What Did You Do in the Coronavirus War, Daddy?

Posted on March 27, 2020 by Prof David Hughes & Miguel Flavián

Well, what a to-do! Just as the nation achingly comes to terms with Brexit, we’re sand-bagged with COVID-19. Bugger! But, on the brighter side, our viral tribulations, apparently, are evoking the cooperative, all pulling together spirit of The War Years – apart from minor lapses such as hand-to-hand fighting in the supermarket aisles and stripping the shelves of staples such that Tesco Extra looks like some Eastern European bare-boned store when the Iron Curtain was still down. We’ve been spared formal food rationing which, incidentally was introduced 80 years ago this past January with bacon, butter and sugar first to be listed in 1940 and sweeties (1953) and cheese and meat last to come “off the ration” (1954). David has a clear early 1950s memory of playing “shop” with his sibling – she 6 he 3 – using the family’s coupons as currency, National dried milk powder tins and angular syrupy Welfare concentrated orange bottles on the pretend shop shelf, with his sister the authoritative shopkeeper and he the compliant customer. Incidentally, it was during these formative food rationing years that we Brits honed our internationally-acknowledged core competence in queueing. Lest you think that Boris’s “Let’s Get Brexit Done” was an unique clarion call, the Tories were trotting this out as an election pledge on food rationing in 1951, although it took a further 3 years to actually execute – mmmm, sounds a bit like what may happen to Brexit in a coronavirus-distracted world!

Of course, we’re doing supermarket-based rationing right now and  we’ve all chuckled at the spoof maximum purchase notices:

  • Tesco: 2 toilet rolls, 1kg. rice, 2 packets dry pasta;
  • Morrisons: 3 toilet rolls, 1 bottle hand sanitizer, 4 pints green top  milk;
  • Aldi: 2 trumpets, 1 arc welding set, 1 chimpanzee costume.
Typically English, we ask our customers to behave themselves…
… until we need to enforce more strongly!

But, we are not at WW2 food rationing levels of hardship when our issues of concern are securing Tesco delivery slots for our weekly groceries and, God forbid, being limited to a paltry maximum of 80 items, bitching because they’re out of plain flour (and when we secured this scarce resource would we know what to do with it?), and sighing with relief that gluten-free, agave-sweetened chocolate brioche are still available. All-in-all, and considering that one-third of our total food supply is imported, the resilience of our supply chains is exceedingly strong. Consumer expectations are so high but it’s no bad thing for shoppers to embrace the fact that it’s not the end of the world if we can’t secure everything we want whenever we want it. You’ll recall the primal screams when bad weather in Spain three years or so ago pushed iceberg lettuce prices from tuppence to some multiple of tuppence. Our wartime family understood the notion of seasonality for food and so should we now. Incidentally, the current run on staple foods may auger well for an uptick in home cooking. As an aside, in 1960, David used to nip down to Mr. Fink’s The Fruiterer near to his school in Keswick, Cumberland, and use his pocket money to buy 4 oz. of fresh lychees as a treat with no thought how this fragile tropical delicacy arrived from Malaya. International supply chains for perishables weren’t too shabby 60 years ago!

Fresh produce wholesalers that have lost the restaurant business are becoming now your friendly local greengrocer!

David’s late Mum and Dad lived and worked in a South Wales steel town in the late-1940s. They were then de-linked from their home village which was a challenging 45 miles away (no car, basic public transport). They had little or no social network  – so, for example, no “off ration” extras from a friendly local butcher (à la Lance-Corporal Jones of Dad’s Army fame). His Mum recalled 1947 as being the “hungriest” year of the period 1940 to 1950. David’s sister was 2 and came first in the family feeding line. Fresh fruit & vegetables were never rationed but, often, in short supply and, unexpectedly, Mum found a bunch of fresh grapes to buy in the local market. Home she went to feed these sugar-filled treats to Jennifer and she recalled peeling them and eating the skins herself to keep her grumbling tummy quiet! In 2020, 5,000 food parcels are handed out each day in UK (one-third of them to children), so tummies continue to rumble in 2020 UK which is hardly a matter of pride for us as a leading global developed country. And, then, there’s the 800 million people in our  world that wake up and go to bed hungry. But, that’s another hugely serious matter.

War time Churchillian language to calm the masses when searching frantically for a pack of spaghetti!

What’s for dinner tonight in the “self-isolating” Hughes household? The exigencies of the time encourage serving nursery food – and it’s corned beef hash. Of course, Fray Bentos comes to mind. The  father of organic chemistry, German scientist von Liebig (yes, of condenser fame) beavered away at extracting the essence of meat as a means of taking the beef cattle bounty of the South American Pampas to the booming industrialising cities of Europe (in pre-freezer transportation days). Compagnie Liebig, with a business based in Fray Bentos, Uruguay, established the Fray Bentos corned beef and the Oxo brands. Dumb David remembers driving past the City of Fray Bentos en route to Punta del Este (Uruguay’s West Palm Beach) where he was speaking and  wondering why you’d name a city after a corned beef brand. Corned beef (or Bully Beef as it was known to the British Forces in WW2) is still sold in excruciatingly difficult-to-open cans with those peculiar easy-to-lose keys. Generations of home cooks have risked tetanus and lockjaw so that their families can enjoy their favourite comfort food!

We are slap bang in the middle of scary times. From  an agriculture and food industry perspective, let’s hope that our tribulations will spawn a more positive era and a better understanding of food issues such as those relating to food security, food equity, food safety, even food cooking at home and our children’s understanding of where food comes from, how it is produced and by whom and its impact on our planet. Whether it be a nasty human or animal virus (coronavirus is both i.e. it’s zoonotic), climate change-induced calamity (floods, droughts, fires, etc.), and vituperative trade policy spats, directions in our world  seem to be increasingly uncertain. Super-efficient JIT supply chains have their moment but, maybe, we should focus on those with more robustness. This will bring additional costs and the need for creative products and routes to market for “waste”.

How we shop for groceries is in flux – the return of “The Big Shop” but purchased online and delivered to our door; increasingly more frugal shopping (UK household incomes are forecasted to decline by at least 5% this year); less focus on quality and more on availability; more careful selection of items that are perceived to contribute to the health and well-being of the family; redefining convenience to include ease of securing grocery needs for the family for the week and less on the immediate Food-2-Go requirements of the individual; and declining consumer confidence in the future manifested as squirreling behaviour for “essentials”. But, when the air raid sirens sound the all clear, will we revert to avaricious consumer type and forget the lessons learnt during the coronavirus war of 2020?

Both of us hope that you and your families will prevail and prosper and we look forward  to interacting with you when the evil mist dissipates.

Posted in Consumer, General, Supply Chain, Trends

Accelerated Change in the Food Industry: Remember The Boiled Frog!

Posted on June 26, 2019 by Prof David Hughes & Miguel Flavián

Two years ago Amazon, one of the online shopping world behemoths, confounded analysts by announcing that it was about to buy Whole Foods – an up-market bricks and mortar grocery shopping chain (June 16th, 2017). Share prices of major grocery stores plummeted, particularly in the USA (and they were rocky in the UK, too):

Grocery pundits opined that the Amazon-Whole Foods deal would change the face of grocery to the detriment of traditional supermarket players. We put in our two cents with our blog “What if …. Amazon bought Sainsbury’s?!” (July 2017). What’s more, in the aftermath of the UK regulator thwarting Sainsbury’s merger with Asda, we are minded to repeat this question!

So, has grocery retailing been turned on its head since then? No, but there’s been lots of changes. In the USA, the grocery retail giants didn’t show the white flag! Most piled into upping their online presence, not least Walmart who are bound and determined to “Out-Amazon Amazon” with initiatives such as:

  • Expanding its investment in Chinese electronic marketplace company JD.Com and bringing it to the USA, alongside its own Jet.com (an acquisition in 2016 to compete with Amazon);
  • Testing a grocery delivery plan – households can pay $99/year for unlimited delivery of groceries of $30+ basket size – hmm, sounds rather like Amazon Prime to us! – albeit without the music, reading material and TV freebies that’s included in Amazon prime. In the UK,  Amazon hired the Top Gear guys to produce a new programme to accelerate the uptake of subscriptions.
  • Substantially expanding investment in automation/AI – trialling autonomous grocery delivery, expanded robotic use in DCs.
  • Selling under-performing assets (like Asda?) to generate additional funds to invest in activities that improve its competitive position against Amazon.
Even Batman finds more convenient to get his BatBurgers without getting out of his BatMobile.

The USA has been a slow poke for online grocery shopping (3% of total grocery spend – it’s 8% in the UK) but from a low base it is growing rapidly and may reach 10% (combining delivered and click & collect) by 2024 giving the online route to the consumer a handsome value of $100 billion. Walmart’s growth in online grocery sales is much stronger than Amazon’s and for that omni-channel offer (“You can shop with us anywhere, any time, in any format”), Walmart has 10 times more stores across America than Amazon. But, they don’t have an Amazon Go offer and, mark our words, these quintessential convenience stores will be become pervasive in higher income urban markets. The real action for online grocery purchases increasingly will be in Asia. South Korea leads the global pack now, but China will dominate the online scene: Asian Millennial and Generation Z fresh food shoppers are caustic about their parents’ affection with traditional wet markets (which they see as being downright dangerous from a food safety perspective) and who would want to visit a physical store for routine food purchases in congested conurbations with scary air pollution problems?

Adapted from Kantar June 2019. ” Global online FMCG sales grew by 20% in 2018 “

By 2025, then, will our food shopping behaviour be radically different than it was in 2015? Yes and No! Buying food is different than, say, purchasing a branded electrical appliance, or topping up our on-hand cash, or the services of a taxi. We’d wager: you don’t have wistful moments recalling halcyon times queueing up at the bank for YOUR cash; notwithstanding your admiration for black cabs and the “The Knowledge” of their drivers, dialling up an Uber hasn’t left you in inner turmoil; and doing your research online and, then, purchasing the fridge brand of choice isn’t too difficult either. But, buying fresh foods is a different kettle of fish! Then, we’re much more contemplative.

For starters, we are conservative  in what we eat – of course, there are changes but, generally, they aren’t dramatic. In history, affordability and availability were paramount and, over time, the form of the food purchased became influenced by its convenience – in contrast to now where all foods are available all of the time. Food traditions were and are important, for example, the centrality of the Sunday roast which, then, led to a cold meat meal on the Monday and a minced one of whatever remained on the Tuesday. Religion played its part – fish on a Friday to cater for Catholics and, God love The JL Partners, Waitrose continues with its “20% Off Counter Fish on a Friday”! But, keep a keen consumer eye, roast dinners, casseroles, soups and sausage-based dishes are down across the UK, and Italian, Oriental, salad and vegetarian meals are up. Potatoes are featuring in 25% less roast dinners than they were 4 years ago.

