers visiting fresh meat departments are incentivized to look for alternatives such as poultry or veggie products by continuously higher prices.
Despite this fact, FAO estimates that by 2050 world population will reach 10 billion people and meat demand will increase by 73%. For the industry this growth rate is clearly a challenge and by keeping the current production method, meat is likely to become a luxury item. Indeed, the single production for one burger beef it is very expensive requires a lot of raw materials:
- 3kg of grain
- 200 liters of water
- land to raise the livestock
- emissions of 3 kg of CO2
A Dutch company founded by a Maastricht University professor is addressing this problem and has found and already implemented a new solution: in vitro meat. This is an extraordinarily technology advance that promises to revolutionise the whole food industry.
Using a completely innovative cellular manufacturing process, they are able to harvest in laboratory cells from a living cow. Of course, this process doesn’t involve any 3D printer machine but the same logic is used. No genetic modification is involved and by growing a single cell in laboratory they are able to create one normal size burger with an equal taste, 99% of proteins and an exactly same cow meat tissue.
Why is this the future?
The overall production requires 99% less resources, no waste and minimal CO2 emissions. When a mass scale production will be reached this new process will cut middlemen in the supply chain bringing meat into the market without any further manufacturing processes, both lowering price and increasing final quality.
Benefits are clear:
Consumers will have the possibility to choose a high quality meat, with no added fats, no substituted ingredients and high hygienic standards. The environment will benefit from less use of resources and no killing of animals.