It’s ”Trends 2023 Time” in the World of Food & Grocery Market Research!

Posted on November 23, 2022 by Prof David Hughes & Miguel Flavián

Come November, come an outpouring of consumer trends for the upcoming year from the influential market research firms of our world (see end for sources). They’re very welcome but overwhelming and, so, here’s some words which you can read with a cup of coffee where we hope we catch their essence.

Trends come and go in all shapes and sizes but Christmas is more predictable!

Across the globe, it looks like tough trucking for many families throughout 2023 and 2024. Early resolution of the war in Ukraine would be welcome (albeit unlikely), together with an acceleration in reduction of other inflationary pressures but expected mortgage rates of 6+% in many countries will be devastating for millions of families. The cruel prospect of should we “heat or eat” will be the grim reality for many this Winter. As a result, the principal focus for many families will be searching for the best value, i.e. low prices. In so-called advanced economy UK, The Money & Pensions Office identified that 25% of those surveyed had less than £100 ($120) in savings – it looks like a bleak Christmas!

Consumers are saying “I want to buy food products that reflect my values and the social issues I’m concerned about but I want them at prices I can afford”. They’re concerned about both their physical and mental/emotional health (e.g. help me sleep better and reduce my anxieties) so seek products which offer affordable nutrition but make sure the health benefit claims are simple and direct. Consumers have “eagle eyes” when selecting food products and want few, natural, authentic ingredients. They may compromise on requirements for “Grab & Go” “Fuel Food” but want to know where/when/how and by whom was it produced for “Story Food” when the meal components are the hero/heroines.

Mars-owned KIND:  in touch with trends on health, clean labels and care for the community.

All the trend setters identify sustainability concerns as being central to many consumers with carbon reduction, global warming, plastic pollution, food waste and deforestation in the top 5 positions. Some consumers want to be more involved with the companies that produce the food they eat as in – tell me more about the ingredients, farming methods, packaging, company stand on big issues such as slave labour, and supporting local communities. They want to know that businesses have plans to improve performance on these social issues but want them to be honest about their progress, acknowledging that Rome wasn’t built in a day. The harsh fact is that, in the face of a cost-of-living crisis, consumers reluctantly compromise on their principles and search for the lowest prices – in the UK, animal welfare-friendly meat, organic, fairly-traded and even local food sales are all down significantly on the previous year. We’ve said it before and we’ll say it again, the “green bar” continues to rise for producers of food and drink products but, particularly for the coming year, it’s challenging to gain a price premium for getting over the bar and more likely that one will be price discounted for being under!

Walmart freezes prices for income-strapped customers in the USA.
“Big Food” is often in the cross hairs of consumer activist groups. Here’s Mars, showing that in tough times beleaguered four-legged family members may need a helping hand!

The evolution of the plant-based market is expected to continue. The “mega-brands” such as Beyond Meat and Oatly have failed to light up the market and financially have performed disastrously. Bye-bye “fake” meat? No, bye-bye expensive, poor quality substitutes with ingredient lists as long as short books! Not withstanding the expected success of  Veganuary (only 6 weeks away), veganism isn’t growing significantly but flexitarianism certainly is. It’s driven by younger, better educated, higher income consumers who are pleased to dip into “no meat meals” and, as they age, they’ll take this habit with them. Watch out for “Regenuary” (Google it!) riding on the coat tails of the increasingly fashionable “Regen Ag movement”.

Waitrose Food and Drink Trends 2022/23

Economic crisis – cut out indulgent treats? Far from it. “Revenge Spending” is an expected trend, with consumers seeking affordable treats to brighten up their day. You’ll notice those treats are becoming smaller in size such that manufacturers can meet margin targets. Generation Z and younger Millennials are expected to lead the charge driving demand for new flavours and formats both in old favourites and exciting novelties. Digital interaction via the likes of TikTok rules the affordable communication waves. Watch, too, for strong demand for premium protein purchases at the food retail shelf as consumers with culinary skills elect to dine out at home, instead of the restaurant. There’ll be more eating at home because of the continued popularity of WFH (working from home). Tight although household budgets may be, demand for “quick quality” meal and snack solutions will continue to be strong whether purchased from the store, local food service outlet and/or delivered by a man on a motorcycle/bike! With high heating costs in some countries and solitary working from home, opportunities have emerged for WFP/WFC businesses – pubs and cafés (with excellent Wi-Fi) offering mini-packages (e.g. access to a table, coffee, pastry, warmth and company) during “light” hours in the regular day of the pub or café. Then, there’s UK supermarket chain Asda with a cute “Fakeaway” offer – meal and snack ideas that are characteristic of the takeaway trade that are good value for money for that “Big Night In”!

                                      

Waitrose Food and Drink Trends 2022/23
Marks & Spencer products for “working from home” couples who want to eat healthily and quickly.
Bord Bia promoting “quick quality” of Irish grass-fed beef.

That’ll do on mega-trends, but just to finish off, let’s take a quick look at what the pricier food retailers think are product areas for accelerated growth in 2023. In the USA, Whole Foods Market identify: yaupon caffeinated tea, the leaves of a sort of holly bush native to the northern states (don’t rush!); products made from the leftovers of other products, such as squished oat and nut remains from plant-based milks; plant-based pasta; date syrup; and “better” (slower-growing, etc.) chicken and eggs. In the UK, Waitrose are backing: “less but better” foods, i.e. smaller portions of premium cuts of meat and fish; “forgotten” meat/fish cuts such as fish heads/beef short ribs transformed into delicious dishes through use of the slow cooker; whole cocoa fruit chocolate; grilled lettuce; the rise of “nextovers” – not leftovers, but conjuring up tasty meals  from whatever ingredients are left in the fridge; and food & drink products with relevant and explicit health benefits – such as, no surprise, Waitrose branded ginger shot drinks and oat drinks.

We trust there’s some food for thought in the above and with Christmas and the New Year beckoning, we wish you a happy festive season and fingers crossed that 2023 turns out rather better than that forecasted by the economic and political pundits.

Sources: Mintel, Innova Market Insights, FMCG Gurus, Forrester Research, ADM, Whole Foods Market, Waitrose and Partners, our own views and research.

Posted in Trends

Coping with the Economic Crisis: What Will Consumers Do?

Posted on October 31, 2022 by Prof David Hughes & Miguel Flavián

It’s torrid times around the world for many consumers and businesses and, likely, it’ll get worse before it gets better. But, hey, it WILL get better! What’s up? Pundits are quick to advise us that a succession of unprecedented events have brought us to where we are now. Harold Macmillan, Prime Minister in the UK 60+ years ago, when asked what was the biggest challenge for a statesperson or an economy, famously replied “Events, my dear boy, events”! The past 3 years, we’ve sure had events to disturb us but none were unprecedented as all had happened before!: Covid  – what about the 1918 Spanish flu pandemic; rocketing food price inflation this year – at similar levels to the August 1973 food price peaks when, wait for it, the Russian and Ukrainian harvests failed and oil prices surged because of OPEC action; Russia invades the Ukraine – yes, just like they did in 2014; extreme weather events – hmm we’ve just become much more aware of what’s been happening for years, i.e. climate change. They’ve all happened before and they’ll happen again!

On the plus side, some positives come out of the wreckage caused by these events coinciding:

  • food security appears on the political agenda as we learn that, irrespective of national income, we can’t simply assume that food for our citizens will always be available when we want it. Sensible food policies may emerge (fingers crossed!);
  • similarly, energy security is top of mind – European dependency on Russian oil and gas at a time when Russia is at war with a neighbouring European country and Europe is placing heavy economic sanctions on the warmonger beggars belief. Surely, this will lead Europe towards a more secure set of energy policies with the prospect of renewable energy being sharply accelerated? Further, at the household level, certainly in the UK, we’re much more conscious of “saving energy” because it translates directly into saving money in income-stressed homes;
  • and what about key manufacturing input security? It’s worrying to note the reliance that the world has on chips from Taiwan at a time when China is sabre-rattling and President Chi has just been anointed as de facto President for Life!;
  • the extraordinary global shortage of labour brought about by, inter alia, the pandemic, governments restricting immigration, better-heeled older workers reassessing their life preferences, has accelerated the commercialisation of automation, not least in food production;
  • and the globalisation of news coverage has made us increasingly aware of the impact of climate change on peoples’ lives and, for our own self-interest, the impact that weather has on food supplies.

