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Introductory Workshop
Added ValueWhy do it?
• Meet customer needs• Gain competitive advantage – unique• Enter a new market / market segment• To gain a bigger value added share • Increase profit
What Value Can Food Have?• Texture, taste and aroma• Convenience• Shape, size and flexibility• Packaging• Service• Information and advice• Reassurance and traceability• Local production• Storability (e.g. shelf life, freezability)• Animal welfare• Nutritional content
Why People Buy
• Solutions to Problems
• Want an Experience
• Good Feeling
Consumers want VALUE
Value = Benefits – Costs – Risk
‘Solution tomy need’
Financial & Opportunity
Costs
Unfulfilled Promises
Creating Value
Customervalue
Perceivedbenefits
Perceivedsacrifice
Productbenefits
Monetarycosts
Relationshipbenefits
Imagebenefits
Servicebenefits
Timecosts
Energycosts
Psychologicalcosts
Positive NegativeCustomervalue
Perceivedbenefits
Perceivedsacrifice
Productbenefits
Monetarycosts
Relationshipbenefits
Imagebenefits
Servicebenefits
Benefits must out-weigh the sacrifice
Where is the value in your business?• What is your USP?• How do you differentiate?• What makes you better?• What’s your story?
Source:
Market Size and Forecast
Estimated UK retail sales and forecast of locally sourced foods, by value, 2007-17
Mintel
(£bn)5.5
Best case (£bn)7.1
Worst case (£bn)5.9
Mintel forecast (£bn)6.5
2
3
4
5
6
7
8
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Mark
et
valu
e (
£b
n)
95%
Confidence intervals
90%
70%
50%Actual Forecast
Est.
0
Source:
Share of Domestic Food
Share of food consumed in the UK originating in the UK*, 1988-2011
DEFRA/MINTEL
0
10
20
30
40
50
60
70
80
%
*based on the farmgate value of raw food. Consumption of UK origin consists of UK domestic production minus UK exports
Source: Base:
The Consumer – Which Issues Matter?
Factors influencing choice when buying food and (non-alcoholic) drink, December 2012 and March 2013
“Thinking about buying food and non-alcoholic drink, which, if any, of the following factors are most likely to make you choose one product over another? Select up to three.”
GMI/Mintel 1,500 internet users aged 16+
21
5
14
7
14
11
14
15
21
11
21
23
34
27
6
6
7
10
12
13
14
1720
21
23
30
0 10 20 30 40
None of these
Detailed foreign origin (eg Parma ham)
Traceable (eg to farm)
Organic
Regional origin (eg Lancashire cheese)
Fair pay for farmers
Sustainable (eg fish)
Environmentally friendly
Local origin (ie 30-mile radius)
Fair trade
Free-from pesticides
Animal welfare standards
British origin
%
Dec-12 Mar-13
Source: Base:
The Consumer – Attitudes Towards Food Origin
Words associated with foods of local, regional, British and detailed foreign origin, December 2012“When thinking about foods of local (ie food produced within a 30-mile radius), regional (eg Lancashire cheese), British (eg British pork) and detailed foreign origin (eg Parma ham, Greek feta cheese), which, if any, of the following words would you typically associate with each of these? Select all that apply.”
GMI/Mintel 1,500 internet users aged 16+
Family-produced
Higher quality
Not mass-produced
Authentic
Environmentally friendly
Worth payingmore for
Distinctive taste
Well regulatedHigher farming
standards
Overpriced
No different from normal
Safe
Local origin
Regional origin
British origin
Detailed foreign origin
Source: Base:
The Consumer – Recollection of Logos
Recollection of logos, December 2012
“Do you recall ever seeing the following logos on food and drink packaging?”