Where we purchase food changes slowly, too, reflecting not least who we trust to provide the food we feed to our families. Remind us, what experience and expertise does Amazon have in retailing fresh meat, fruit and vegetables and aren’t they a tad more complex to source than masonry drill bits? A major constraint to expanding online retail sales of fresh food in the UK and many other countries is that shoppers mistrust the retailer to select produce on the customer’s behalf – even although the likes of Sainsbury’s, hardly a Johnny-come-Lately, have been doing exactly this for 150 years!

However, the rate of change of what we eat, where we purchase and consume it is accelerating driven by, inter alia:

  • Demographic change particularly in burgeoning cities – e.g. the growth of one person households (close to 50% of households in major international cities);
  • Time compression for families where 2 parents are working outside the home or, even more frantic, single parent families;
  • Fragmentation of the “family” meal occasioned by different working hours, proliferation of extra-curricular activities (sports, music, Ipad time, etc.);
  • Increasing incidence of food allergies and dietary preferences – e.g. the 20% of families with youngsters in the 10-20 year old range who are  – vegetarian or gluten-/lactose-intolerant (we refer to this as the tricky “What have you bought/cooked that Brenda can eat?” question);
  • And the global impact of food trends emerging, converging and being embraced brought about by social media consumption – e.g. pervasive Instagram food pictures (David’s 9 year old granddaughter woofs down smashed avocado on sour dough toast having no truck with Fanny Craddock-esque avocado prawn cocktail with scarily pink Marie Rose sauce!);

The food service industry responding adroitly to accelerating food-to-go demand – for example:

  • the likes of Pret out-performing traditional supermarkets in F2G (and buying F2G chain EAT to expand its vegetarian offer presence);
  • gas/petrol stations becoming respectable places to stop by for a chocolate croissant and decent coffee (explaining why Coca-Cola swept up Costa Coffee early this year) and a nutritious, ready-to-eat salad curated by Jamie Oliver himself;
Jamie Oliver branded products at Shell Petrol Stations. Can you spot the difference with your convenience supermarket?
  • restaurant meal delivery options arriving en masse (note that Amazon has just increased its investment in Deliveroo having failed twice to buy the company, and McDonald’s with its global link with Uber Eats is expecting a $3 bn. meal delivery business by the end of 2019);
  • meal kits whisked to one’s door with the week’s meals ingredients (in the USA, Unilever increasing its investment in Sun Basket and the largest Japanese organic food investor purchasing Purple Carrot both to hold positions in vegetarian and paleo diet meal offerings).

There’s so much going on in global F2G that it makes you dizzy and the pace of change and entrepreneurial energy in the UK is frenetic!

Having taken a battering over the past few years, Big Food as we expect has come back fighting and recognised that cutting costs is not the only solution to  its woes. Global brands are on the decline and regional/local ones on the up:

  • Danone is focusing on growth of the local brands in its brand stable, and on high growth areas such as plant-based foods, dairy protein, rehydration (water!), and gut health (pre- and probiotics);
  • Gut health has also appealed to Kellogg’s (launch of “Happy Inside” cereals) and to Unilever (investment in Culture Republick probiotic ice cream) as well as riding the healthy snacking trend by buying the UK’s Graze;
  • Shifting business emphasis from slow or no growth developed markets to speedy emerging markets is the order of the day, too – Unilever’s sales increased 5% in the latter and 0.3% in the former last year;
  • Even Big Meat, never first to the innovation parties, have lumbered forward with Tyson, JBS, Cargill and Purdue all launching flexitarian and plant-based “meat” products within the past few months. This is a segment that Nestlé seems stubbornly trying to embrace. Initially, the company failed with the launch of plant-based meals Garden Gourmet but, stoically Swiss as ever, Nestlé is re-launching it and has the impetus of providing its product as McDonald’s Big Vegan Burger, and has revealed to the world the Awesome Burger under the Sweet Earth label. Slow but generally sure, Nestlé aim to reach $1bn in sales within a decade from plant based products.
It is refreshing, and helps your Gut on the Go!

What’s all this mean to the rest of us – from broad acre arable farmers through SMEs in food manufacturing and meal & snack solution delivery? Change in the food and beverage industry is constant, inexorable and is clearly accelerating. Businesses of all shapes and sizes should reacquaint themselves with The Boiled Frog fable. Irrespective of the relevance to you of the second anniversary of Amazon’s Whole Foods purchase, ask yourself “In the last 24 months, what have we done in our business both to improve our position vis-á-vis our competitors and our customers?”. Go on, make a list! And for your products and services, what’s the fastest growing routes to the consumer and are you in them?

So far, the most visible effect of Amazon buying Whole Foods: New lower prices, Same high standards.

We started the blog talking about Amazon’s acquisition of Whole Foods and the tremor that this caused through global retailing. Two years on, the Whole Foods Division is the slow poke of the Amazon Empire (+2% p.a. revenue growth) dragging down overall corporate growth to a miserly 18%!  Bricks & mortar grocery retailing is not in the stratospheric arena of cloud computing in which Amazon excels. Kroger – America’s Number 2 grocer – slipped backwards in sales last year. Since buying Whole Foods (and not because of), Amazon’s stock price has close to double, whilst Kroger has lurched to and fro and, currently, has scraped a 6% gain over its June 2017 price. It’s tough trucking in grocery retailing and that’s one of the reasons, dear readers, to put it delicately that big supermarket chains are such difficult entities to deal with!   

Amazon delivering chilled beer for Prime customers! The secret weapon to impulse sales?
Posted in Convenience, Foodservice, Hypermarkets, Online, Trends

Who’ll Be in the Mind’s Eye of the Global Consumer for Providing Meal Solutions in the 2020’s?: Likely NOT Big Food and Traditional Supermarkets!

Posted on April 17, 2019 by Prof David Hughes & Miguel Flavián

Don’t you just love those old fashioned advertisements that pluck at our heart strings regaling us about how we used to shop and put meals on the table for the family. The classic 1970s Hovis advertisement turned out to be prescient – the boy on the bike morphing into the Tesco deliveryman and the deliveroo guy!

Within 5 years, ageing Millennials and Generation Zers will be shaking their heads and chuckling at YouTube clips of “Supermarket Shoppers as Mules” queueing endlessly to purchase groceries and, then, ferrying them across carparks fraught with danger.

Around the world, traditional supermarkets are under siege and leaking grocery market share. The antagonists are a motley crew, including:

  • on-line specialists like Amazon, Alibaba, JD.com who are also taking aim at the offline side with shops that appeal to urban consumers because of their speed (Amazon Go) or the theatre and experience (Alibaba’s Freshippo);
  • basic but effective hard discounters like Aldi and Lidl, and “dollar stores” (e.g. Dollar General) in the USA expanding their food offer and adding in fresh produce;
  • small format convenience stores personified by the impressive 7-Eleven chain;
  • “food-to-go” specialists such as Pret, itsu and EAT. in the UK (and USA) ;
  • restaurants teaming up with on-line food ordering and delivery services such as Just Eat and Uber Eats, and for those appalled at food waste, the app Too Good To Go as a means of buying food that would otherwise be thrown out and is good for the pocket and for the environment;
  • meal kit providers à la mass market Hello Fresh and niche Mindful Chef;
  • specialty vendors of all kinds of foods linking primary producers directly to consumers (e.g. Crowd Cow in the USA with its “craft meat” offer, Abel and Cole in the UK selling premium organic ingredients, or the likes of Odd Box, another UK initiative that delivers “ugly” fruits and vegetables direct to consumers’ homes.);
  • non-food retailers adding a food section – e.g. the Walgreens Boots Alliance in the USA and, of course, Boots UK has long been a significant player in food-to-go (as has news agent & book seller WHSmith), and the increasingly sophisticated convenience food and drink product ranges in petrol/gas stations (who’d of thought of buying a chocolate croissant and fancy coffee from the greasy-handed pump attendant of the 1970s?!);
  • more modest local initiatives allowing us to use apps to connect with each other and swop (or unload) food that’s surplus to family requirements;
  • and coming to a home near you shortly, cool 3D printers that will produce intricate fancy cakes and cookies and magic up custom-designed, multi-coloured spaghetti and pizzas.

Globally, consumers are cooking less and buying more prepared meals and snacks, and eating out more. Euromonitor International note that “the bond between consumers and meal facilitators is becoming stronger”. This is particularly the case among younger consumers who report far less time and inclination to cook than previous generations. They use their mobile phones as extensions of their bodies and as the first port-of-call for help/assistance. What’s more, they are astonishingly impatient – whatever they want, they want it RIGHT NOW! This isn’t just a smart aleck London/NYC consumer trend, it’s a global pandemic! Indeed, with regard to frequency of eating out, the “Western” world is following emerging Asia rather than leading: 60% of Thais eat out 3 or more times per week and are loathe to pop out of their home for snacks when  Line Man is on hand (established in 2016 as a WhatsApp look-alike, it exceeded 1 million Bangkok customers by mid-2018 as it expanded the range of services it was offering).

This preference for uber-convenience is particularly expressed by younger consumers who view meal preparation as a very low order priority (“who has the time when there is so much to keep up with on social media?”). Of course, the dark irony is that “food and dining is becoming even more of a lifestyle, to be discussed, explored and used to define ourselves”. The preface to a meal is not a prayer of thanksgiving, it’s taking a photo of the plate to share with friends on Instagram! So, consumer interest in food, its story, food trends, and the willingness to pay a premium for food with status is growing even as the time to shop for and prepare food is being compressed. This has enormous implications for the global food and drink industry.

Demand for convenience in meal preparation isn’t a 21st century phenomenon. In the 1950s, David’s Mum would magic up Instant Whip dessert for a mid-week treat (Angel Delight in the USA). But, then, making instant pudding became too time-consuming! The last 70 years of the history of “Big Food” has been a journey of adding convenience (including extension of shelf life). In fact, this unrelenting journey has been part responsible for bringing “Big Food” to its current uncomfortable place – one characterised by slow sales growth, dwindling margins and the perception by many Millennial mummies that Big Food makes yesterday’s food.