The IMF notes that food and energy prices continue to drive the global inflation surge. In the UK, consumer price inflation is at around 10%, highest as it has been for decades, with food price inflation a hefty 14%. The UK Office for National Statistics has shown that a basket of the lowest priced grocery items from supermarkets “value lines” are 17% higher now than 1 year ago. It’s the same story in many countries with particularly damaging consequences for those on low incomes (in many emerging nations – e.g. much of Africa – half the household income is spent on food and double digit food price inflation is devastating). In so-called higher income “developed” countries, household incomes in general have increased over time, but polarisation is more evident – there are comfortable “haves” and a much larger grumpy group of “have nots”. The story is the same in the UK, much of Europe, North America, or Australia.

Interest rates are rising quickly in many countries with huge consequences for those with home mortgages to pay. For 10 years or more, we’ve had historically low costs of money – a boon for spenders and a bane for savers! Energy prices have come off recent astronomical highs but are way above recent memory bringing huge additional costs to families for heating, light, cooking and transport (notwithstanding government support which will need to be paid off by our grandchildren). Family budgets are under extreme pressure and are causing significant changes in purchasing behaviour for food, and the postponing of larger purchases (e.g. for furniture, clothing, electricals, and entertainment).

We’re most interested in the impact on food purchasing and consumers are:

  • switching to discounters (e.g. Aldi, Lidl);
  • buying less items such as trimming back on “indulgent” snacks;
  • “stretching” meals by using smaller meat portions and lower cost protein foods;
  • buying less alcohol to save money, or drinking at home rather than in the pub;
  • buying more “Value” private label products, more frozen and tinned foods to save on food waste;
  • seeking advice on using up leftovers and reducing waste;
  • even thinking about energy efficiency in cooking – air fryers became fashionable during the “lockdown” and, now, are seen as being the sensible way to cook to save energy costs;
  • less eating out and this can translate into trading up for quality foods to eat at home;
  • “parking” concerns about the environment, animal welfare and other social issues whilst coping with the squeeze on the family budget.

What of the future? Analysts suggest that things will get worse before they get better! A short recession is likely in Europe (and we are in one already in UK) although the USA economy may squeak through unless burgeoning interest rates causes the housing market to collapse. Haven’t we seen all this before – what about the 2008 recession? Then, there were differences to now: there was low inflation; no Covid/energy/war in Europe issues; falling interest rates; much higher unemployment; and the online retail sector was growing rapidly taking many traditional players by surprise.

At the consumer level, the “heavy carrying” will be by lower income households. In the current economic crisis, 40% or so of households are and will continue to struggle until inflation abates and economic stability returns. Household saving rates have fallen sharply (after rising during the “Lockdown” period of the pandemic) and, so, the big holiday or the house extension will have to wait a couple of years or more. Those serving consumers will need to focus on showing them that their offer is helping them save money. But, remember, value means different things to different consumers and their economic groups. The “should we heat or eat” households need much more help than an Aldi price match basket of basic foods from Tesco. But, all households grumble about rising food prices, including those comfortably off who are outraged that their seeded, olive organic sour dough loaf has gone up by £1 a loaf. Food businesses should be attuned to and deliver on what consumers value and this can be much more than just low prices. However, grocery retailers, not least the big traditional supermarket chains, need to compete with “the barbarians” close to their forecourts (i.e. the discounters!) whilst responding to the needs of local communities and the producers of the food products that are on their shelves. There’s much talk of “partnerships in the food supply chain”. Retailers must walk the talk to ensure that those who actually produce our food, and have been operating throughout this harrowing period, are set fair for the longer term.

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Posted in Inflation, Uncategorized

Up Your Marketing Game to Make the Best of Challenging Times in Fresh Produce: The Case of Cucumbers

Posted on October 26, 2022 by Prof David Hughes & Miguel Flavián

October has been a meat, vegetable and “non-dairy “dairy month for me and Miguel. Mid-month, I was the closing speaker at the UK Cucumber Conference. It’s been a torrid time for fresh produce growers: input costs through the roof; excruciatingly high and volatile energy prices; pervasive labour shortages on-farm and in the supply chain; escalating retail food prices (14+% in UK in October) but the reverse for most fruit and vegetables as retail prices  have been lower than last year (notwithstanding 20+% increases in key production costs) as traditional supermarkets wage price wars with buoyant hard discounters such as Aldi and Lidl; and, for cucumbers and other salad crops in the UK, the unwanted additional pressure of import competition from similarly beleaguered horticultural producers in the EU and elsewhere. The crowd attending the cuke conference showed remarkable “best foot forward” resilience. Wishful thinking or last man standing doggedness?!

Protected crop growers, i.e. those using “greenhouses” requiring heating during cooler parts of the year, know exactly what they have to do in terms of reducing costs through use of renewable energy (solar panels, harnessing waste heat, etc.), automation to reduce labour,  applying technological solutions to reduce pesticide use. In history, they’ve shown an ability to produce more quality product using less inputs. The benefactor has been the consumer – paying lower and lower prices for higher quality produce! Improving production efficiency has been the forte of the horticultural industry. Improving marketing performance has lagged woefully behind!

The good news for salad crops, including cucumbers, is that they are in the Top 10 of vegetables regularly purchased by food shoppers in the UK and USA. Worrisomely, in both countries, the higher purchasing households tend be those who are older, richer, and without children. I don’t think, as you tip over 50 years old, that you wake up one morning and think “I fancy a cucumber”. Rather, we need to introduce (aka train) our children to eat such items sooner rather than later in their lives. Also, learn from other countries, how to use salad crops as breakfast and snack items – they’re on breakfast buffet tables in many British hotels, so put them out at home, with a healthy & tasty dip would be helpful.

The health attributes of fresh produce are an issue and the issue is that the produce industry keeps the manifold nutritional advantages of fruit and vegetables a secret. Cucumbers are a case in point. This is not highfalutin research, but in preparing for my talk I asked dozens of people I met en passant  do you eat cukes, why and what was in them? Usually, the response was: “yes, they’re refreshing and full of water”. Nutrients, special benefits? Silence! Click on Tesco.com and put in “Cucumbers”. Up comes 3 fresh cucumber skus and half a dozen cucumber beauty products (e.g. brand named “Yes to Cucumbers” skin toners and eye treatments).

Mark our words, if a consumer goods product has ANY health/beauty features, it’ll shriek it from the rooftops. Why wouldn’t we tell consumers, in particular those younger ones who under-purchase cucumbers, that, apart from being refreshing and a guilt-free stick for dipping, they’re: chock-a-block full of vitamins C and K, magnesium, manganese, and potassium; help as a satiating afternoon snack for those wishing to manage their weight; and are embraced by the beauty industry in a host of skin toning and eye health products?

If you tell customers that your product is tasty, healthy, good for the skin and eyes, and convenient will they buy more? Yes! Will they pay more? No – not if there is a seemingly endless supply of identical product available every time they go shopping. That’s a huge problem for cucumbers and many fresh produce items. The dreaded commodity trap awaits which is so well exemplified by the case of bananas in the UK. Bananas retail at 78p (<$1) per kg. across  the UK high street – the Cavendish variety is pervasive. Bananas are our favourite fruit and account for one-quarter of all fruit consumed in the UK. Why? They’re tasty, convenient, children like them and they’re virtually a free good! The retail price of bananas has declined by 15% over the past 15 years. Did production costs decline?! NO and the story sounds familiar to that for cucumbers and many other produce items.

How can you exit the commodity trap? With difficulty! Grow something that is identifiably different with attributes consumers value and are willing to pay more for. For a grower, this could involve aligning with a seed supplier and produce marketer that has access to exactly that. Fruit and vegetable product examples include: Tenderstem broccoli in Europe and its Aussie equivalent Broccolini. In fruit, take a look at the price premium earned and marketing programme of the Pink Lady apple. Grower-owned Zespri from New Zealand has  done a remarkable job earning a small premium on the commoditised green kiwifruit and a substantial premium on the SunGold version gaining great traction in markets, particularly in Asia, for its immune health benefits.

For UK fresh produce growers, here and now, what can be done to make a very difficult position a little better? Collaborate as a domestic industry and start to communicate with home consumers on provenance (home grown to high standards), your importance to the local community, freshness, health benefits, and tell them how to use it on “new” occasions – breakfast, snacking, etc. for cucumbers. Where’s the budget coming from? Canny use of social media can produce brilliant results with minimal spend – have a peek at how Little Moons mochi ice cream balls made a huge impact on TikTok. Cucumbers aren’t ice cream but you’ve got more to work with than, say, iceberg lettuce or swede! There’s clearly a role for the Cucumber Growers’ Association here. The Veg Power Campaign staff focussing on promoting overall veg consumption would be useful allies in crafting a social media campaign specifically for cucumbers.

In the UK, households spend less than £10 per week on fruit and vegetable bought from grocery stores that’s way less than many commuters spend on buying a coffee per day! It’s scandalous and we in the fresh produce industry need a good kick up the bum for being so coy about the manifold consumer benefits of our produce. Our produce isn’t caffeine-rich but, for cucumbers, it’s rich in nutrients that extend life and improve our looks. What isn’t there to shout about!

