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Food and Beverage Industry Predictions for 2018

It’s been an interesting year for the U.S. food and beverage industry to say the least. Restaurants continued to struggle with flat-to-declining traffic, and retailers faced stalled growth. Amazon made a big entry to the food world with its purchase of Whole Foods, and meal delivery kits took new steps with Blue Apron’s IPO and Albertson’s acquisition of Plated. These new realities reflect consumers’ changing demands that will force marketers to realign how they remain relevant. The seeds of change have been firmly planted. Here are a few changes we expect will take hold in the near future.

Retailers will change to bring in the experiential consumer

There is a movement all across retail where consumers are looking for greater experiences with their purchases. This is evidenced by a shift in personal consumer expenditures toward areas like travel and related categories, while sales of material objects haven’t fared as well. Food retailers aren’t immune to this and will need to rethink their purpose for being among consumers. It’s no longer enough to provide a purely transactional relationship with them. Retailers will need to examine if programs such as cooking classes, in-store bars, and grocerants, for example, will suit customers’ needs by bridging products with experiences to make a trip to their store unique.

Health is about wellness, balance, and authenticity

Over the last decade we witnessed consumers moving away from the center of the store and more toward the perimeter, where fresh items are found. Nearly two-thirds of consumers say fresh and clean eating is synonymous with healthy eating. And since everyone under age 40 is consuming more fresh foods than their cohorts did in the last decade, this isn’t just a fad – it’s a generational shift. Packaged goods makers obviously can’t become fresh but they can win in this environment. It requires a new look at ingredients to see if reformulation is possible to remove preservatives and other artificial ingredients.

We’re also seeing consumers shift their focus to wellness and well-being; food is a means to that end. Good health and healthy behaviors can include a sensible indulgence as a reward for good behavior. Authenticity is critical here – consumers seek real and natural products, even with sweets. Consumers know sugar isn’t the healthiest ingredient, but when it’s time for a sweet indulgence, it’s best to be the real thing.

Convenience is shifting toward making fresh easier to prepare

Since consumers rely on fresh foods more often we need to rethink the meaning of convenience. For decades, we considered convenience to be built into the foods. Frozen entrées that required the touch of a microwave oven’s button were the ultimate form of convenience, but now convenience is shifting toward appliances, tools, and services that assist with fresh-food preparation. This is especially true given consumers are not dedicating more time to prepare these fresh items, which inherently require more time. Other areas along the Path to Consumption® are where consumers seek to save time. Online grocers and fresh delivery meal kits are gaining steam each year. The top reasons consumers use these services center around their time-saving aspects, such as not having to wait in lines or travel to the store. Meal kits go a step further solving the age-old question, “What’s for dinner?” Once the foods are in the kitchen, more consumers are using items like splatter guards to minimize cleaning time and electric fryers to manage the cooking process.

Culturally-based eating patterns aren’t the fastest to change, but our culture is being rapidly influenced on many fronts. Whether it’s new technologies, international influences, or economics, all are conspiring to change the way consumers think and act. As we enter 2018, look for these changes to continue. More importantly, think about how your portfolio can be part of these changes.

For more information, contact darren.seifer@npd.com.

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