Big Food’s megabrands have been assaulted by upstart new age food producers who cosy up to their customers with convenient, tasty products and heart-winning stories about their values and how these are commensurate with those of 21st century consumers. And of course, how “natural” and “clean” they are in many cases, and that they leave the planet much better than they found it! Just as traditional supermarket retailers are under siege, so are traditional fmcg food companies and BOTH are being attacked from all sides. An “on demand” freshly prepared food economy is emerging at the double turning fresh ingredients into meals and snacks whenever and wherever consumers require them. For Big Food’s billion dollar mega-brands, “one size fitted all” – now, the challenge is to be faster, fresher, more personalised, artisan-like but using AI and automation, and emulating fast fashion wizard Zara in shortening supply chains, and working much closer with producers.

When the focus is on providing consumers with meal and snack solutions rather than ingredients for them to prepare, power in the food industry shifts “to a new generation of companies and brands, from delivery aggregators and meal kit providers to next generation retailers, restaurant operators, and cooking equipment manufacturers, all striving to offer a wider range of prepared meal (and snack) solutions, across a wider range of occasions than ever.” (Euromonitor International). Led by Marks & Spencer (with a 50 year history of producing high quality chilled prepared meals, meal components and snacks), UK traditional supermarket companies are significantly further ahead than, for example, US supermarket retailers in responding to this challenge. For them, it’s making sure that their meal and snack products are immediately available when and where the customer wants to purchase and consume them. Proximity of store to the customer is helpful but not the end game. McDonald’s were comforted by the fact that 1 billion consumers were within 10 minutes of a Golden Arches outlet. The view was “that’s handy, it’s not far for them to drop by our restaurant”. Current senior management interpreted the proximity more perceptively as being “very handy, it’s not far for us to deliver whatever they want, whenever they want”!

Increasingly, we want more “experiences” when we buy products and services, particularly when we are in leisure mode. But, to reiterate, whatever we want, we want it NOW! Our demand for food is more complex: when we are in a food-as-fuel frame of mind, convenience is paramount (convenient to buy/prepare/consume/dispose). Our requirements are modified when food is the centre piece of a memorable gathering with friends or family. For a very few meal occasions in our week, we may well be willing, God forbid, to try out newly honed cooking skills garnered from watching cooking programmes. Then, food preparation and consumption is about celebrating the stories associated with the meal.

The decline of home cooking is not indicative of moral decay. It does reflect the reality of, in particular, urban life across the globe. Smaller households are burgeoning – single person households will increase by 30% between now and  2030, whereas those with 2 parents and children will expand by half that rate. In high income urban markets, the single person household is  the dominant unit. The 1 person family isn’t going to pop home after a long working day and prepare and cook a satisfying slow-cooked shoulder of lamb! They’re more likely to eat out, buy something prepared on the way home, drop into the Amazon Go which will be at the foot of every apartment building, order something in and have it delivered, or maybe heat up some leftovers in the microwave. Then, it’s either slump in front of the screen to surf the internet, watch a lifestyle cooking programme/dream of your “Escape to the Country” (i.e. rural idyll) or some intense moments perusing a dating app – hope triumphing over experience –  with the prospect that you might find a compatible mate!

Happy Easter holidays from the two of us. Miguel’s off to South Korea (he’s a kimchi aficionado and has to feed back his clients with the latest Asian trends). David is hot foot for a 6 week talking tour in SE Asia and Australia/NZ.

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Posted in Convenience, Foodservice

What’s All The Fuss About Flexitarians and Faux Meat?

Posted on February 18, 2019 by Prof David Hughes & Miguel Flavián

Well, we’ve got through Veganuary and, if you’re to believe all the media hype, the comfortably-off Western world is eschewing meat. January saw a torrent of plant-based meat lookalike products and vegetarian fare flood onto markets in Europe and North America and, what’s more, they were courtesy of “Big Food” not quirky millennial start-up companies, inter alia:

  • McDonald’s launched its first vegetarian Happy Meal for kids;
  • Pizza Hut playfully launched a cheeky, cheesy jackfruit pizza;
  • Vegan Beyond Burgers arrived in Carl’s Jnr. and A&W outlets in USA and Canada and, now, the Beyond Burger is in Tesco;
  • M&S introduced its Plant Kitchen range and had a special offer Vegan Valentine’s Dinner for February 14th featuring a heart-shaped beetroot burger;
  • Discounter Aldi pre-empted M&S with its own tiny-priced beetroot burger, and Iceland had launched with “surprising success” its “No Bull” burger back in April, 2018 and a jalapeño variant is now available;
  • Tesco doubled its vegetarian Wicked Kitchen offer;
  • fmcg heavyweight Unilever popped out to buy The Vegetarian Butcher in Holland and Nestlé will launch its plant-based Incredible Burger this Spring under the Garden Gourmet brand;
  • and, just to make dairy farmers nervous, Danone USA doubled its plant-based milk processing product capacity (e.g. So Delicious yogurts and cheese, Vega Clean Protein (i.e. without “naughty” No’s such as GMO, gluten and, of course, without dairy!), Silk soy, nut, grain-based milks).

What’s the  story and is meat consumption plummeting? Certainly not in the USA where “Meat is Making America Great Again” and per capita meat consumption is at a record high (+100 kg. per capita). In many other Western markets, however, per capita meat consumption is flat at best and any market growth reflects an increase in overall population and, within the overall meat category, beef and lamb are struggling for momentum while chicken still has inexorable growth. In fluid milk markets there are clouds, with liquid consumption falling (“full milk” in free fall and growth in semi-skimmed failing to compensate fully), whereas plant-based milks (isn’t cows’ milk plant-based?!) are experiencing huge growth albeit from a very modest base. Butter’s doing well – God Bless The Great British Bake Off!

What’s good for foods with a bona fide protein claim is that consumers are seriously interested in upping  their protein intake as part and parcel of  the Health & Well-Being super-trend. But, in the consumer’s mind’s eye, the “protein canopy” (to coin a phrase) has been expanding:

  • in history, red meat and particularly beef were synonymous with prime protein, then, chicken (and, to a lesser extent, turkey) muscled in!;
  •  eggs have always been an acknowledged protein source but lower order than “proper” meat, occasionally bedevilled with food safety scares and, still, some consumers are uncertain about the impact of eggs on cholesterol levels (although, currently, eggs are motoring well) ;
  • whey protein was for body-builders and the infirm but, now, it has broad market appeal still used for sculpting the body beautiful but, also, for adding muscle to dwindling, wizened baby boomer frames;
  • a decade ago, yoghurts weren’t perceived as being proteinaceous, then, Chobani launched in the USA and the “Greek-Style” yoghurt race was on with high protein claims. Arla wasn’t slow to the party and quark-based yoghurts and cottage cheese came to market as “Arla Protein” with advertisements claiming “same amount of protein as 2 egg whites”;
  • soy, long a protein mainstay of vegetarians, is a principal ingredient in protein “shakes”, protein bars (e.g. Mars Protein and Snickers Protein), protein breakfast cereals (e.g. Kellogg’s Special K Protein), etc.;
  • and, remember, the protein backbone for the Indian sub-continent and the Middle East for millennia has been pulses – peas, beans, lentils, etc. – which are having a surge in growth on Western menus. Then, there’s nuts, of course, which in Western markets are moving on from being Christmas items and salty pub snacks to having a moment in “high protein” snacks, salads and meat-free meals which are scooped up by omnivores not just  vegetarians;
  • creeping into view, pardon the pun, come insect protein products – the Insekten Burger is our favourite, but cricket flour snacks abound (e.g. Jimini’s and you can have your insect of choice – grasshopper, mealworm, and buffaloworm) and algae protein, not least with Spirulina, is becoming very fashionable;
  • and, lest we forget, what about Faux meats? These are the plant-based burger lookalike products and mycoproteins (e.g. Quorn) that incense the traditional meat industry. Love them or hate them, they are under the protein canopy and will be joined in years to come by much closer representations of “the real thing”, i.e. meat grown from animal cells. Faux meats are, increasingly, in the product stables of international meat companies (e.g. Cargill, Tyson and Maple Leaf Foods)

Marks & Spencer famous promotion “Valentines Day Dine in for Two for £20” had this year vegetarian options, plus an array of new products for the day like the Heart-Beet Burger suitable for vegans.

We note the outright antagonism between meat and dairy farmers and the more extreme end of plant-based imitations (aka fake meat/milk in Trumpian parlance). Can meat only be the flesh of an animal? In history, the term meat meant food of any kind. Venerable David has long referred to coconut meat and milk and the more hide-bound in the red meat industry don’t count fish as real meat! Some of the plant guys, mind you, can be self-righteous and zealotic to the extreme excoriating omnivores for destroying the planet, ruining their health and encouraging animal welfare abuse. The use of “clean” protein/milk/meat fans the flames with the intimation that animal meat and milk is “dirty”.

On nomenclature, it’s still early days and going forward expect to see regulation and the application of common sense. The over-riding requirement is not to confuse the consumer – s/he’s confused enough as it is! If it’s a burger, then, usefully precede with an adjective such as beef/pork/vegetable. In the past, Quorn has been cheeky in its labelling – e.g. meatless & soy-free (in small type)  Chik’n Tenders – clearly, beyond the pale. But, Quorn meat-free mince seems to us perfectly acceptable. Does milk only come from female mammals? We reckon that soy/almond/oat/hemp … milk labels will be permissible long-term on the basis that 99.9% of consumers won’t be confused at the supermarket shelf.

As mentioned, the market for protein foods is expanding and farmers through to retailers should be happy about this. Let’s look at meat (including faux meat!) in the marketplace. We see a continuum of products in the Meat or should it be the Protein or Centre of the Plate Department of the near future:

  • at one end, “real” meat with a compelling story – festooned with adjectives identifying provenance, breed, feeding regime, etc., and retailing at a substantial premium;
  • more basic meat fare, value-priced for weekday meals (more fuel than fancy!);
  • flexitarian products combining meat and pulses – they’re gaining market traction right now – e.g. Lidl’s Keen & Bean chilli con carne meat balls, Greggs sausage and bean melt (so, what’s new about flexitarian products – Michelangelo invariably had chilli con carne in his lunch box as it was well-suited for those doing ceiling work), Waitrose’s Spanish pork, chickpea, red pepper & spinach sausages;
  • cultured, cell-grown meat initially will be accessible only to those with high incomes and, of course, it will be grown to meet customer specifications on shape and size;
  •  a range of faux meat products, like the Impossible Food and Beyond Meat burgers with no animal products in their ingredient lists;
  • a small and discrete entomophage section for insect food lovers.

Will each of the above categories have distinct, unique customers? Yes and No! Vegetarians and vegans will stick to their own. But, increasingly, the majority will have a meat repertoire and shop across all categories depending on the occasion – e.g. it has to be the real McCoy meat with a story for the big celebration. This is why anyone in the meat processing business should consider having representative products in all categories.