Posted in Fresh Products, Health

New Routes to the Food and Drink Consumer. Do They Matter to My Business?

Posted on January 25, 2022 by Prof David Hughes & Miguel Flavián

The pandemic may have slowed us all down – incarcerated in our homes for months – but it certainly didn’t slow developments in food and drink delivery to consumers. In fact, the reverse, Covid has served to sharply accelerate trends. Over the past 2 years, $15 billion has been ploughed into rapid delivery electronic platform start ups in Europe and North America such as getir, Delivery Hero, GoPuff, Zapp, and Bolt . Within as little as 10 minutes, food and drink items can be delivered to our homes and offices from “dark” mini warehouses (micro-fulfilment centres in the vernacular) at skinny tariffs. Right now, we’re seeing rationalisation in this new sector with the likes of USA venture capital rich GoPuff acquiring Fancy and Dija to give it accelerated entry into the European fast delivery market. How big is this market? Well, it’s moot but the overall European grocery market is measured in trillions not billions and, so, a very small percentage of that total market would be an eye-watering number!

Source Shifted. Oct 2021.

That’s why big supermarkets are peering at these fast delivery small fry, with some apprehension, and are bemused by their current valuations – Berlin-based rapid delivery start up Flink has a current market value of close to $3bn and it was only founded in 2020! How can “traditional” supermarket companies hedge their bets and take a piece of the fast delivery action? Tesco’s approach in the UK is to form a partnership with start up unicorn Gorillas. In the pilot, it’s using spare space in a big Tesco Extra superstore to establish a 2,000 product micro-warehouse from which Gorillas can use as its ”with you in 10 minutes” delivery base.

Stuck gloomily at home, we wanted to eat out but couldn’t but we could “eat out in” using restaurant meal delivery platforms such as Just Eat and Deliveroo in the UK and the major player in the USA DoorDash to deliver our favourite restaurant meals. Again, this development has been threatening for traditional supermarkets, particularly in the USA where grocers have been a tad slow in developing delicious ready meals for their supermarket customers. Now, Instacart, the American company that makes it easy for you to order groceries from your favourite store has launched “Ready Meals Hub” to deliver meals ready to eat/heat from your store of choice within 30 minutes. This is an effort to claw back supermarket sales lost to the restaurant meal delivery platforms. Restaurant delivery app DoorDash senses the competitive threat and its response has been, amongst other things, to increase its investment in German fast delivery Flink, while in the same month investing close to $8 billion on a Finish grocery delivery company to extend its European presence. It beggars’ belief where all the money is coming from!

Flink's Valuation Hits $2.85B In New Financing Round Led By Doordash. Flink Competes With Gorillas, Picnic, Getir, And Others In Hyper-Competitive European Grocery Delivery Market - CB Insights Research

Are you keeping up?! Like waiting for a bus, nothing turns up and, then, accelerated by the pandemic, a whole bunch of new routes to the consumer appear. So what? Is it all froth that will disappear when we return “to normal” or, at least, the “new normal”? Well, there’s certainly more choice for consumers on where and how they can buy food and drink. What about investors in unicorn meal kit, restaurant meal delivery, and rapid grocery delivery companies? How sanguine one is depends on the timing of your entry and exit from the investment: the share price of meal kit platform HelloFresh has halved over the past 12 months; and the share price of restaurant delivery app Just Eat has halved in the last 2 months! Mind you, even after a collapse in stock value, both of these companies have market valuations of around $11bn which is close to double that of, say, Sainsbury’s which has been in business for 250 years. From an investment perspective, are you a lion or a mouse?

Just Eat is expanding their business into the grocery deliveries.

If you’re a farmer or food manufacturer does the emergence of these new routes to the food and drink consumer market matter? Unequivocally, yes! Think back a few years, the pervasive concern was about the dominance of a few, powerful supermarkets calling the shots. Now, you’ve got more options, more customers. For some suppliers, you can even go direct to the consumer as they’ve slowly accepted that buying fresh foods online isn’t too frightening! What’s more, the pandemic has made many consumers more enthusiastic about purchasing food with a compelling authentic story, particularly if it’s local.

Artisan producers can sell now in the whole country!

If you’re concerned about the health of our planet are you happy with more purchasing options? If the white delivery vans are electric, it helps peace of mind and one can be close to self-righteously euphoric if a cyclist delivers!

For all food and drink businesses, these developments bring some combinations of challenges and opportunities. Is our modus operandi relevant given the pandemic-accelerated transformation of our commercial and physical environment? Did we have a strategy? Should we change it? We know 2022 is going to be, by any measure difficult – ingredient and food price inflation, crabby shoppers seeking “value”, retail price wars, unexpected climate and political (Ukraine?) events – do we have the resilience? What’s that? The resources, willingness and drive to adapt successfully to the challenges that threaten the function, survival and future success of our business. Spend some time thinking about how your business is placed to cope with what’s coming our way in 2022. It’s better to be in the box seat than the back seat in troubled times!

David and Miguel January 25th, 2022

Posted in Convenience, Online

Heads Up! Some Food Industry Issues to Keep an Eye on this Month.

Posted on January 5, 2022 by Prof David Hughes & Miguel Flavián

Every January, two hardy perennials burst into full flower. Here’s a brief botanical review of them both.

Established in 2014, Veganuary is native to the UK but, wind-borne, its seeds have germinated in dozens of countries and has a mission to inspire people to “try vegan”. As “A Movement”, Veganuary carries an implicit health warning for carnivores and livestock producers. Smart marketing is at its core: in January, we’re predisposed to try a healthier diet; plant-based foods are firmly on-trend; trying vegan food for a month gives us a guilt-free opt out after only 4 weeks (“tick, done vegan!”); the promotional material doesn’t focus on killing distressed animals, rather on “saving” cute, cuddly ones; certainly, in the UK, the food media and food retailers of all stripes are supportive – e.g. hard discounter Lidl (not the immediate grocer of choice for the urban élite chattering classes) has “Going Meat-Free in January?” as the strapline of its New Year adverts; and, particularly, post-COP26, it’s consonant with the notion that family food purchase choices can contribute to saving the planet.

Veganuary everywhere!

Vegan and vegetarian diets have market traction in many higher income countries (they’ve never lost it in emerging countries where meat is still a relative luxury food) and the proportion of the population claiming that they follow vegan or vegetarian diets is edging up, albeit slowly. Much of the media hype revolves around consumers eschewing real meat and embracing “fake” meat yet, in the market place, this isn’t the case. In the USA, plant-based meat sales have declined 7 months in a row. Plant-based heavyweight Beyond Meat’s Q3 sales were down 16% year-on-year and its share price as of January 3rd 2022 was one-third of its top value in January 2021. Meat substitute products festoon supermarket shelves but sales of many are floundering. What’s the problem? Shock horror! Many fail to deliver on taste and texture, are increasingly perceived to be “over-processed”, are criticised for being unhealthy, not least because of high salt content, and are expensive relative to “the real thing”. European sales of plant-based meats have been rosier. Beyond Meat has provided the patty for the successful launch in the UK of McDonald’s McPlant burger. The USA could be a harbinger of future demand, although, perish the thought, it may be that our continued strong demand for meat substitutes indicates that European taste buds are less refined than our trans-Atlantic cousins.

Tentative although future demand for fake meat may be, venture capitalists haven’t been shy at throwing money in the direction of prospective plant-based unicorn companies – Impossible Foods is purportedly valued at $7bn, although it’s yet to make a profit. It has raised $2bn of development finance over 2 years, and 10 other plant- and cell-based food companies each raised $100+m in 2021. There may be tears before bed time!

Thumbs down for plant-based foods? Far from it, they have excellent market prospects. Tasty, healthy, convenient, affordable plant-based meal and snack solutions are and always have been on the up. The best of Big Food (e.g. Nestlé, Unilever) are investing heavily in the sector through their own NPD and via acquisition, gobbling up nimble start-up companies. Their major competition will come from private label manufacturers for major grocery retailers – Tesco’s Wicked Kitchen and Marks & Spencer’s Plant Kitchen are in the van. Implications for the meat industry? In higher income countries with current high levels of per capita meat consumption, we’ll slowly eat less meat, particularly beef. Those more comfortably off, however, will eat “better” meat and the definition of “better” will be a topic hotly disputed!

Lidl’s “veganuary” aisle in UK
One of the new Wicked brand products that Tesco presents for the Veganuary 2022

Bolting is a term applied to vegetables when they prematurely run to seed.  Humans have a tendency to do so, too and are chastised for such every New Year …. and, particularly this year as waist lines expanded after months of working from home accompanied by surreptitious snacking! Our Lock Down promises to eat healthier came to nought in the UK where average weight gain through the pandemic has been 3+kg – 2 out of 3 adults and 1 out of 3 children are overweight or obese and the NHS and tax payer stump up £6bn/year treating weight associated ill health.

