The food industry continues to evolve as a number of industry trends including health and wellness continue to disrupt traditional consumer engagement tactics and strategies for growth. Food manufacturers have been anticipating this retail revolution for a number of years, and the time is finally here.
Health & Wellness Trends Impacting Food Manufacturers
In a recent Wall Street Journal article, the impacts of these trends to well-established food brands in the grocery aisles were highlighted. The impacts have been significant in terms of a category decline of packaged food and beverages: 0.4% in 2016, and 2.4% in the first quarter of 2017. As compared to other categories like fresh meat, produce, and deli-prepared foods which grew between 1.7% – 4% last year. There is a forceful shift toward the readily-available fresh alternatives and to products that are perceived as healthier. As consumer preferences change and retailers adjust, the question for food manufacturers becomes how to remain relevant with consumers and how to expand their offerings to meet their customer requirements.
Understanding the Meal Replacement Trend
One segment that is growing because of the health and wellness trend is snacking as a meal replacement. This year at the Snacking Innovation Summit put on by Food Navigator USA, the presenters shared that 90% of consumers are currently snacking multiple times per day and 7% of consumers are reporting they don’t eat meals at all anymore, instead simply opting to snack through the day.
- Although the snack category is growing, healthy snacking is outpacing indulgent and premium snacks. Reinforcing this shift, Mondelez CEO Irene Rosenfeld recently commented that “the biggest power shift for a company like ours is the rapid growth of the well-being trend.” Consumers are choosing many ways to ‘eat healthy,’ including gluten-free, whole 30, paleo, and flexitarian. These examples all underscore a market opportunity that food companies of all sizes are chasing.
- Another category that is experiencing high growth as a result of health and wellness trends and the snacks as meals trend is the functional food category, with an annual growth rate of 6%, the market is seeing entrants like Burt’s Bees.
- With the millennial consumers driving the snacking trend, retailers are still trying to figure out where to place healthy snacks in the store. Research shared during the summit shows that these consumers have a tendency to avoid the center aisles, retailers are focusing on increasing ‘healthy snack touchpoints’ where those consumers are. As an example of this, retailers have had success placing healthy snacks in refrigerated areas by the checkout.
The leading message for healthy snack manufacturers are to know your consumer, what they want out of your snack, and how to reach them. Some questions to consider:
- If you’re a snack manufacturer looking to expand distribution penetration, are you dominating through differentiation in your strategic channel management and collaboration with retailers to shelve your products in the right part of the store?
- When faced with limited shelf space and increased competition, are you adjusting your sales planning and promotional tools and processes to capitalize on the opportunities offered by snack growth?
- What snacks in your portfolio could work as a meal-replacement option for consumers? Could you work with your retail customers to position that product in the readily-available section of the grocery store?
The shift towards healthier snacks was predicted long ago but the latest evolution of this trend, where consumers aren’t eating as many meals, has happened rather suddenly. The necessity for food and beverage companies to remain agile in their speed to market with new products continues to be an issue for companies of all sizes and the key to combating perpetual margin and growth pressures.
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Author Contributions: Maggie Seeds