Traditional retail meat departments, as we know them, may be increasingly a feature of the past – it’s happening in front of our eyes right now. Consumers are stressed and short of time and they demand a meal or snack solution, not a problem. Clearly, the meat purchase, per se, has become less central as the importance of the meal purchase increases. The challenge for meat of any description is to ensure that it gets into the breakfast/lunch/dinner/snack sections of the supermarket or the high-flying food-to-go outlets.

Premium meats with stories, and convenient to eat and purchase will still have their market.

“Real” meat has never been under so much pressure on three fronts: its impact on the environment, human health, and animal welfare. Within the past couple of months, 2 high profile reports (EAT-Lancet Commission and World Resources Institute [WRI] Sustainable Diet Report) concluded that meat consumption, particularly in high income countries, should be slashed. WRI gives advice to those marketing plant-based foods and recommends “appealing language to boost mainstream diners’ appetites for plant-rich foods”:

  • don’t use meat-free, vegan, vegetarian, “healthy restrictive” labels;
  • but do use provenance, flavour, look and feel as hooks. Sainsbury’s Cumberland-spiced veggie sausages and  mash sales jumped 76% when the “meat-free” label was downplayed and the traditional recipe was highlighted.

The traditional meat industry should dwell on its unique attributes from a consumer perspective. We say, don’t get angry with the plant-based guys, get smart! They’ve joined meat under the protein canopy and they’re here to stay. Don’t fixate about “your protein” versus “their protein”, or even risk chronic constipation bickering over product nomenclature! Consumers want food that is tasty, healthy and affordable and they’re most interested in convenient meal/snack solutions NOT problems! Remember, this means convenient to buy, to prepare, to consume and to dispose of what’s left and its packaging. The threat to the meat industry of plant-based protein foods is not so much an emerging era of vegetarianism, it’s more of the arrival in the market of delicious, convenient, affordable food that happen to have fruit and vegetable ingredients!

Posted in Consumer, Health, Trends, Vegetarian

Food Industry Trends: 2019 Will Go in a Flash, So, What’s The Picture look Like in 2030?

Posted on January 7, 2019 by Prof David Hughes & Miguel Flavián

Watch out, food industry pundits are about holding forth on key trends affecting your business in 2019. Blink and 2019 is gone and we’re into a new decade. So, we thought our blog to you should be on what the global and local food industry scene might look like in 2030 – it’s closer than you think!

Good news to start with – the global population will have grown from 7.7 billion now to 8.5 billion by 2030 and 800 million extra mouths to feed is both a challenge and a huge opportunity. Half of the population increase will come from Africa and most will stay there if economic growth advances at a decent clip. However, if the African continent slips into the economic doldrums with slow growth and economic gains garnered only by a favoured few, then, unhappy citizens will walk and most will head North and that could create a real immigration crisis in Europe! Much of the other half of the global population increase will be in Asia, not least the Indian sub-continent and Indonesia. Rapidly growing Asian countries are experiencing transformed diets benefitting particularly chicken, egg, fish and dairy businesses and soy producers (largely in South America and the USA). Intensive insect producers will be well-established by 2030 competing with soy to supplement intensive livestock feed supply.

What about the UK? We’ll add 3 million to our population over the next 10 years or so (from 67m to 70m) and that’s way better than in Japan, Russia, Germany where numbers will decrease. Like many countries, the UK is ageing fast – in 2018, 18% of us were 65 or older and by 2030 it will be 28%. So what? Older folk eat less and, increasingly, are concerned about their health. If you’re over 60, stand on a chair and look out. What you can see is THE END and you’re bound and determined to push THE END out a bit further by improving your diet! In 10 years, most of us irrespective of age will be significantly more conscious of what we eat and its impact on our health. We’ll have a much better notion of our food goals, for example:

  • if we aspire to be fit, toned, with an active lifestyle, then, food that is good for muscle-building, improving performance and providing quick energy will appeal;
  • or if wishing to retain (even improve) our looks, then, food and drinks that are good for the skin, assist weight control, and are anti-ageing will be sought;
  • or, maybe, we wish to be more zen, less stressed, with improved sleep quality and more balance in our lives and a better digestive health diet might fit the bill;
  • and for those with specific health problems, foods with known disease prevention/repair attributes, heart healthy, and allergen-free might appeal.

By 2030, we’ll embrace technology much more than at present to assist us in food and drink selection. It’s happening right now – e.g. Professor Toumazou from Imperial College London has developed a cool DNA Nudge “machine/App” whereby you swab saliva from your mouth, pop it into his magic machine and, then, when shopping zap the ingredient list of the food product you fancy and the DNA Nudge will advise you whether it is a good or bad purchase given your dietary proclivities.

In many countries, not least the UK, health systems will be under huge pressure because of the ageing population, and 2 major diseases – heart health and Type 2 diabetes. Governments will have long moved on from simply recommending that we should moderate our diets and, as they are doing now for sugar, will wade in with hefty taxes on food and drink products high in sugar, salt, fat and alcohol. Cannabis and hemp food and drink products will be closely regulated but pervasive for social and medical usage. The global beer and soda companies are all investing in drinks containing CBD (cannabidiol oil).

Incidentally, in early-January 2019, world stock markets are reverberating because of concerns about slowing economic growth in China. Well, pardon the pun, here’s another Sino-wrinkle, by 2030 China’s population profile will be very similar to that of Japan’s in 2018, i.e. more old folks than young ones as a result of decades of the one child policy in China (now rescinded). In fact, China will get old before it gets “Western” rich and will have all the consequential labour, social and health problems associated with such. AI and robotics may ease the pain of labour shortages and care of the elderly but the years of China driving global economic growth are numbered.

Returning to the UK and other developed (as we amusingly call them) countries, consumer stress levels are on the rise and will continue to do so. Current millennials will be 10 years older and well into (for some) their child-rearing years. They’ll be increasingly peevish to have missed the spectacular financial gains made by Baby Boomers and Generation Xers from house price inflation. For the food industry, escalating consumer stress will simply accelerate the already well-developed trend towards providing snack and meal solutions and not problems. Whilst income distribution in the UK is unequal, perhaps surprisingly, it has not deteriorated significantly over the past decade. Notwithstanding this, consumer households in the bottom 2 income deciles are struggling now and will continue to do so over the next decade (irrespective of the political party(ies) in power). This will be exacerbated by the sharp growth in AI and robotics which will squeeze jobs at the lower income end of the labour market. This will ensure that traditional supermarkets will continue to have a very strong focus on price. The Tesco/Sainsbury-Asda’s of our grocery retail world have broad shopper churches and can’t afford to lose the custom of their keenest price-conscious shoppers.


The “green” packaging material is an important attribute of the overall product.

We’ve been talking for a few years about how “the green bar is rising” in the food industry. Globally, consumers are seeking products that are tasty, convenient, affordable and that are good for their families’ health and for the health of the environment, local economy, food producers and their animals, etc. By 2030, putting consumers and society first will be pervasive in the world of business and such will be the transparency of supply chains and global communicative powers of social media that “greenwashing” will be doomed to failure. Specific examples of how this will affect the food industry include:

  • the burgeoning popularity of “climate-friendly” diets;
  • an accelerated move to less, recyclable/compostable packaging (“Big Food” is promising this by 2025 – they won’t have that much time!);
  •  an increasingly global focus on reducing food waste – in richer countries, in the home and emerging countries on the farm and in the supply chain;
Focus on packaging: less and more (recyclable)

The food sector under the most “green” pressure will be meat. By 2030, inexorable pressure relating to the impact of high levels of meat consumption on human health, the environment and animal welfare will reduce the centrality of meat in Western diets exacerbated by the continuing growth of alternative protein foods (including “lab-grown” meat). A proportion of Generation Zers will hold the view that dispatching sentient animals for us to eat as being barbaric. Beef, lamb and pork will be in the front line. Bye bye carnivores? Of course not, but flexitarian diets will be widespread. Our meals will look more Asian just as theirs look more Western (i.e. with more meat)!

Vegan Chorizo? Now even Spanish people can become vegans!

This leads us on to thoughts on what the food retail scene might look like in 2030. We’ll keep it brief:

  • hard discounters (Aldi, Lidl, etc.) will continue to threaten the traditional supermarket players in every country where they are established: they’ll keep growing in the UK and hit 20% grocery market share in the next decade; likely, Aldi alone will take a 20% share Down Under giving long-term migraines to Woolworth and Coles (and, surely, Costco will add to the Australian Big 2’s tribulations by significantly increasing store numbers);  and we shall see if the combined clout of Aldi, Lidl and the dollar stores become more a serious competitor than an irritant for Walmart, Kroger and  Ahold Delhaize in the USA. As an aside, we expect the much loved Trader Joe’s discount gourmet concept (Aldi North-owned) to appear outside the USA. Will the German discounters seek to invade Asia and Africa? The combination of strong population growth and households with relatively low but increasing incomes would seem to be lip-smackingly attractive for a discounter. But, experience shows in Asia that local/regional operators are adept at out-competing the global monoliths! In Africa, there’s a serious challenge for even the super-efficient Aldi to cope with poor infrastructure although, courtesy of President Xi’s “Belt and Road” initiative, internal road communications are improving but this may encourage retailers from China to try their hand in sub-Saharan Africa;
  • as discounters continue to expand in mature markets, the big 3 or 4 traditional supermarkets will look to hang on to their current share. In markets such as the USA with a distinct regional structure, expect to see smaller regional players disappear. In all markets throughout the upcoming decade, there will be a dog  fight on price, more concentration, agreements between non-competing retailers to negotiate together (à la Tesco and Carrefour), sharing services, and grocery retailers looking to increase their customer base with linkages into independent stores and food service (à la Tesco’s takeover of Booker) ;
Big stores will fight on price.
  • on-line grocery sales will march on  with a range of offers (click & collect, 1 hour delivery, etc.) driven by millennials reaching the “nest-building” stage of their lifecycle – online will simply be the normal way to purchase food, unless it’s dashing out to a store for emergency purchases or, if they want to prepare a special meal and take the time to seek advice from a retail artisan. Amazon will struggle to compete in fresh and chilled prepared foods in the absence of a significant store base which suggests Amazon will either exit fresh or purchase other grocers and push on relentlessly. Check out what Alibaba/Hema and JD/7Fresh are up to in China to find out what is going to happen here – for convenience retailing and retail theatre overall, we have much to learn from the Asian experts;
  • Tesco and Walmart emerge as two of the world’s leading practitioners of omni-channel retailing, although the dynamic action in online is best observed in Asia, not least China and South Korea;
  • big stores will suffer through the decade and dwindle in numbers, but little stores and, in particular, mini-stores will flourish popping up like weeds in every apartment and office block, hospital, entertainment area, indeed, wherever people congregate. Some of them will not necessarily be manned as the system will recognise us when we enter, and cameras will record anything we purchase in the store. The offer? – fast turnover healthy, tasty snacks, mini-meals and regular meals (again, see best practice of this in Asia with the likes of 7-11 stores)
    increasingly, special interest groups and activist shareholders are influencing the policies and activities of major companies (e.g. on executive/gender pay, the environment). Major retailers will have to become accustomed to such pressure particularly in relation to product sourcing – consumers will ask “remind me again, what foods can’t I eat?”, whether it be slave-tainted shrimp from Thailand, orangutan-harming palm oil from Malaysia, chicken that has been fed on soy from the Amazon Basin, wrappers that are not recyclable;
  • the next 10 years will see a technological revolution in our supply chains – it’s already well underway with robotic picking, blockchain and its equivalents becoming mandatory, Big Data and individual loyalty data personalising offers, and grocery shopping experience being transformed – “drudge” shopping for routine essentials disappearing as IoT kicks in and the loo paper inventory is managed by our lavatorial product provider in the clouds, while we can elect to shop for “touchy feely smelly” stuff in a  store with knowledgeable staff or online talking directly to the producer. Mind you, there’s a dark side to the IoT/AI/Robotics era which is rushing towards us. Indubitably, criminal hackers will see opportunities to hold us and our food supply chains to ransom and this will elevate concerns about food security to a higher and darker level;
  • climate change will have an important impact not least on fresh produce. Weather extremes can create havoc with supply programmes. In Europe, we’ve seen this with The Beast from the East disrupting arable crops, Winter deluges in Spain destroying salad crops and droughts in Summer across the continent sharply reducing produce yield and quality. Expect to see serious growth in urban hydroponic farming and continued expansion of protective cropping (e.g. polytunnels). Seasonal eating may well have a renaissance as consumers match their fine words and thoughts on being greener with their actual food purchasing and consumption behaviour;
  • we’re already seeing the accelerated convergence of food retailing and food service and this will continue apace. Note in the UK that, for food-to-go, traditional supermarkets are upping their game but still only in 3rd place to specialty operators (such as Pret and EAT) and the fast food operators that will be attempting to get a slice of the food for home market! The food-to-go market will flourish in the big and most visited cities, and we think London will be a global leading light in innovative freshly prepared meal and snack solutions reflecting its cosmopolitan population and their voracious appetite to try anything new;
  • from a fresh food sector perspective, suppliers will benefit substantially over the coming decade as the importance of emerging routes to the consumer increase, in addition to the traditional supermarkets and hard discounters. Understanding and being in concert with the values and aspirations of consumers will be vital. “Greener” consumers will be hard taskmistresses – local food with trusted provenance will continue to flourish and look towards towns and cities seeking to become carbon neutral, even self-sufficient in their energy use.

The global food industry is changing and fast and the pace seems to be accelerating. Consumer trends permeate the globe at an astonishing rate, with social media the lubricant. “Big Food” companies (including retailers) when pondering food industry evolution would do well to recall a couple of Charles Darwin quotes, viz.: “It is not the strongest of the species that survives, nor the most intelligent …. It is the one that is most adaptable to change.”; and “In the long history of mankind ….. those who learned to collaborate and improvise most effectively have prevailed.”! Happy New Year to you all and early next month, it’s Chinese New Year (February 5th) and it’s The Year of the Pig. Winston Churchill was fond of pigs: “Dogs look up to us. Cats look down on us. Pigs treat us as equals”. We’d add “and they provide us with bacon without which Veganuary would turn into a veritable 12 month tsunami of vegetarianism”!

Posted in Credentials, Trends

Prospects for Grocery Retail and Who’s Eating Their Lunch?!

Posted on July 23, 2018 by Prof David Hughes & Miguel Flavián

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One way or another, each of us ingests food every day. The intriguing question is, in the future will we be buying it from the same retail providers as in the past? Drop back a decade and the answer revolved around the perceived relentless march of the mega-supermarkets – Walmart, Tesco, Carrefour et al. Now, massively present although they are, “Big Box” retailing is looking a tad jaded, with the Germanic terrible twins, Aldi and Lidl, causing consternation and the manifestation of all that is online, Amazon, hovering menacingly! So, what’s the story?

Let’s look at some facts and forecasts. In the UK, supermarkets and hypermarkets have a combined grocery market share of 55%. By 2023, their share is forecasted to slip to 52%. Let’s race ahead to 2030 – share will have dipped to the mid-40% but reports of their death will have been greatly exaggerated. Discounter share in the UK, now at 12% and expected to reach 14%+ by 2023 will nibble towards 20% by 2030. Across Europe, those pesky discounters have shown consistent ability to prosper in a hostile environment – like moths in the wardrobe, they’re very difficult to expunge!

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Retail pundits are increasingly disappointed and sceptical about the future rate of growth for online grocery. In 2018, 6% of UK groceries were purchased online and this is projected to increase to a modest 8% by 2023. The disappointment is that this growth trajectory does not emulate that of hardware, electricals or fashion. We believe that in the UK online grocery share may be 15% by 2030 but what sort of groceries will be routinely sold online?

Look, there’s a big difference in the level and frequency of emotional involvement in our purchases of, say, kitchen paper towels versus meat. For paper towels, we buy our regular brand or whatever other brand is in our “paper towel repertoire”, often being influenced by whatever is on special. Few shoppers sniff the pack and search assiduously for the “best before” date! However, fresh foods are predominately supermarket labelled and we feel the need to check dates/appearance/ripeness/maybe smell because, after all, this core purchase will be eaten by me and my family.  Like meat, the fruit and vegetable purchase is equally complex: green or ripened bananas?; is the avocado for guacamole tonight or do I want it to be perfectly ripe for a salad in 3 days?

Satisfying online shoppers on fresh foods is a weighty responsibility. Trust in the provider and brand owner, whether it be a supermarket or a pure online player like Ocado is paramount. So, do you think the majority of shoppers will be comfortable with their local supermarket selecting their families’ fresh foods, let alone a distanced, monolithic entity such as Amazon?! Building online share for fresh foods will be very hard work whereas doing the same for the other boring but essential stuff will be, relatively speaking, a doddle! That’s why UK online share of grocery purchases will be “only” 15% by 2030 and the disproportionate share of those online grocery purchases will be for shelf stable items that are, currently, located in the middle aisles or “the morgue” as this area is unkindly named. Surely, at least half our grocery purchases, the ones that are essential but low involvement from a shopper perspective, will be auto-replenished via signals from smart fridges and pantries in most homes within a decade?

Shoppers’ relationships with groceries have always been a bit more personal than other goods. Back in 1998, grocery sales were just 14% of total for Walmart and it took close to 20 years for “The Mother of All Grocery Retailers” to ratchet this percentage over the 50% mark (57% of Walmart’s $500 billion sales were grocery items in 2018). For Amazon, 2017 sales of $180 bn. had a tiny fresh food component – that’s one of the reasons Bezos bought Whole Foods. We’re convinced that he’s kicking himself regularly for not putting in an early bid for Sainsbury’s before they went and queered his pitch by snagging Argos and, then, Asda. Online platforms with no track record in perishable fresh foods need to earn shopper trust and an accelerated way to do this is to purchase a bricks and mortar retailer with a fresh food pedigree. The strong performance of Morrisons’ share price over the past few months is indicative that market pundits think Amazon may dip into its petty cash and fork out $8 bn. (a mere1% of its current market cap.) to buy a friendly Yorkshire grocer before the year’s out!

Pundits have a short attention span and are impatient by nature. Amazon takes a longer-term view. David signed up as a customer with Amazon in 1998 – 20 years ago, when Bezos was just moving out of his garage using it as an office and depot and his “books by mail” business was taking off. In 2018, Amazon has a 40% share of ALL online sales in the USA. Are its sales peaking? Hardly! 85% of retail in America is still bricks and mortar-based. But Bezos believes that Amazon must expand and grocery sales are an integral part of this expansion. Look to China for endorsement – both Jack Ma (Alibaba) and Pony Ma (Tencent) are expanding their internet-based businesses by buying into traditional supermarket chains.

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China’s level of digitalisation is enough to make Western online companies dribble with excitement. Payment by touch phone dominates and cash is passé. B2C e-commerce penetration in China far exceeds that in any other market in the world. Are the Chinese more tech-savvy? No – they’re leap-frogging traditional stores because of poor store networks and shocking product availability. For a US food producer, partnering with the top 4 grocers gives you access to half of the US food market. In China, by contrast, the top 4 grocers connect you with 5.7% of food retail spending (The Economist Intelligence Unit). This is a headache for food producers and consumers alike – supply chains are long, circuitous and, often, dodgy. So many Chinese consumers shop online because the products they want are not available offline and, as a bonus, they don’t have to sit in a horrendous traffic jam going to and from the store!

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Getting back to our food purchasing behaviour – let’s not forget that whilst food is fuel, it’s also for some occasions (which are being squeezed) hugely social, fun, family, tradition, entertainment, reward and much more. Online is great for basics but can be at odds with consumer values when we are in feasting rather than refuelling mode. Yes, we can make “Mindful Choices” shopping online but it’s more rewarding when we have an opportunity to interact with the physical food and those that sell it. Capturing online share of fresh foods and story foods will be a marathon not a sprint. But focussing on the battle solely for grocery market share is profoundly blinkered. The overall market for food must be viewed in the round. What about food consumed out-of-home or when we “eat out in” using the likes of deliveroo, uber eats, etc.?

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The food-to-go market is huge and growing substantially faster (x2) than traditional grocery. Whereas supermarkets are expanding their food-to-go offer, they are not the movers and shakers. 60% of this market is taken by specialists and by QSR, but over the next 5 years the specialists will advance at pace and QSR overall will struggle, as some fail to keep pace with the digital/technological initiatives of the global fast food employers (particularly McDonald’s who have done remarkably well in the UK during a torridly competitive period for food service). For best in class, look to Pret (snapped up recently by  Germany’s JAB), Itsu and, as ever, M&S’s food-to-go offer can be fabulous. Younger consumers are the driving force in food-to-go and when they want it, they want it NOW, not in a minute but NOW! Desperate to claw their share of this market, supermarkets are and will continue to revert to type and rely on astonishingly low-priced meal deals. It’s in their DNA to foment a “race to the bottom” on price.