The Centre for Food Policy report for the UK Government’s obesity research unit warns that “easy access to and availability of unhealthy food 24 hours a day across the UK makes losing weight difficult for millions who are trying to reduce weight – we eat more because food is easily available and its proximity triggers us to want food more often”. It’s a particular problem for those on low incomes as cheap, unhealthy food is more likely to be promoted in shops and supermarkets. It’s the dark, other side of the coin problem associated with the hyper-competitive UK food retail sector which in most respects deserves applause from consumers for delivering low food prices for food overall, whether it be healthy or unhealthy. Should Tesco be scolded for offering an Aldi Price Match “Hearty Food thin pepperoni pizza for 67p ($0.90)?!

The UK Government has an obesity reduction plan which many view will fail in the face of a perceived junk food culture and where consumers are “bombarded by unhealthy food options”2. Food high in saturated fat, sugar and/or salt and deficient in fibre, protein and other good stuff is broadly defined as junk! Later this year, junk food advertisements will be banned on TV and the cinema (and online) prior to 9pm and promotions such as BOGOFs and aisle end placements of HFSS products will be illegal. Health activists call for fresh fruit & vegetables to be discounted but aren’t they already? Basic fresh produce prices are astonishingly low, just ask any fruit & vegetable producer.

Obesity is as much a pandemic as Covid-19 and removing the problem is as complex. A multitude of factors are key contributors, including: genetics and biology; household income; financial insecurity; deprivation; weight stigma; access to opportunities to be physically active; cultural norms; food prices; portion sizes; food and cooking education; food availability (e.g. food deserts); life experiences; food advertising and promotions; mental health; access to treatment and support.

Global problem although obesity is, its incidence varies hugely – across the OECD countries, 40% of USA adults are obese versus 4% of Japanese adults. In the so-called developed world, food industries should steel themselves for a plethora of government-imposed measures to combat the problem ranging from soft touch bans on food promotions and placement, through mandatory health warning labels on food at retail and in restaurants, to hard-edged taxes on foods high in fat, sugar and salt.

Veganuary will come and go and our promises to reduce our waistlines will evaporate like snow off a dyke. In this first quarter, supply chain disruptions caused by Covid-related labour shortages will cause food industry challenges and irritate pampered consumers. But the global food issue that will dominate the headlines throughout the year will relate to escalating food prices. The FAO Global Food Commodity Price Index for 2021 was 28% above that for 2020 and these food price inflationary pressures have by no means passed through to global retail food prices.

Higher basic food commodity prices are very welcome for farmers but rocketing farm input prices are not! “UK farmers braced for spring fertiliser crunch after prices triple” shrieked The Financial Times, but it’s a global problem and particularly for poor small-scale farmers in the emerging world who produce the majority of the food for their burgeoning population. Fertiliser use will be down causing yields to decline and continued upward pressure on food prices at retail. Container freight rates will remain stickily high for much of the year – we import 40% of our food in the UK! General inflationary pressures abound around the globe – in the UK, household incomes will be under stress as energy prices remain at high levels and tax rates (i.e. National Insurance) increase. Consumers will look to trim their budgets on items on which they have flexibility like food items. Watch out for: full on food retail price wars in many countries; and political turmoil particularly in lower income countries – when staple food prices spike, the huddled masses take to the streets (and even the seeded sour dough and matcha tea brigade get peevish).

We’re set for a rough and tumble, challenging year for those in the food industry and for food consumers. It will require companies and households to be resilient with resilience defined as “the capacity of dynamic systems to adapt successfully to challenges that threaten their function, survival, or future development”. Looking at how largely adeptly the global food system has handled the unwelcome Covid pandemic, we believe the global food industry can cope in spades with what’s coming our way in 2022. Happy New Year!

David and Miguel

January 6th, 2022        

Posted in Uncategorized

Headline News About Food Security and Environmental Impact Present Challenges and Opportunities for the Food Industry

Posted on November 5, 2021 by Prof David Hughes & Miguel Flavián

Dr. Food is an inveterate reader of the weekly influential current affairs periodical The Economist. In history, it was always a Saturday morning treat to sit down with the magazine and a coffee and be immersed in the brilliantly written ways of our world. Now, of course, saving the planet and the pocketbook, it’s read online anywhere anytime! Items on food proliferated on the issue for Oct. 2nd. A decade ago, items of news on agriculture and food were exceedingly sparse. It’s a measure of the burgeoning importance of and widespread interest in issues such as food security and the impact of food production on climate change that this journal is increasingly peppered with food-related articles. Here’s a flavour from that week:

  • “Treating beef like coal would make a big dent in greenhouse-gas emissions”! The article has an eye-catching graphic on CO2 emissions (see below) which shows beef far exceeding arable crops, albeit with rice higher than cow’s milk, pork and chicken and, bizarrely, higher than Japan and air travel prompting the whimsical thought that, if “seeking to save the world”, one could keep on flying but give up beef!
  • The finger is pointed at cattle for emitting methane and accounting for two-thirds of beef’s total GGE. More controversially, 27% of emissions are attributed to land-use changes, such as clearing land for grazing and growing feed. Of course, this provokes an incendiary reaction from those producing grass-fed beef, particularly on land that is perfect for pasture and, through improving the quality of the soil, actually increases the capacity for the land to sequester carbon! 

Source: The Economist.

The same edition of The Economist included: a “Leader” on the roles of new technology and government regulation in “New Foods”, sitting alongside other leaders on high profile issues such as political clampdowns on technological behemoths in China (e.g. Alibaba and Ant Group), and an aquacultural review of “seaweed at scale” and its food and carbon sequestration uses. 

The 2021 UN Climate Change Conference (aka COP 26) is on now in Glasgow, Scotland. You can hardly miss it as it’s dominating the media.  COP is the decision-making body responsible for monitoring and reviewing the implementation of the UN Framework Convention on Climate Change whose objective is to “stabilize greenhouse gas concentrations in the atmosphere at a level that will prevent dangerous … global warming”. It’s a big deal and many of the big political and business names are attending. In the previous weeks leading up to the meeting, countries and companies released statements relating to their promises and programmes to reach carbon net zero by 2050 or before. Mars, the privately-held food company, is one example:

  • Mars has pledged fresh climate action to achieve net zero emissions across its full value chain. This isn’t just a Mars commitment. The company has 20,000+ suppliers and together they are promising to eliminate deforestation, transition to 100% renewable energy and much more! The clear implication is that Mars is and will continue to rationalise its supplier base to deliver its promises. Palm oil is a case in point – Mars is sourcing all from those certified by the Roundtable on Sustainable Palm Oil (RSPO) – the number of palm oil mills that it deals with has been slashed from 1,500 to fewer than 100 and their names are in the public record and all are RSPO-certified. In Asia-Pacific, 1 mill has replaced 780 smaller ones reminding us that reaching net zero may not be small business-friendly! Mars is using a combination of satellite mapping to monitor land use and 3rd party validation by the not-for-profit AidEnvironment.
  • Mars is joining the Science-Based Targets Initiative’s (SBTI) “Business Ambition  for 1.5C Pledge” and  the Race to Zero. Its managers should take good note – executive pay will be linked to Mars achieving environmental targets! The corporate focus will be on:
  • Absolute emissions’ reductions across its entire GHG footprint including ALL scope 3 emissions such as business travel, customer emissions, use of sold products and product end-of-life (i.e. disposal and recycling of final product & packaging), and setting 5 year milestones to drive action and track progress;
  • Elimination of deforestation in its supply chain;
  • Challenging its 20,000+ albeit diminishing suppliers to deliver GHG value chain emission reductions;
  • Publishing a full net zero roadmap by 2022 to align with the anticipated SBTI rules on net zero commitments by the end of 2021.

Linking executive pay to achieving environmental targets shows how ingrained these objectives are within the company. The cost of some other companies’ borrowings are linked also to their environmental performance. British grocer Tesco attracted loans of £5bn at the beginning of the year. The interest paid will drop if the company achieves its targets related to Scope 1 and 2 emissions. They aim to be a Net Zero Carbon business in the UK by 2035 (15 years ahead of the UK as a country) and by 2050 for their entire international business.

