The packaged foods industry's sales are flagging, and its business leaders seem to think the economy and the need for better marketing are to blame. The Hartman Group's research indicates it's something else: the food.
Legacy brands need to take a page from upmarket, entrepreneurial food businesses and start shaping their products to consumers' needs, which are radically different than they were when many of these brands were growing fast. Our free white paper, A Recipe for Growth in Packaged Foods, outlines the issue and gives practical advice on how to start making the shift toward success in today's changing food and beverage marketplace.
A Recipe for Growth in Packaged Foods
Breaking away from legacy behaviors
Major U.S. food and beverage companies are experiencing anemic volumetric growth, according to The Hartman Group’s analysis of Euromonitor data. It revealed that from 2012 to 2013, more than half of the top 14 branded food and beverage companies grew their U.S. retail revenue slower than 1 percent inflation.
The implications are troubling for those at the helm of food and beverage companies with large exposure to the U.S. retail food market:
During three days of sessions at IRI’s recent “Winning the Race to Growth” summit in Orlando, ironically, the mood seemed fairly upbeat, despite the unimpressive performance of the industry.
b) stale go-to-market strategies and/or
c) inefficient marketing/promotions
In other words, the reasoning is that everything will be solved when GDP picks up and when companies use better data to plug distribution holes and reach consumers with better targeted digital promotions.
The Hartman Group has a different theory: It’s about the food. In three days of conferencing, rarely did the subject of product or product design come up as part of the recipe for growth. That’s mystifying, given the relentless double-digit growth of disruptive upmarket food retailers that sell highly differentiated foods curated to a contemporary set of quality criteria. Even the management consultants on hand commented on the market-share growth of small brands.
The biggest long-term challenge facing the U.S. food industry is that taste preferences are changing. This is most apparent among highly urbane and educated consumers, where the arbitrary boundaries of “too sweet” and “too fatty” are altering in ways inimical to the core food science paradigm of the U.S. food and beverage industry.
The U.S. food industry routinely serves crude flavor profiles associated with the unsophisticated farm cuisine of Middle America: heavy on salt, dairy and animal fat and, in the past half century, sugar. Fattiness. Sweetness. Saltiness. These are the primary flavor triggers the American food industry knows how to engineer and incorporate into branded processed foods. And it is very, very good at it. For years, there was growing demand for these flavors in all sorts of foods, primarily because U.S. preferences were not changing.
As leaders in the study of American food culture, The Hartman Group has been tracking how Americans shop for food since the 1990s. From one-stop shopping to multichannel shopping to online markets and click-and-collect, we continue to track consumers’ evolving perceptions, needs, habits and relationships with food retailers. New to the 2017 report is a special section on the expansion of the discount grocery channel, the emerging fresh-format channel and smaller-footprint retail formats.