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 As traditional eating patterns (breakfast-lunch-evening meal) break down and are replaced by a series of mini-meals and/or snacks which can be bought and eaten out, or delivered in to office or home, demand for old-fashioned food ingredients wanes. Breakfast is purchased on the way to work, lunch is at or close to place of work, dinner is carried home or “ubered-in”. The result is that the pre-eminence of the supermarket as a destination to purchase food is lessened substantially. In short, the meal/snack market moves from being highly competitive to, let’s call it, ubercompetitive!

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Is this good news? Well, YES from a consumer perspective with a myriad of food businesses vying for our attention and opportunities galore for those that are quick on their feet, technologically adept and are well tuned-in to fast-changing consumer whims and fancies. But, it’s more challenging for monolithic 20 Century grocery retailers who may lose sales massively from the core of their stores to pure play online merchants and struggle to keep up in the fast-changing world of food on the move! Surely, it’s good news for food suppliers as new routes to the consumer emerge and become established and, in doing so, take share of stomach from the traditional supermarkets. So, do we expect to see tumbleweed blowing through dust-covered  aisles of abandoned Tesco and Sainsburys/Asda supermarkets? No – they have huge areas of strength including a thorough understanding of sourcing fresh foods, the capacity and resources to change, and the capability to be world class omni-channel retailers.

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Posted in Fresh Products, Hypermarkets, Online, Uncategorized

The Green Train is No Band Wagon. It’s a Bona Fide TGV Consumer Express!

Posted on April 18, 2018 by Prof David Hughes & Miguel Flavián — Leave a comment

Here’s a challenge: explain consumers’ understanding of sustainable food in a 140 character tweet – oh, go on then, try the new 280 character option! Succinct descriptions of complex topics are very fashionable with politicians and business leaders alike and we, the hoi polloi, have to work out what is genuine and what is fake news on food.

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Back in the early-noughties, David spoke on themes such as “The Green Train Has Left the Station: Get On Board!”. Continuing the green theme, in one of our early supermarketsinyourpocket posts, 3 years ago, we concluded:

“Bottom Line: consumers are and will increasingly ask more of those who produce and retail their food, whether it be local, animal welfare-friendly, environmentally sustainable, chemical-free, or whatever, the “green bar” is rising inexorably. Consumer citizens will have their way and they won’t pay a premium for ethical food – they’ll simply discount those that fail to meet their ever-rising expectations about the food they feed their families.”

Frankly, today, we wouldn’t change a word of the above. Back in 2006/7, 1% of new products launched around the world had some environmental/ethical claims but this had climbed to 22% by 2016/17 (Mintel). “Natural” claims (e.g. no additives, preservative-free, organic, GMO-free) rose from 17% to 29% over the same period. The USA has led the charge: Euromonitor estimate the American market for ethical food products to be around $270 billion in 2018, with environmental issues foremost and animal welfare much less so than in Europe. Mind you, pervasive use of “green” terms can dilute their impact, particularly, if loose usage has no foundation. That’s why, transparency and traceability in the supply chain is a “must have” and not a “nice to have”. The flurry of interest in blockchain technology (a digital business version of “I’ll show you mine if you show me yours”) is testament to this. Clearly, American consumers’ interest in “what’s in my food [the ingredients], how was it produced and who produced it?” extends much further than well-heeled Whole Foods Market customers.

The impact of the rising “green bar” is well illustrated through Danone’s American journey over the past couple of years: buying WhiteWave Foods for $12.5 bn. in 2017, which is a major producer of “green” food products (e.g. organic, plant-based, “non-dairy dairy” brands such as Alpro and Silk) to assist it in exiting the slough of despond afflicting “Big Food” companies in North America. Danone North America has been accredited B Corp status (April 12th, 2018) whereby it is third party certified for achieving rigorous standards of social and environmental performance, accountability, and transparency: walking the talk of its mission “to bring health through food to as many people as possible”. Emmanuel Faber, Danone’s CEO believes that “increasing distrust of the global food system and the consumer-driven revolution in food are the two sides of the same coin. (Consumers) want to understand who are the people behind the brands and how the ingredients have been grown and what the impact is going to be on their health and the planet and everything. Then, of course, they choose” and they may or may not take these factors into consideration when making the actual purchase – that’s their prerogative to be glowingly rational, quixotic or palpably irrational!

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Increasingly, there’s no hiding place for food companies and their ingredient suppliers. Ten years ago, fast food customers wouldn’t have thought to mull on where the soybeans came from that were fed to the chickens that were processed and, then, dusted with the Colonel’s secret recipe of 11 herbs and spices. Now, they’re concerned that this journey may have involved the destruction of the Amazon rain forest (come to think of it, it’s increasingly difficult to have ANY secret recipe because were those secret spices processed in a factory in India manned by children?). It’s moot whether serried ranks of consumers are spending their time mulling such issues, but WWF are watching every step of your suppliers and will spill the soybeans if there are transgressions.

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Note to readers: DON’T cross The Panda or she’ll knock your block off!

So, where’s the “Green Train” now – decelerating gently as it approaches the terminus? Well, NO it’s picking up speed driven by the winds of social media, activist organisations, governments, and concerned consumers and it’s international, not just a British foible, with huge implications for the global food industry. The consumer issues agenda lengthens:

  • food waste is a big issue: with Tesco pledging to halve food waste in conjunction with its suppliers by 2030; the launch in the UK of the Karma food waste app; ugly/wonky fresh produce becomes fashionable. Spare Fruit differentiates itself in the market by using fruit not meeting supermarket specifications;
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  • food packaging is set for a drubbing (see last month’s blog). Waitrose is removing all disposable coffee cups from its stores this year. Major players are pledging to have full recyclability for their packs by 2025 – they won’t be allowed that much time by consumers and will have to adopt a “Hurry Up Offence” (as NFL teams say when they are attempting to clutch victory from the jaws of defeat!) to get there sooner!;
  • governments are losing patience with consumers and the food industry as the NHS buckles under the weight of diet-related disease costs. Initially exhorting consumers to eat more healthier, then, pressure was applied to the food industry to cut sugar, salt and fat levels and, now, it’s the heavy stick of taxation.

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Public Health England has launched several campaigns to influence shoppers’ decisions and make them aware of the sugar and calories they are consuming

Health is the driving force behind the greening of the global food industry but it’s much more than the consumer’s health. The Number 1 global consumer mega-trend is the growing concern about the health of the family and the health of the planet. Increasingly, when shopping consumers will take previously considered esoteric environmental and social concerns into account and, albeit modified by inter alia their financial situation and the eating occasion (e.g. special meal, refuelling “grab & go”), they will make “meaningful choices”. Do they have a better defined notion of sustainability than in the past? No, but inexorably, they are recognising that they can influence the direction and outcomes in the food industry through their purchasing behaviour. Now, sometimes this can be scary if they get hold of the wrong end of the stick or are unduly influenced by crackpots or wicked corporations manipulating research data to further their venal ends. But, in the end, we’d back the common sense of the masses to exhibit “parish pump wisdom”. In bygone times, the women of the village would gather around the water pump to wash clothes and discuss the matters of the day. Invariably, after discarding the dross, a consensus would emerge on what was the right thing to do and who was the hero and who was the villain! Used perspicaciously, social media vehicles, including shamed facebook, has become the global parish pump!

Shoppers are getting more and more involved in the food they are buying. They want a meal and snack solution without a mess – in the home, on the farm, on our planet. In fact, their preference is to have meal solutions coincide with solutions for our planet and those that live in it. Monitor consumer concerns and adapt your products and services accordingly. Don’t become the sugar-laden breakfast cereal or fizzy drink of your sector. Consumer scrutiny of the food and drink industry will only increase. What issues are edging on to the radar screen? That’s for another blog, but be open, talk to your customers and to special interest organisations that are active in your sector and they’ll give you advance notice on future issues. Be open and they’ll respect this. When consumers are eating your products, they are sharing their views with friends and almost anyone else who is stuck on a train or motorway – make it a trialogue!

Take a good look at what the best of “Big Food” is doing to become more transparent and engaging with their customers. We gave the example of Danone with its B Corporation accreditation. Triple Bottom Line preceded it and Net positive Futures shares a similar space. Business is changing fast – the consumer is driving the Green Train and it’s no Band Wagon. It’s  a bona fide TGV Consumer Express!

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Posted in Credentials, Sustainability

The Domino Theory: Implications for Plastic Packaging

Posted on February 27, 2018 by Prof David Hughes & Miguel Flavián — 2 Comments

Who would you choose to captain your fantasy A Team on environmental issues? In agriculture and food, Rachel Carson of “Silent Spring” comes to mind. She’s been the mother of the modern environmental movement with her early stance on abusive usage of pesticides. St. David Attenborough would make a decent Vice-skip, particularly with his revelations on destruction of our planet’s oceans which are the home of the world’s favourite meat protein – fish and seafood. Concerns about the impact of plastic waste on our environment are not new but, certainly, he has raised them to their current high levels via the BBC documentary Blue Planet II.

Evening Standard February 25th, 2018Evening Std Milkmen.jpgA recent UK Kantar Worldpanel survey identified that:

  • 25% expressed “extreme concern” about plastic packaging in grocery;
  • 42% thought it should be a priority to make all packaging recyclable;
  • 21% want entirely plastic-free packaging;
  • and 59% said they were trying to minimise plastic waste at home.

A large sample, these results reflect substantially more than the views of eco-terrorists, Guardian readers and Waitrose shoppers!

Grocery industry folk we meet with outside our borders often comment on the profligacy of packaging in the UK, identifying “overly-packaged” fresh foods and ready meals as being particular culprits. There’s some truth in this although it does reflect that we are an acutely convenience-driven shopping society – grab & go people with no time (or competence?!) to select the pick of the crop and, anyway, shouldn’t that be the job of the vendor? This suggests that we don’t like plastic packs but we might find it difficult to give them up.

Richard Walker The Grocer.jpgMind you, there’s plenty going on in the grocery industry:

  • astute Malcom Walker, CEO of Iceland, was first out of the blocks promising to eliminate plastic packaging from all Iceland’s own brands by 2023;
  • Waitrose has announced it will eliminate black plastic on own brand products by the end of 2019;
  • Tesco has its “3 key pillars of the Little Helps Plan” committing to make all packaging recyclable or compostable by 2025;
  • Nestlé and Unilever, amongst others, have endorsed a total ban on oxo-degradable plastics (those that many consumers believe are biodegradable but, in fact, leave micro-plastic waste as a hazard for fish in the oceans);
  • Coca-Cola has a “World Without Waste” goal to have 100% of its packaging recyclable by 2030;
  • and pesky millennial start-up companies incorporate total recyclability into the package of values that are integral to their products. Ella’s Kitchen (now, part of “Big Food” Hain Celestial) has pledged to make its baby food pouches recyclable by 2024 but, in the meantime, has an “Ellacycle” scheme in which consumers can drop off their empty Ella packs to be made into useful consumer items! Fair Play, Nestlé have picked up from customers’ front doors used Nespresso pods as part of its coffee system offer for years.