Another recurrent line on the environmental news is the GGE impact of global meat and dairy production on climate change.  The global meat and dairy industries are a soft target – pardon the pun but it’s “Easy Meat” for the “Green” lobby. Who isn’t going to defend the future of our planet and the wellbeing of cute farm animals when we’re told that the livestock and meat industry is causing problems? Particularly when anti-cattle activists are so zealous, passionate and increasingly professional about getting their side of the story across; whereas the pro-meat and dairy protagonists are, often, grumpy and focus on scientific arguments to support their case when most consumers are swayed by their emotions and side with those who seem to understand and share consumer citizen values. Most people prefer simple “facts”, too and, unfortunately, there’s no one global livestock production system and explaining life cycle assessment for meat products from the growing of livestock feed through to the disposal of leftover meat products and packaging, whilst not rocket science, is far from being simple!

Most pro-meat and -dairy groups do need to up their game on convincing consumers about the relevance of their products in the third decade of this century. It’s a VERY tough job and regularly made tougher by news coverage revealing the stark reality of producing farm animals that we then slaughter for our own consumption! You can see why, particularly younger people, might be swayed by vegetarian/vegan arguments and embrace plant-based products which mimic meat and dairy products.

Meat and dairy “bashing” may be fashionable but there’s plenty of initiatives abroad to redress these controversial issues, and find new processes that improve the sustainability of their operations and reduce their environmental impact:

  • Norwegian agri-tech company N2 Applied has been working on an EU-funded trial with Danish international dairy company Arla on its UK “Innovation Farm” using a scientific technique that applies air and electricity to slurry that “traps” methane and ammonia and, via a N2 plasma unit, converts cow manure into “sustainable fertiliser”. The N2 unit can eliminate harmful ammonia emissions (which reduce air quality), eliminate greenhouse gas emissions from methane, and enriches the nutrient content of livestock manure.
  • Earlier this year, Arla shared the output from the 1st year of its landmark Climate Check programme. Manure management was highlighted as one of the 5 main levers that will have a positive effect in supporting farmer cooperative Arla’s commitment to a 30% reduction of on-farm carbon emissions by 2030 and reaching carbon net zero farming by 2050. The challenge is to take these findings and find ways of making them work on a practical and affordable level on-farm.
  • The plasma-treated fertiliser converted from slurry using the N2 unit was independently tested when applied to winter wheat and found to reduce ammonia emissions by 90% compared with untreated slurry. Treated slurry produced on-farm has the potential to reduce the need for chemical fertiliser thereby reducing GGEs. IF N2 units were adopted across the UK dairy herd, they could deliver 17-21% of the UK’s National Farmers Union emission reduction targets for livestock. N2 Applied views that 1 N2 unit, working on a farm with 200 dairy cows, can reduce and remove a total of 183 tonnes of CO2 per year.

Back in 2016, the Brades family farm in Lancashire, UK, launched “The Original Barista Milk” for cafés and coffee chains to differentiate itself from commodity milk and to establish that premium “real milk” was better than the up and coming plant-based milks which were becoming fashionable with coffee drinkers (plant-based milks have a 10% milk market share in the UK).

As the “anti-dairy/milk” lobby switched their arguments for ditching cows’ milk for plant-based substitutes from animal welfare and human health to climate change concerns, so did the Brades family farm focus on reducing the carbon impact of its business. The result was a partnership with biotech startup Mootral which has developed a garlic-based livestock feed pellet that reduces methane output from cows by 30% – the pellets work by disrupting methane-producing enzymes in the cow’s gut.

Mootral is not alone in its methane reducing endeavours, UC Davis in the USA has found that some seaweeds in the cows’ diets can cut methane emissions by 82%. Royal DSM has recently received regulatory approval from Brazilian and Chilean agricultural authorities for its supplement Bovaer which, it is claimed, can cut methane emissions by up to 30% for dairy cows and 90% for feedlot cattle reared for beef. And, serendipitously redolent of Covid solutions, Cargill is trialling a methane-reducing mask for cows (90% of cattle methane emissions come  from the mouth and nostrils), and an anti-methane vaccine is being researched. 

The feeding of additives may work in developed countries where dairy and beef cattle may be fed indoors or fenced in but it’s more challenging in emerging countries with thousands of small-scale livestock producers who largely graze their animals wherever they can find grass. These countries contribute 70% of emissions from ruminant animals worldwide! As their household incomes rise, so will meat and dairy consumption exacerbating emissions’ problems although, agricultural development leading to increased farm sizes and changes in production systems may help.

There’s lots of international initiatives focusing on helping the global dairy industry edge towards a substantially reduced carbon emissions future. Arla and 10 other global dairy companies (e.g. Royal FrieslandCampina, Fonterra, Nestlé, Mars), plus other businesses in the dairy sector launched “Pathways to Dairy Net Zero ” in September just prior to the UN Food Systems Summit. Its focus is on accelerating climate efforts already underway and driving further necessary actions to reduce dairy’s emissions over the next decade.

Some critics of methane reduction products take the view that they’re no more than “greenwashing” and the best solution to reducing methane from cattle is just to eat less meat and dairy!

We’re going to see accelerated change in the global agriculture and food industry over the remainder of this decade. Our industry will be substantially “greener” to the good of the planet and to our businesses as the proportion of consumers rises inexorably who recognise that, through their purchasing decisions, “the power is on their plate”. Diets will change albeit slowly. Heavy meat and dairy eating countries will seek moderation, as others increase consumption of these aspirational foods. New foods will arrive but take ages to become established on our meal tables! “Story” foods will focus on provenance, seasonality, authenticity and the artisan. Working and school week foods will be better versions of what we woof down now – tasty, convenient, affordable and more understanding of evolving 21st century consumer values. All new? No – strikingly similar to our great-grandparents – eat what’s on your plate, don’t waste, respect the food producer, eat what’s in season! With food shopping and eating, there’s heart-warming circularity. We got seriously off track over the past century or so. Or some of us did in higher income countries. But consumers and the industry that feeds them may be slow to change, but they’re not stupid and, now, we seem to be juddering in a better direction for all concerned. 

Posted in Consumer, Credentials, Sustainability

Grocery Shopping Decisions are Becoming More Complex. Help is At Hand: There’s an App for That!

Posted on September 14, 2021 by Prof David Hughes & Miguel Flavián

Many consumers have the very best intentions when it comes to buying food for their families – they want the healthy one and, increasingly, the one that’s better for the environment. But, bless us, we want these good attributes if they’re convenient. We thought we’d take a look at some more recent developments that are designed to make the increasingly complex business of shopping easier. 

Nutri-scores and Enviro-scores with traffic lights – red through green – are coming and at pace. That’s got to be good for consumers concerned about their health and the health of the environment and it’s in the same direction that governments are pushing health and climate change policies. But will shoppers understand them and/or will the traffic lights be lost amongst the plethora of marketing and regulatory required information on pack when most shoppers only apportion a few seconds to each grocery purchase? IGD research in the UK indicates that many consumers are confused by nutritional traffic light labels but, one thing is certain, dealing with complex matters relating to nutrition & health and, maybe even more complex issues relating to a product’s environmental/animal welfare/social impact, there’ll be no perfect system. For those consumers who have the time and inclination to check out food and drink products they wish to buy based on their performance on both health  and on tricky social issues, then, “there’s an app for that”! Here’s 4 of the higher profile ones:

  • Yuka – the “mightiest” of European shopping apps which covers 1.5 million products of which 70% are food and drink (the rest are cosmetics) and has 20 million users in 11 countries across Europe. In France, each product is actually given a Yuka enviro-score;
  • Giki – awards product badges, based on data provided by the manufacturer and referenced against 30 subject matter expert partners, such as RSPCA (on animal welfare), RSPO (sustainable palm oil), Fairtrade and the Rainforest Alliance;
  • Setai – carbon emissions are the main concern of this app and users can see how much a product contributes to their daily “carbon budget”. Soon, the app will offer users the chance to offset their purchases through reforestation. In addition, it scores each food product out of 10 on health;
  • Food Switch – developed by the George Institute for Global Health, users can filter by health concerns and get alternatives based on whether reducing salt, fat or sugar is a priority.
What about the reliability of the Yuka application? - Les Petits Plats d'Arthur
Source Yuka

These apps are performing the role of a “trusted third party” who is not linked to a retailer or a brand at a time when, increasingly, consumers are confused by “green” claims and suspect companies (particularly the bigger ones) of “greenwashing”. As these apps gain traction with consumers, it will certainly push manufacturers to up their game relating to their products’ health and social impacts. They may disagree with the scoring systems used by Yuka et al, but if their products generate glaringly red traffic lights on the apps, it will have a profoundly detrimental impact on sales, at least sales to the app users!

Avoiding food waste has moved closer to the top of consumers’ agenda during the pandemic.Ten years ago in the UK, discounters gained the favour of an increasing proportion of shoppers vis-à-vis traditional supermarkets. Discounters focused on everyday very low prices, supermarkets looked to drive volume and value through BOGOF (Buy One Get One Free) and “3fers” promotions that led to increased food waste. We’ve moved on since then. In fact, the UK Government is introducing regulations to ban such multi-promotions albeit specifically for “junk food”. Now, there is great pressure along the supply chain both to avoid waste and to save money!

