FORCES OF CHANGE: HIGHLIGHTS FROM FOOD CULTURE FORECAST 2016, NASHVILLE
A handful of change agents is creating turbulence for iconic, established food and beverage brands in the American market today. While several factors are at work — ranging from socioeconomic to broadening competition from new food and beverage entrants — the dynamism of food culture itself and a general redefinition of quality toward premium experiences are increasingly influential.
These influences were the focus of in-depth scrutiny and discussion at The Hartman Group’s sold-out A.C.T. Food Culture Forecast 2016 gathering of food and beverage industry professionals this past April 7 in Nashville, Tennessee.
As the day unfolded, attendees were introduced to the megatrends that are altering the structure of demand for foods and beverages in the American marketplace or what we refer to as the “quality pillars” of the premium marketplace. The primary pillars are: freshness, health and wellness, transparency and culinary values.
- Freshness. Consumers view freshness today as foods that are perishable, less processed and pure. The American diet is shifting long-term toward more perishable foods as a proportion of total food volume consumed. Fresh food is something that all consumers, regardless of income or background, love and appreciate. Part of the magic of fresh food is our association with scratch cooking, the cultural moment where purity and perishability become symbolically inter-twined. As some consumers increasingly romanticize fresh foods in American food culture, they are helping to unleash the buried concept of purity tied historically to fresh farm products and baked goods and are applying it to anything in food retail. The most important takeaway around fresh foods is that, whether by being more pure or more perishable or both, they appear to consumers to be of inherently higher quality.
- Health and Wellness. Part of the major shift we see in the food and beverage market is the emergence of new, more nuanced health and wellness goals within the everyday American diet. Hard-core wellness consumers, usually higher-educated and often upmarket consumers, are leading the charge here, focusing on the specifics of nutrient density, customized diets to maximize energy, performance and digestion. Today, Americans manage a slightly broader set of physical concerns with their diet than in the past. This is driven by a more nuanced, self-aware view of how our bodies age and how they function. Healthy-eating approaches reflect a desire to re-examine fundamental nutritional needs and seek out solutions in more pure, less deleterious forms.
- Transparency. Transparency is more than enabling a moral evaluation of trustworthiness for brands; it is a way for companies to reveal details about production and sourcing that enable consumers to find higher-quality distinctions otherwise concealed in conventionally marketed branded commodities. While it's rarely a primary driver of purchase, transparency attributes on a product can potentially settle a competitive draw in otherwise identical products where what is being communicated makes sense. The strongest transparency attribute today made on packaging in terms of relevance to consumers is “how it was made."
- Culinary Values. Within the redefinition of quality is the urban-anchored upsurge in emerging foods and cuisines we organize under the term "culinary." In examining the vast creativity of modern urban restaurants, cafes, chefs and artisanal-food producers, we can distill our findings into two basic themes into which most culinary trends can be slotted: trends related to uncommon flavor or food forms (usually corresponding to what we call global cuisine) and foods and beverages (usually familiar) made with much higher-quality ingredients. What is “uncommon” to an individual will vary at a societal level; we can call it "that which is rare, not easily found at Walmart or the local grocery store or at McDonald’s or Applebee’s." The uncommon is still primarily owned by the restaurant world, since we tend to associate rare foods with specific occasions in which we are more likely to be in the mood to venture beyond daily routines.
Combined with the quality pillars, additional factors that are shaping the direction in a new premium marketplace were highlighted. These include:
- Socioeconomic dynamics. America is broken out into distinct social tiers that interact with each other but have different orientations to consumption. Most demographic analytics in the food industry focus on one variable at a time (age, income, gender, etc.). This prevents strategists from seeing the actual macro-social worlds driving key consumption patterns on the ground. Instead of this approach, we use modern sociological theory. Our work has demonstrated that the intersection of education and income create unique, broad social worlds which affect how consumers evaluate brands and what they value in life.
- Changes in eating occasions (or "how we eat"). Across American society, we see an erosion of formal eating rituals. Primary examples of this include the fact that almost half of our eating today is snacking and, in the past few years, eating alone has slowly, steadily increased to the point that it also comprises almost half of all eating occasions. Also, we live in less communal households, driven increasingly by the whims of individual desire, not family routine.
- Changes in retail shopping and restaurant selection. Retail specialists are growing market share driven by upmarket and downmarket consumers, supporting highly specialized, even extreme, retail concepts. Faced with such competition, midmarket retailers and restaurant chains are increasingly left to struggle. Premium restaurant brands are growing in QSR, and fast casual food service brands are taking share from other food service operators.
- Changes in the manufacturing and entrepreneurial food and beverage ecosystem. Younger food and beverage brands are outperforming legacy ones. The future of growth appears to be with the young brands. Hartman Group analysis finds that 61 percent of younger brands, born on or after 1980, have been growing ahead of inflation in recent years, while only 40 percent of legacy brands can claim the same result.
- The redefinition of quality and changes in how consumers define quality as they shop and eat. Consumers want fresh products (fresh forms the epicenter of the “redefinition of quality”), and within this context, consumer demand for perishables is transforming the meaning and pricing power of legacy brands, which once represented the peak of quality in their respective categories.
Going forward, marketers should be aware that the new premium requires nuanced production and sourcing criteria specific to food and beverage menus and categories so as to be able to create narratives about why specific products and meals are superior. The rising success of the premium phenomenon is based on a fundamental truth in a country where consumers historically bought familiar food and beverage experiences in large volumes for the lowest possible prices. People will pay more for higher-quality food and beverage experiences on everyday occasions. Keeping in mind the fact that the resurgence of fresh foods is at hand, marketers should be increasingly willing to invest in emerging small brands in the new premium space. Most importantly, immerse yourself constantly in key areas of food culture that could impact your business model and fuel new opportunities.
Highly Recommended: Attend the Next Hartman A.C.T. Event!
Take a deep dive into the premium food and beverage marketplace in Seattle at the Edgewater Hotel on Sept. 15, 2016. Learn more and register by clicking here: A.C.T. Seattle16
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