 

So, the grocery industry seems to be saying “We recognise there is a plastic packaging problem and we shall fix it .. umh .. in 5 or 10 or 15 years time”. Problem recognition is a good start, albeit after years of, if not denial, at least ignoring. Do you remember the contretemps associated with CFCs –used in refrigerant cooling and aerosols. In the very-early 1970s, their impact on the ozone layer was shouted out by “eco-terrorists, ne’er-do-wells, flower power people and communists”. But, it wasn’t until the 1987 Montreal Protocol that the world started to take action to address the widening hole in the ozone layer. David can remember in the 1970s blithely using spray can deodorant without a smidgeon of guilt that he was upping the skin cancer risks for his mates in Australia!

So, relax, we’ve got 15 years to fix the plastic packaging problem. Well, it took Rachel Carson and her “Silent Spring” and the anti-CFC protagonists the better part of 15 years to get a hearing but, then, we didn’t have pervasive social media. If you sell a dodgy chicken in Ulaanbaatar and get rumbled this morning, it’ll be on facebook and Bloomberg News before lunch. Time has become compressed. Those that run our industry – consumers – won’t allow us the luxury of 15 years to fix the problem and particularly those impatient centennials and millennials. There’s billions of them around the world and they are astonishingly inter-connected and, increasingly, concerned about social and environmental issues. Damn them. They’re all like Veruca Salt, the spoilt brat in Roald Dahl’s “Charlie and the Chocolate Factory” who wants the Golden Ticket and she wants it NOW!

The issues associated with plastic packaging are analogous to those related to animal welfare, food safety, and food chain integrity, in general. Responses to consumer concerns are accelerated by the actions of major food industry players. Why the Big Boys? First, increasingly, they are aware that if their corporate interests are not consonant with the values embraced by their customers, then, they won’t remain Big Boys and they’ll certainly be perceived as Badder. Secondly, nimble start-up and smaller players will grasp social and environmental initiatives to give them a competitive edge and exacerbate the doldrums which many major companies find themselves in.

McDonald’s is a case in point. In many social areas, it’s been ahead of the curve (e.g. MSC certification on its fish). On a platform of “Food with Integrity”, USA-based Chipotle claimed “antibiotic-free chicken” and, essentially, forced or at least accelerated discussions that McDonald’s had with its chicken suppliers worldwide to follow a similar path (mind you, Chipotle went on to foul up on food safety and queer its pitch on food integrity!). McDonald’s move towards cage-free hens for its egg supplies in many countries reflected pressure from animal welfare groups and prompted a very quick response. Do click on the link below to see the YouTube clip placed by Animals Australia (2014) which is a quite brilliant example of lobbying – fair and balanced? No. Effective? Yes.

Once a Big Beast like McDonald’s or a Tesco takes a radical social, environmental, and/or animal welfare initiative (or, indeed, one on price), major competitors are forced to follow – the dominoes start to fall. What’s more, these domino tiles aren’t tiny, they’re the size of massive Stonehenge pillars and the consequential knock-on effect has massive implications for the food industry.

What’s our point? We see a classic example of the Domino Theory in Practice for the accelerated removal of plastic packaging. Concerned consumers won’t accept dates for 100% recyclability that stretch into the mid-2020s. Back to Veruca Salt, they want it NOW and, increasingly, their purchase decisions will reflect this. We’ll be seeing much less of the pervasive, anger-inducing label on pack of “not currently recyclable”. Should this be an opportunity for governments to regulate? We’ve moved on: in the food industry, it’s not governments that regulate us, it’s our customers, the major supermarket and food service chains, and they are the proxy for those with the real market power – shoppers, consumers and their families!

Plastics will take time to disappear but if they are not recyclable and/or compostable soon, the products inside these packages will not be purchased. Will consumers pay more for green packaging? NO – they’ll simply expect it and will be outraged if it is not. Ralph Early (Harper Adams University) has an insightful article in February’s issue of Food management Today: He concludes “(food businesses) derive income from the products they sell to consumers and in doing so they assume a range of moral (and ethical) responsibilities on behalf of consumers”. We concur. We’ll attain 100% recyclability much quicker than the food industry is planning to do so now. When we get there, we’ll be asking ourselves “Why didn’t we do this before?”.

 

Posted in Consumer, Credentials, Sustainability

Trust Me, I’m a Farmer!

Posted on January 24, 2018 by Prof David Hughes & Miguel Flavián — Leave a comment

Back in 1933, soap detergent company Procter & Gamble sponsored “Oxydol’s Own Ma Perkins” daytime radio show and soap operas were born! Post-War, the “goggle-box” arrived and we’ve been huddled together watching the ubiquitous soaps for decades. Food companies got into the game: Domino’s Pizza and BirdsEye sponsored The Simpsons. But, the notion of the “nation’s favourite” laundry detergent or food brand has dissipated – weakened by encroaching supermarket private label, promiscuous shoppers chasing price deals and, more recently, the gnawing perception by not least millennial consumers that Big Corporates are Bad and Smaller are Sweeter!

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The 1930’s Advertisements for Oxydol were Soap Operas in Themselves!

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In fact, there’s been a collapse in trust of erstwhile élite institutions such as government, the church, non-government organisations, the media (true or false news?!), particularly social media (trusted by less than 25% of Brits), and business, not least global companies. Grumpiness about the latter varies substantially by country: the French are the most dyspeptic (hasn’t it been ever thus “La Bonne France, L’Autres  sont Terrible”!), Brits are sceptical by nature, Americans generally positive and the Chinese, ironically given their Communist status, laissez-faire and happy to embrace international brands! Mind you, it’s not surprising that the Chinese are generally happy with their lot – there’s more than a few citizens of democratic countries that would trade their voting franchise for a long sustained period of income growth and “things getting better for my family”.

On trust, “Big Food & Drink” has fared badly this decade, as we’ve reported in previous blogs. As issues relating to consumer health, the environment, worker welfare, etc., have become more widely discussed, big corporates have been perceived more of being part of the problem rather than the solution. Let’s be clear, it’s a nonsense to think that the answer is to revert to small-scale, but Big F&D has been ponderous and, often seemingly reluctant, to align their values and performance to meet their customers’ requirements. Let’s give 2 cheers to Kellogg’s in the UK who announced in November last year that it was cutting sugar content in kids’ breakfast cereals by 40%. Child obesity didn’t pop up as a problem in 2017, Mr. Kellogg! And, then, there’s Coca Cola promising that by 2030 all its packaging will be recyclable – much too little and much too late would be our view, lest the oceans be a squidgy mess of plastic waste by then! Or the gob-smacking promotion this month from IHOP (International House of Pancakes) in the USA – the country firmly in gold medal position in the OECD Obesity League Table.

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We think that 2018 will see an acceleration in the transformation of the global food and drink industry. Sieving through the plethora of “Food Trends for 2018” that arrive with the New Year, we like Innova Market insight’s top trend “Mindful Choices” which identifies increasing consumer concerns about the health of the family and the health of the planet as current  Millennials enter the family “nesting” stage of their lives. In 2007, 1% of global new product launches identified environmental and ethical attributes – in 2017, the figure was 22% (Mintel Global NPD Base). Is this just corporate greenwash? No, Big Food is on to this, or at least some of them are. Unilever and Nestlé are clear leaders but here’s a quote from Danone’s CEO: “our business is inherently reliant on agriculture, so we will help transform the food system, and work with our partners to build regenerative models of agriculture based on healthy and resilient soils”. When did you last hear a word from a food and drink company that acknowledged that its business had anything to do with soil!

On environmental matters, and particularly the global food industry’s impact, we’ve passed the tipping point. Sometimes it just takes a little nudge – a 5 pence charge on a supermarket plastic bag and usage is slashed (UK). It’s got little to do with the financial penalty and much more to do with the increasing awareness of the impact of plastic waste on our environment (and the guilt of being an indiscriminate plastic bag user). The BBC’s riveting Blue Planet II has taken this concern to a higher level – note the headlines “Plastic killing our precious sea creatures” (for goodness sake, sanctify Richard Attenborough!).

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The most recent and pivotal manifestation revolves around non-recyclable coffee cups and whether there should be a 25 pence (35c) charge. The charge won’t materialise because it won’t have to – increasingly, consumers will make it unequivocally clear that if the cup isn’t recyclable, then, they won’t buy it. That’s why we feel that frequent criticism of over-packaging of food in the UK is currently valid but shortly to be passé. This is a great area to show a first mover initiative – note Iceland supermarket very recent promise to remove all plastic packaging within 5 years. Be assured, in a very few years, if packaging isn’t at least recyclable but preferably compostable, then, the product won’t be purchased. There’ll be no premium paid for recyclable/compostable packaging, but there will certainly be a discount on products which are not!

We mustn’t ramble on, so, back to building trust in the global food and drink industry. Reflecting back on the past 60+ years, “those in charge of our food” has changed from big food and drink manufacturers usurped by monolithic retailers (hey, it was only a decade ago we all thought Tesco would bestride the retail world and Amazon was a Ponzi scheme and Alibaba a fairy tale character). Now, the internet has brought huge social challenges but, in the world of food and drink, it has moved power firmly towards the consumer-citizen. A bit late in the day maybe for some in the industry – if we had worked out back in the early-1990s that doing clever stuff with plant genetics required the sign off from consumers before we got too far down the pike would have saved us a lot of grief on GM food. However, then, we weren’t smart enough to grasp that working on the basics of life required us to gain a licence to operate from those that paid our salaries and took the risks of our actions i.e. consumers.

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Jeff Bezos, in the process of building the challenger of Walmart and Tesco.

It’s a fact, Consumers Rule OK! They demand transparency and traceability along the supply chain. Increasingly, they’re interested in how the products they put in their families’ mouths are produced, and where and by whom – why wouldn’t they be? Particularly because they are of the mind that the food and drink industry has been sparing in information presented heretofore and, occasionally, economical with the truth on its costs and benefits.