Of course, good retailers have long been assiduous in reducing in-store food waste – it’s a “no-brainer” as dumping unsold food is a double cost (cost to buy and cost to dispose).  Supermarkets often have an effective multi-tiered approach: discount what is slow-moving and edging towards its Best Before date; if it still doesn’t sell, use any of the available Apps that connect your food with consumers avid to get products with a discount, or send it to a Food Bank to help feed the deprived. Distributing through the Too Good To Go App can generate some revenues (and it is widely used by restaurants, especially during pre pandemic times) and as a last resort, give it away via the Olio App, that connects the supermarket with volunteers that will collect the food, upload the details on the Olio App and then give it to those that claim it. The Olio App is gaining traction – its British and American co-founders have just raised £43 million to expand internationally and have a Big Hairy Audacious Goal of attracting 1 billion users to the App by 2030! 

But, in fact, food waste at the retail level is very small compared to waste in the consumer’s home and there are also interesting developments to help consumers reduce waste. The UN’s Sustainable Development Goal (SDG) 12.3 aims, amongst other things, to halve food waste at consumer and retail levels. Being part of the solution will be a high priority for high profile grocery retailers who will come under increasing pressure from government and consumer activists. As importantly, helping consumers reduce food waste builds trust and concomitant loyalty between retailers and their customers. 

Plant Jammer (PJ) is best known for its AI-powered cooking assistant that helps users create recipes from the existing inventory in their fridges and pantries. The idea is to provide consumers with more ways to use all of their at-home food, so less waste goes into landfill. The pandemic has fuelled interest in its use. PJ has just added an “Empty Your Fridge widget” which it is licensing to third parties who can build customised experiences for their own customers – for example, a consumer can simply select the ingredients they have in their fridge and, via the  widget, receive a customised recipe from the licensed third party in return. Users can input preferences and dietary concerns which will be reflected in the recipe. Aldi Sud and RIMI Baltic (owned by Sweden’s major retailer ICA) are among the first major food companies to implement the food waste-fighting widget on their web sites so that their customers can track and manage food waste in their own homes.

Source Plant Jammer

USA supermarket chain Kroger has launched an AI-powered Twitter recipe tool, Chefbot, for helping consumers come up with recipe ideas using leftovers and food items lurking in their fridge! Here’s how it works:

  • Snap – snap a photo of 3 ingredients from fridge/pantry;
  • Tweet – photo to @KrogerChefbot and thousands of possible recipes are scanned to come up with meal ideas!;
  • Cook – within seconds, you’ve got personalised recipe recommendations with instructions.

Chefbot fits in well with Covid-induced cooking behavioural changes and can be very useful in expanding the often limited recipe repertoires of many household meal preparers. A UK environmental charity Hubbub survey shows that 57% of consumers value food more now than in the past, and almost half are more worried about food, not least wasting it, than in pre-Covid times. When you’re home all day, you’re in closer contact with your fridge and its contents!

We’d wager that food waste in the home has increased in many countries as household incomes have increased, cooking skills declined, and principal meal preparers, often women, took employment outside the home. Chefbot and Plant Jammer Apps are designed to give home cooks inspiration and practical cooking tips.

Is grocery shopping simpler now? NO. There’s more products, more channels, more social issues that we must check before purchasing. Is it slave-free? Animal welfare-friendly? What’s  the environmental status? Who produced it and where and how? On top of all this, Brenda is vegan and John is trying to cut out dairy and thinks he’s gluten-intolerant. It’s a nightmare! As a result, we need help and there’s an app for that which might sit pretty with Generation Z app natives but it adds challenges for those who are less digitally adept. Nutritional and environmental apps will have their place but only for a minority of shoppers. We think the front-of-pack nutri- and enviro-scores are more likely to have a significant impact on purchasing behaviour and both these will lead to substantial reformulation of thousands of food and drink products as manufacturers seek to avoid the red traffic light scores for their products. 

The pandemic lockdowns have increased our screen time, so there is no wonder that startups and big companies have seen an opportunity here to be more relevant, especially for younger shoppers. If your digital offers and services are easy to access, helpful and respectful of users’ privacy,  they’re terrific business tools that can build the trust and the longer-term loyalty of your customers.

Posted in Consumer, Health, Trends

Will Work Patterns Have Changed Radically Post-Covid Or Will We Drift Back to Previous Work Behaviours and What’s the Implications for Food Businesses?

Posted on August 2, 2021 by Prof David Hughes & Miguel Flavián

In the Northern Hemisphere, Summer is here, our Covid-constrained world is opening up, courtesy of extensive vaccination programmes and notwithstanding the continued ravages of the Delta variant. The feelings of fatigue, wanting to mix with friends and colleagues, travel for work and leisure are palpable. Yet, we can see from the labour shortages in key industries, not least in food, that the pandemic “ain’t over ‘til it’s over” to quote baseball player and American 20th Century philosopher Yogi Berra! As we claw back our lives to some sort of normality, will our work habits have changed irrevocably – specifically, eschewing daily commuting to the office and working much more from home – or will we slip back to pre-pandemic work patterns?

For those who were paid to be at home during the lockdowns and didn’t have to fight for financial survival, there was an element of novelty and opportunity to relearn how to cook and do so from scratch, to eat more healthily and, of course, we could start that exercise programme that had been lounging, gathering dust on our “Must Do” list for years. In 2020, the aroma of banana bread and sourdough loaves pervaded the leafy suburbs from April through to the Autumn. Then, in October, we realised that Covid was with us for the longer haul. Our enthusiasm for jogging, sit ups, and cooking meals “like Mum used to make” waned, Deliveroo, Uber Eats, and Just Eat became more frequent visitors to our homes and waistlines expanded. Survey data for the UK shows that Brits gained, on average, 3kg each, through the 2020/21 pandemic period. 

So, how much of our in-home incarceration will stick? Good USA data suggests that “confident cooks” and “cooking enthusiasts” (those who are gung ho but tentative) expanded their home cooked meal repertoires substantially and accounted for a huge proportion of the incremental Covid period retail purchases of premium meat and seafood as they sought to replicate favourite restaurant meals at home. However, 70+% of households soldiered on with menus having a recurring theme of minced (ground) beef and chicken.

Online grocery shopping is sticking, albeit its rate of increase has slowed relative to the dark days of full lockdown. Working from home (WFH) makes the reception of your online groceries easier – there’s somebody in – and the arrival of Mr. Tesco is even a mini-event to lighten your day! Clearly, WFH is good for the local corner store and it may fuel a renaissance of local artisan bakers and see growth in local coffee shops – good for small businesses and the local community, as well as giving the at home worker an opportunity for light exercise and a chat with fellow workers from different professional backgrounds. It’s not good for the Food-2-Go outlets which are scattered, eerily empty, around the office high rises downtown. 

These are challenging times for the likes of previously very successful chains such as Pret. However, all is not lost. Kantar data for the UK shows that WFH and home schooling explained around 20% of the uplift in lunch and dinner at home occasions during the peak of lockdown. Kantar projects that meal occasions at home in Q1 2022 will be 10% up on the same period in pre-pandemic 2019 – that amounts to a good slug of revenue potentially lost for F-2-G businesses but not enough to sink them. 

Recently, PepsiCo announced a new corporate policy embracing work flexibility – led by shifting half of its office staff to working from home permanently. The company notes that employers offering flexible work see a 15% increase in productivity, 31% less absenteeism,10% less staff turnover, and the policy will attract high calibre staff. The “Work that Works” programme will let PepsiCo scale down its real estate footprint by 15%, which it says will lead to less waste and lower energy use. Fifty percent of office staff will work remotely at any time, and that for every 100 employees who work from home twice a week, it will save 70 tonnes of Greenhouse Gas Emissions (GGE). Working from home staff will be able to reserve a workspace or meeting room via a mobile app, while occupancy sensors and integrated meeting technology will assist in scheduling meetings between in-person and virtual groups.

Asda, the UK’s Number 3 grocer (formerly owned by Walmart), has also announced flexible working measures taking a “hybrid” approach: 4,000 of the supermarket chain’s HQ staff can choose to work from home, the office or from space in its shops and depots. Coming to HQ is recommended for training and key meetings.

We are still waiting for more food businesses to clarify publicly what are going to be their work policies as restrictions are eased, but it seems that “flexibility” will be mentioned frequently! McKinsey and Co suggest that finance, management, professional services, education and the information sector have the highest potential for remote working. Deloitte UK agrees and its staff will be able to work wherever they want when Covid restrictions are eased, with no requirement to work a minimum of days per week from the office. Deloitte has conducted research in the USA’s food sector finding that 60% of top management agree with allowing employees to choose working from the office or from home. Although 25% of them were expecting everyone back to their desks once it’s allowed. The expectation is that hours worked remotely in late-2021 and 2022 will be about double that of 2019.

Source: Deloitte USA

Of course, working from home won’t appeal to everyone. Younger workers are more attracted to the office – it’s more social, an opportunity to learn the tricks of the trade from more senior staff and, indeed, to interact directly with line managers to show them how quick, smart and enthusiastic they are! Employees with families may value spending more time at home to give them a better work:life balance (there again, they may be pleased to get away from the maelstrom and grind that can be family life!). Of course, for those working at the coal face in processing plants and retail stores, working from home isn’t a realistic option. What’s more, they’ll resent those working from home in their slippers and feel more like the worker bees having to head out into the rush hour traffic every morning and night.

As we all know, change is inevitable and we’re just experiencing an accelerated period of change. With it comes new opportunities. One result of this in the UK is an explosion of businesses connecting home cooks with hungry diners. The UK Food Standards Agency estimates that 44% of new ventures registered from March 2020 are run from domestic kitchens. New electronic platforms have emerged – All About the Cooks, NoshyCircle, Grubie – taking around 12-15% commission linking domestic chefs with closely located diners. Most domestic cooks will be part-time, work flexible hours and earn a helpful income on the side.

What can we conclude about WFH in the post-Covid era? There’ll be more of it, working location will be substantially more flexible than in the past and it will be disproportionately a benefit on offer to those that, in history, worked from offices – ranging from the “professional classes” to online platform gig workers. It will pull workers and their families from the larger cities seeking better lifestyles and more affordable housing in more rural surroundings. In turn, this will bring pressures on rural-based businesses (many of them in agriculture and food) with employees who, already, face challengingly high house and rental prices fuelled by weekend 2nd home owners. 

Ostensibly, the UK Government has a major policy to “level up opportunities across all parts of the United Kingdom”. The idea is that people and communities that feel they have been left behind get a chance to catch up. In truth, a combination of WFH and pervasive availability of 5G would be a huge boost to accelerating “levelling up”. This is much needed as we recover from the ravages of Covid-19 which has served to polarise household incomes (“haves” and “have nots”) across the UK and in most other countries.

The longer-term impact of the pandemic on the food service industry may be profound. The UK government’s furlough programme gave thousands of restaurant staff a taste of home life and being paid to be there, rather than working the unholy hours that are characteristic of this sector. There are clear signs that many are reluctant to return to restaurant work exacerbating the vacancies that are evident from the aftermath of Brexit (when particularly Eastern European workers exited the UK en masse). Reducing the requirement for labour in restaurants and food service outlets will be a feature of the future and reflected in a focus on automation and reduced complexity menus for many food service businesses. 

Posted in Consumer

Organic Food Sales Surge During the Pandemic and are Part of a “Green Wave” Supported by Governments Across Europe

Posted on June 24, 2021 by Prof David Hughes & Miguel Flavián

Consumer concerns about protecting and improving their health and the health of the planet are twin trends that have been accelerated during the pandemic and both have a big significance for the food and drink industry. Our food purchases are being influenced by a desire to have healthier diets and we’re willing to apply cooking skills improved by enforced practice during Lockdown, notwithstanding that scratch cooking fatigue is evident as we limp into the middle of the second year of coping with Covid-19! There is growing awareness that all of us, through such actions as being selective in what we eat, reducing food waste, conserving and recycling resources such as packaging, can be part of the solution rather than the problem relating to climate change and reducing the damage to the global environment.

Indubitably, the halo of dietary and environmental health surrounding organic food has helped drive its popularity in many markets.The organic food market in the USA saw solid growth year after year in the first 2 decades of this century and, then, the pandemic struck and the rate of growth accelerated by a record 12.8% in 2020 to a new high of $56.4bn. Almost 6% of the food sold in the USA last year was certified organic. Pre-Covid, 82% of consumers surveyed bought organic food and drinks at least monthly, 18% weekly and 11% daily, with Millennials the group most likely to purchase.

The top 5 reasons for purchase of organic food in the USA are:

  • safer for me and my family; 
  • to avoid pesticides and other chemicals; 
  • to avoid antibiotics and growth hormones;
  •  to avoid GMOs;
  • and its perceived higher quality.

This is worrisome as it indicates concern about the  safety of “regular” food. The aspiration, not unreasonably, is to eat food that is closer to its natural form and less changed by human manipulations – sentiments that have been reinforced during the pandemic. The label organic is seen as promising “GMO-free” and contributes to the attractiveness of organic food for many as GM products are very far from popular!

US retailers have been quick to promote organic private label products during the pandemic as organic food represents an unique intersection of perceived quality and value and the store brand association with an organic label shines a positive light on the store brand overall (e.g. Kroger’s Simple Truth organic products). Such products are increasingly seen in the centre aisles that house categories further down consumers’ adoption pathway of organic items (i.e. moving along from fresh foods which are core organic lines to canned  food and non-food items). Shoppers see private label organic products being as good quality as branded ones but have the advantage of being lower priced.

In the UK, a surge in demand from locked-down shoppers helped sales of organic food products rise by 13% in 2020, the highest growth level in 15 years. Canned and packaged organic food grew the most (20%), followed by meat, poultry and fish (17%). But, total sales are still only at a modest £2.8bn (<$4bn). On a per capita basis, organic food sales in the UK are one-third of equivalent US sales. In the UK, close to 20% of organic sales from supermarkets were online indicating that younger, higher income shoppers are key customers for organic products. In Germany, the largest organic market in Europe, we have seen a similar picture:  the organic market growing at double speed of the conventional market (22% y-o-y growth in supermarkets) to reach a record 15bn EUR in 2020, and a record share of the market of 6.4%. Poultry, with a 70% growth, and red meat, 55%, were leading the pack.

In the UK, the pandemic has led to a greater appreciation of food, in general, and organic food, in particular, is seen as being sustainably produced, i.e. good for the planet. Effective lobbying by farm groups and consumer activists concerned about future trade deals with powerhouse food exporters such as the USA and Australia has fuelled consumer concerns about “industrial” farming practices. Such practices are perceived to threaten UK food quality and  safety standards should they be given untrammelled, tariff-free access to the British market!

The favourable consumer view of organic food within the EU sits well with some powerful EU politicians, not least the EU Commissioner of Agriculture. As part and parcel of the EU New Green Deal in a post-Covid world, targets have been set to reach 25% of agricultural land under organic farming and 25% of food production by 2030 across its 27 member countries. Currently, 8.5% of the bloc’s agricultural land is farmed organically but there’s considerable variability by country ranging from 0.5% (Malta), to 25+% (Austria). Ex-EU member UK, with 2.6% and Ireland with 1.6% are in the European “naughty corner” for organic land use. Four member states accounted for more than half of all organically farmed land in 2019: Spain (17.1%), France (16.2%); Italy (14.5%); and Germany (9.4%). Together, they had 57.1% of the EU-27 organic area. Sweden has the highest proportion of its cereals and vegetables produced organically – 6.5% and 19.5%, respectively.

The organic food production and consumption component of the EU’s Green Deal has the intention of “restoring balance in our relationship with nature”. The plan has 23  actions structured around 3 axes: boosting consumption – through helping consumers make informed choices; increasing production; and improving the sustainability of the sector.

Is this just a nebulous plan which will be blithely ignored by commercial farmers? NO – it comes with financial support for growers! The 2020 total  EU budget was €168bn, of which 35% (€59bn) was destined for agriculture, rural development and fisheries. Further, there’s significant “green” political support in some EU countries (e.g. the German Green Party is mainstream).

Digging into the agricultural statistics, more than three-quarters of “farms” in the EU are less than 10ha (in fact, the majority are <5ha – little more than gardens!) so the splash of agricultural support money will reach a lot of voters. But farm numbers are declining sharply – between 2005 and 2016, falling from 14.5m to 10.3m. Over this period, more than one third of livestock and poultry holdings disappeared in France, Germany and the Netherlands. The EU Agriculture Commissioner (Janusz Wojciechowski) is bound and determined to halt the decline: “the European food sector in the past was based on small farms, and it should be in the future as well”. A mental picture of King Canute sitting on his throne at the seaside attempting to turn back the oncoming tide comes to mind! 