This upcoming decade may well be a watershed for food producers – and we mean the farmers and fisher folk who produce, to use an old-fashioned term, the ingredients which comprise our daily fare. Actually, from a consumer trust perspective, in general, farmers are well placed (maybe to their surprise). Research from Canada, for example, shows that farmers are more trusted than other food chain participants – such as retailers, manufacturers and government regulators; although, trust levels have slipped right across the food chain in most recent years. Canadians see their farmers as being competent but needing to work on providing greater transparency in their farming operations. A similar picture is evident in the USA: government, farmers and food manufacturers are all held responsible to ensure safe food for the nation, but farmers (along with our own family members and the local doctor!) engender much more trust than the others. Big Food and big business in general lack trust, whereas smaller-scale operators are perceived more benignly. If there is a pervasive view that “Small is Beautiful”, then, this is both naïve and problematic – small can be cute and cosy but, of course, it can be under-resourced, ill-trained, under-regulated and downright sloppy!

There is a big issue for farmers, too, on consumer perceptions of scale in agriculture. Big farming/factory farming is demonised whereas smallholder farming is fêted. The rhetoric surrounding messianic support for the small-scale producer reminds us of Primrose the pig in George Orwell’s Animal Farm mindlessly chanting “Four legs good, two legs bad”. Most UK consumers, for example, would have no idea of what number of cows would constitute a large or small dairy herd. In fact, what is portrayed as gargantuan and the worst sort of industrialised farming by activists would be seen as barely economic in, say, South Island, New Zealand!

Clearly, one can’t usefully lump farmers (or any businesses) into arbitrary categories based on land plot size, sales, etc. The world over, there are good businesses and bad businesses and, fingers crossed, let’s hope there is sufficiently robust regulatory frameworks in place to weed out those that are noxious! For a producer of a “finished” food product sold to a consumer, however, what is much more important than in the past is the story associated with the manufacture and procurement of the ingredients that comprise the final product – the primary producer is an integral part of the food team. This wasn’t the case in the history – ingredients appeared automatically, almost by magic! The farmer is now maybe the most important part of the food integrity team. Those farmers that can deliver this on a sustained basis will earn a premium for doing so, after all, they are carrying the brand integrity torch on behalf of food brand owners.

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In the future, expect to see primary food producers much more upfront than in the past. It’s already happening – note the coverage that small-scale coffee and cocoa farmers receive in advertisements from the likes of Nestlé, Cargill, Kraft Heinz. McDonald’s puts egg and potato farmers in its advertisements. Danone is talking muck and farming! The worm is turning! Farmers are becoming increasingly fashionable and deserve a premium for their fashionista status. This doesn’t mean that every farmer should become a media star. There’s a lot of farmers who would put the fear of God up a consumer. But farmers do need to be more on the front foot. We like the farmer-led campaign to promote milk products and dairy practices in the UK –  #Febudairy. Let’s see some “agri-proactivity” as it shouldn’t just be the bailiwick of vegan special interest groups to trample unfettered across the twittersphere when communicating with impressionable consumers. Finally, in Agriculture’s “A Team”, make sure there are real farmers who are personable, attractive to the eye, with media training to carry the banner for the agricultural industry!

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Aldi sponsors Olympic Team GB and picks the most athletic farmers to supply them with milk!

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Posted in Credentials

Some Reflections on Global Food System Trends

Posted on December 20, 2017 by Prof David Hughes & Miguel Flavián — 1 Comment

End of the year food blogs, often, focus on trends embraced by the chattering classes, such as Gothic desserts, even more obscure ancient grains, and posit opinions on whether demand for kombucha tea has peaked. However, we thought we’d take the “ground-breaking” FAO 2017 study of global food system trends and pull out some stuff that might be of interest to you whether you are farming, retailing or doing anything in between.

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  1. World Population Growth is Slowing

We’re going to add 2 billion more people to our world over the next 30 years and most of us will be living in cities – that’s handy because it makes them easier to bag with our products and services.  By 2050, India will be the most populated country and China will have got old before it gets rich, with too many grumpy batchelors. Notwithstanding the UK’s wingeing about new entrants, Germany’s population growth rate is double our own. Urbanisation brings sharp falls in fertility rates across the globe – who’s going to do the grunt work? A combination of robots and immigrants?

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  1. Dietary Patterns are Changing

Global meat demand is buoyant and the better part of 90% of anticipated increase in consumption over the next decade will come from Asia. Right now, China woofs 25% of the world’s entire production of soya to feed an increasingly ginormous pork herd, but global meat exports will surge – 5 million tonnes per year into China alone. Counterbalancing meat demand growth in emerging markets will be a slow drift down in per capita consumption in richer countries. Mind you, protein intake will grow, driven by pulses, dairy and complex meat substitutes.

  1. Nutrition and Health

The proportion of the world’s population that is under-nourished is falling, thank goodness, but over-consumption is increasingly pandemic. Under- and over-consumption bring huge avoidable costs to us all. Food culture and history explain astonishing divergences between countries: in Europe, obesity is 3 times higher in the UK than Italy; and it’s 10 times higher in the USA than in Japan! There’s a well-beaten path – first, government departments of health recommend we change our diet and lifestyles. Little happens and the food industry is exhorted to reformulate. Marginal changes arrive but too little, too late. Governments turn to fat and sugar taxes more as a stick to beat industry into accelerated change than to influence significantly consumer behaviour. The health & well-being megatrend is a long-term runner.

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  1. Global Economic Growth, Investment, Trade & Food Prices

Global annual economic growth is projected at 2.7% but it won’t be shared equally around the world. Watch out for hiccups in China, the USA and India – the first two have a disproportional impact on the rest of us, i.e. if they have a sniffle, we catch cold. A slowing China is entirely predictable but don’t forget that a VERY modest 5.2% growth in Chinese GDP is equivalent to adding “Another Germany” every 5 years! When the USA is struggling, China and India account for over 50% of global growth – a frightening reminder that economic performance in these two emerging markets can both make and break us economic minnows. Agricultural commodity prices are expected to remain at relatively low levels which is particularly disappointing for farmers ……

  1. Competition for Natural Resources, Agricultural Productivity and Innovation

…. because of growing scarcities of natural resources which will drive farm input costs higher. FAO anticipate “intense competition for diminishing resources resulting in further land degradation, deforestation and an unsustainable level of use of water resources”. But, there may be some mitigators: peak oil being pushed further back into the future because of alternative sources of both non-renewable and renewable energy; increasingly AI-driven, high tech agriculture bringing a productivity surge to commercial farming; science-based and societally-approved genetic engineering of plants with consumer and producer benefits such as nitrogen-fixing staple crops, drought- and disease-resistant crops, etc.; transformation of business models in farming fuelled by rewarding productivity increases (and other societal benefits) rather than focussing on slowing the rate of agricultural adjustment (e.g. elements of the CAP).

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Unilever and other Big Food using their scale for good.

 

  1. Climate Change, Natural Disasters, Conflicts, Crises & Migration

FFAO separate these into 4 separate, gloomy trend boxes but we lump them into 1. Unequivocally, climate-related disasters are escalating causing huge economic damage, viz. $100 bn. per year between 2004 and 2014 and exacerbated by higher global temperatures and erratic rainfall. For many countries, this will mean greater food insecurity – higher income consumers can cope if a staple or a treat leaps in price. But, it’s a different matter for the lady buying food for her family in The Philippines. More than half her family’s income goes on food and, if the price of rice rockets because of a nasty El Niño, she doesn’t buy less rice, probably she buys more and much less of the little treats she was starting to give her family (e.g. imported beef, dairy products). For exporters, anticipate more volatility when you are business planning.

Here’s another crisis in prospect: in Bangladesh, half of the 165 million people live so close to the water that a combination of rising sea level, more frequent and extreme weather events and add in the tragic influx of Rohingya Muslims from Myanmar, then, Bangladeshis and the world have a massive problem. Because when push comes to shove and their feet get wet, they’ll start walking – and in numbers that will make the more recent North African immigrant flow into Europe look like a Sunday picnic. This is a Bangladeshi issue but a problem that the world will have to solve. Mind you, it’s an ill wind etc…. as we’ll be needing the labour.

  1. Transboundary Pests and Diseases

Global food security is threatened by an alarming increase in the number of outbreaks of pests and diseases in animals and plants. Bird flu is a case in point. Two years ago, there was egg rationing in the USA for goodness sake – a country where they can’t spell rationing, let alone come to terms with food shortages! China’s National Health & Family Planning Board reported 79 human deaths in January, 2017 from Avian Influenza. The worry is that a mutation might allow human to human transfer of AI and that would beget a cataclysmic pandemic. Remember, more than 70% of infectious diseases in humans since 1940 can be traced back to animals.

  1. Food Losses and Waste

There is plenty of food to feed our world of 7.6 billion. It’s not evenly distributed and close to 800 million people end their day hungry. Yet, one-third of all food produced is lost or wasted! In emerging countries, food is mainly lost in the supply chain before it reaches consumers (e.g. spoils in storage, or in-transit). In “our” world, most of the waste is in the home – we buy too much and throw it away. We’ll all get better at this – better supply chain management and infrastructure in emerging countries and, in the Western world,  we’ll be shamed into more sustainable food buying and consuming practices and become savvier about spending our hard-earned money on groceries. Move on to 2050 – Malthus will be proved wrong again as we produce plenty of food for 9 billion consumers. The issue is will we be doing so in a sustainable way?

  1. Structural Changes within Economies and the Food System

As we travel the world of food, we note the accelerating pace of change in many markets. When David lived and worked in Africa, one huge constraint to smallholder farming was simply them getting paid for their output – payment was slow and poor via a labyrinthine marketing chain. Then, the mobile phone era arrives – Africa skips the need for a land-based telephone system and becomes a world leader in transferring cash safely via the phone. It’s refreshing to note, for example, Cargill’s “Cocoa Promise”  to small-scale farmers ensuring rapid and fair prices plus extension support to their mutual benefit – a better deal for farmers and a more secure and higher quality source of cocoa for Cargill. The triple bottom line approach to business is a megatrend and essential for “Big Agribusiness and Food” to regain the trust of farmers and consumers worldwide.

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We wonder about the path that grocery retailing will take in some emerging countries. Not necessarily the path of small grocery store (duka) through to large supermarket route characteristic of grocery evolution in our own markets – note the huge attraction of on-line grocery shopping for customers living in global mega-cities in Asia! In short, the evolution of food systems in Western economies is no blueprint  for emerging countries. What we’ve learnt is that, for any business person, it’s good to get out more (and go a little further than Tesco and Pizza Hut). Stay home, stay stupid!

Happy Christmas to any readers who have got this far in our last blog of the year. We’ll talk to you in 2018 and reveal all about Gothic ice cream and kombucha tea!

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Posted in Trends
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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.