On financial support to the EU farm sector, the stark reality is  that 80% of direct subsidies go to just 20% of the larger-scale farmers which incenses the green lobby. Providing some degree of mollification, CAP reforms are being introduced to encourage farmers to leave more space for wildlife, adopt organic standards for livestock, with the intent of using less chemical fertiliser and pesticides, and to nurture healthy soils. The Commissioner believes that “Small farms can ensure food security for EU citizens and deliver environmental benefits”. Over the past 25 years, farmland birds and insect numbers have plummeted. His view is that food exports are important but not as much as producing EU food for EU consumers. Implicit in his arguments is that smaller-scale producers are more likely to be environmentally friendly than the larger-scale. Environmental campaigners remain hugely sceptical of any significant change to the CAP, let alone radical change, arguing that funds will continue to flow to the biggest, most polluting farms with barely any “green strings” attached.

Now, having exited the EU, the UK or, at least, England, is taking a different tack. It’s withdrawing over time the direct farm payment subsidy and replacing this with “public payment for public goods”, essentially paying farmers via the Environmental Land Management Scheme (ELMS) for providing citizens/taxpayers with environmental and social goods and services on-farm. International competitors may shrug and say “Ah, just another set of disguised farm subsidies”!

A new radical UK government initiative being proposed is to pay older English farmers to retire thereby attracting new, younger entrants into the industry. It’s proposed farmers could be paid up to £100,000 ($140K) if they rent out, sell or give away land they own, or if they surrender a tenancy. The rationale is that older farmers are more likely to be resistant to changing production systems to be more environmentally friendly whereas younger farmers may be more open to new “green” methods. In contrast to the EU vision, this approach may well accelerate the exit of small, uneconomic farms from food production, particularly given that the average age of UK farmers is 59. Don’t stand in the doorway, there may be a rush!

The direction of EU and UK agricultural policy is increasingly and, in most respects, encouragingly “green” – with the focus on environmental and animal welfare aspects. This may increase costs albeit whilst adding social benefits. The accepted wisdom is that EU/UK food products will be of “higher quality” and, therefore, must be protected from lower cost competitors who are producing food of “lower quality”. This will seriously complicate the completion of trade agreements with international food exporting countries such as the USA, Brazil and New Zealand – often, in international trade negotiations, agreement on agricultural and food items become the tail that wags the dog ensuring that the speed of completion of comprehensive trade deals are glacial. 

The deal with Australia seems to be close to “done and dusted” leaving many UK farmers incandescent with rage. In truth and fact, the “Aussie Deal” will have very limited immediate or even medium-term impact on UK producers but their concerns are that this agreement is “the thin edge of the wedge” opening the gates for a veritable flood of chlorinated American and Brazilian chicken and red meat “doused in hormones”! This story will run and run. The longer-term implications are that the EU and the UK may well build a protective “green wall” around its borders and this will have strong consumer support. However, EU and UK food exporters will likely have to face “tit for tat” rebuffals from those countries that are not well pleased with their food exports being labelled substandard! The result may please many Europeans – viz., an increase in food self-sufficiency in the EU and the UK – but not, perhaps, classical economists who promote the advantages of international trade and comparative advantage!   

Posted in Credentials, Health, Sustainability, Trends

Is Big Food and Grocery fast becoming “Little Goody Two-Shoes” on ESG matters? Lobbying the EU and Brazil!

Posted on May 13, 2021 by Prof David Hughes & Miguel Flavián

A group of 40 influential European food industry companies, including major retailers Ahold Delhaize, Aldi, Lidl, Migros, Sainsbury’s, Tesco and some of the big names in UK’s meat sector like Moy Park, Hilton Food Group and Cranswick  have  written an open letter on the protection of the Amazon to the National Congress of Brazil advising them that if measures are introduced in Brazil that undermine the protection of the Amazon rainforest region they will “have no choice but to reconsider our support and use of the Brazilian agricultural commodity supply chain”. In short, the food businesses are threatening to stop sourcing food products from Brazil. The letter specifically addresses the issue that Brazil’s legislature is considering introducing a bill to legalise the private occupation of public land in the Amazon region. The group believes such legislation would accelerate deforestation. The bill is being considered just months after Brazil pledged to end illegal logging.

The level of deforestation in the Amazon is reported as being the highest since 2008 – 175,000ha has been logged or burned in 2021 so far. Most of the cleared land is destined to grow soy and graze cattle for beef exports. The UK Coop grocery retail group said “it is imperative that the proposed legislation isn’t given any airtime by the Brazilian government”.

Is this just an idle threat or posturing to curry favour with green activists in Europe? Back in May 19th, 2020, essentially the same group of food companies, via an open letter, threatened to boycott Brazil over the same issues, although the link was made in their arguments that biodiversity is a vital factor in safeguarding against diseases like coronavirus that pass from animals to humans. The letter concluded: “We want to continue to source from and invest in Brazil and help ensure that protecting the Amazon can be economically productive for all. We urge the Brazilian government to reconsider its stance and hope to continue working with partners in Brazil to demonstrate that economic development and environmental protection are not mutually exclusive”.

Clearly, the world’s largest meat company, Brazil’s JBS, is nervous about how its customers might view “Beef from Brazil” as being unacceptable. Back in September 2020, JBS launched an “anti-deforestation plan” to ensure by 2025 that cows it purchases are not raised on deforested land, financed by a $45m fund with more money to come, and using a blockchain-driven “green” platform. The company has considerable ground to make up as it has been accused of “cattle laundering” – switching cattle from black-listed ranches to ones with a clean environmental bill of health.

Marfrig, JBS’s principal Brazilian and global competitor, is equally active in announcing its commitment to deliver a deforestation-free supply chain and has ambitions to reach net zero emissions by 2030 using, inter alia, extensive regenerative agriculture practices.

Close to half of China’s imports of beef come from Brazil and 70% of Brazilian beef imports to China are from the Amazon region where deforestation risks are highest. Using TRASE, a date-based supply chain tool, these risks can be quantified and influential Chinese trading houses, if minded, can place pressure on Brazilian beef exporters to require that they minimise the environmental and social risks associated with beef destined for China. 

It’s unusual for Big Food to stick its head above the parapet and place pressure on governments to up their standards relating to environmental and social policies and regulations relating to food production. However, the practice is becoming more common as social issues are increasingly taken into account by consumers when buying food. Big Food players, including Nestlé, Unilever, Mondelēz International, Ferrero and Aldi, have written a joint letter to European Members of Parliament asking that they pass legislation to phase out eggs produced from caged hens. The letter states that “Companies moving away from eggs from caged hens have paved the way for changing how EU farmed animals are kept. Cage-free systems are widespread, economically viable and provide better living conditions for hens”. The  signees called for support of poultry farmers during the transition.

The European Commission banned battery-caged eggs in 2012. Why would Big Food wish to push the legislators into better bird welfare regulations? After all, Unilever (amongst others) has already committed to eliminate caged eggs from its supply chains by 2025. For Nestlé, it’s simply “the right thing to do” and switching to cage-free eggs is “a central part of our strategy on improving animal welfare”. 

Is Big Food fast becoming “Little Goody Two-Shoes” on animal welfare and environmental matters? Yes although it’s with a big dollop of self-interest! Increasingly, society expects big companies to show leadership and “do the right thing”. However, if doing so raises costs (e.g. for free range rather than caged eggs, or sourcing soya and meat from higher cost countries than, say, Brazil), then, it is disadvantaged in the marketplace if other players, perhaps minor brands, do not follow, and consumers just don’t notice! In such cases, big businesses may prefer formal government regulation, even more than informal industry agreements to a standard that can’t be penalised if some firms elect not to follow the agreement. Also, it’s just smart for companies to keep their fingers to the wind and to anticipate food industry changes that will be driven by upcoming government policy changes. Right now, one can observe governments becoming much more active on healthy food regulations – moving from trying to nudge  their citizens towards healthier diets and exercise regimes towards harsher regulation – e.g. on fat/sugar/salt content, and advertising “junk” food to children. Better to make the changes before forced to by regulation and harvest the “healthy product halos”!  

Big Food is stuck “between a rock and a hard place” as it has to decide on which social issues it might not bend. To continue with another egg example: should Big Food’s eggs be free range and free of male chick culling (the common practice of slaughtering day-old male chicks that are bred for egg production and, unfortunately for them, turn out to be the wrong gender for egg-laying!)? In this case, consumers or consumer activists will set the agenda.

In short, food companies should at least keep abreast of the social issues that consumers consider important when buying food. Being only a follower on such issues can be damaging for corporate reputations.

Posted in Credentials, Sustainability
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About the authors
Prof David Hughes: Around the world, David speaks to senior agribusiness and food industry managers about global food industry developments that are and will affect their businesses and industry. Energetic, engaging, humorous and insightful, David gains the very highest evaluations at seminars, conferences and Board level discussions in every continent he visits. Miguel Flavián: works for several Spanish organisations and companies to help them to learn from the developments of the British grocery market and improve their business back home.