GMI/Mintel 1,500 internet users aged 16+
88
53 51
32
21
109
37 36
55
65
75
39
13 13 14 14
0
10
20
30
40
50
60
70
80
90
100
Fairtrade RainforestAllianceCertified
Red Tractor Freedom Food Certified Farmers’ Market
ProtectedGeographical
Indication
%Yes No I don’t know/remember
Source: Base:
The Consumer – Attitudes Towards British Food and Drink
Agreement with statements on British food and drink, December 2012“When thinking about British food and drink products, by which we mean products that have been produced or grown in Britain, or made using British ingredients, which, if any, of the following statements do you agree with?”
GMI/Mintel 1,500 internet users aged 16+
24
29
30
40
48
52
53
55
57
59
68
71
37
35
30
48
37
28
34
37
34
28
26
22
39
36
40
13
15
20
13
8
9
13
6
6
0% 20% 40% 60% 80% 100%
I would be willing to pay more for food/drink with a ‘made in Britain’ label
I feel guilty about not buying British food and drink whenavailable
I do not feel any loyalty to buying British food and drink
British food is of better quality than imported
Price matters more than whether a product is British
I would be willing to pay more for British food and drink (egmilk) if the extra money went to farmers
I would buy more British produce if the benefits were cleareron-pack (eg supporting British farms)
British food is usually fresher than imported
Buying British food and drink is more environmentally friendly
It’s hard to know when food is really British
I t is the duty of the retailers to support British farmers/growers
I would be willing to buy misshapen fruit and vegetables thatare grown in Britain
Any agree Neither agree nor disagree Any disagree
Source: Base:
The Consumer – Attitudes Towards British Food and Drink
Agreement with statements on British food and drink, December 2012 and March 2013“When thinking about British food and drink products, by which we mean products that have been produced or grown in Britain, or made using British ingredients, which, if any, of the following statements do you agree with?”
GMI/Mintel 1,500 internet users aged 16+
33
49
68
74
24
40
59
68
0 10 20 30 40 50 60 70 80
I would be willing to pay more for food/drink with a ‘made in Britain’
label
British food is of better quality thanimported
It’s hard to know when food is really British
I t is the duty of the retailers tosupport British farmers/growers
%
Any agree
Dec-12 Mar-13
Source: Base:
The Consumer – Attitudes Towards Provenance, by Alcoholic Drinks
Agreement with statements on the provenance of wine, beer and spirits, December 2012
“Thinking specifically about the provenance of alcoholic drinks, which, if any, of the following statements do you agree with in relation to wine/beer/spirits?”
GMI/Mintel 944 internet users aged 18+ who have drunk wine, 825 internet users aged 18+ who have drunk beer and 690 internet users aged 18+ who have drunk spirits in the last six months
22
12
31
21
30
20
40
20
19
18
27
28
17
42
17
12
19
24
28
28
50
0 10 20 30 40 50 60
None of these
I prefer drinks made by smaller producers
I prefer drinks made by producers from a specificregion (eg Scottish whisky, Bordeaux, Bavarian
beer)
I would like to see a wider range of drinksproduced in my own country
I prefer drinks from the country they traditionallycome from (eg French wine, Belgian beer, Russian
vodka)
I always check the country of origin of the drink
I like to try drinks from different countries
%
Wine Beer Spirits
The Local advantage
• How do you get your message across?• What’s the personality of your business?• How is that represented?
Consumer Trust in Food Brands
Top ten most trusted food brands*, January 2012- April 2013
66.462.1 61.0
58.5 58.4 58.3 57.4 57.1 56.8 56.2
0
10
20
30
40
50
60
70
%
Base: Internet users aged 16+SOURCE: GMI/MINTEL
* Among the selected leading brands featured in Mintel’s brand research
Consumer Attitudes Towards the Food Industry
“To what extent do you agree or disagree with the following statements about the food industry?” April 2013
23
23
24
32
32
35
36
40
40
42
49
77
36
39
32
42
31
37
30
37
37
35
37
20
41
38
45
26
37
28
34
23
23
23
13
4
0% 20% 40% 60% 80% 100%
Food manufacturers encourage people to eathealthily****
Different elements of the food supply chain allwork effectively together***
Supermarkets care about British farmers
The food industry sources food responsibly
Supermarkets are aware of where theiringredients originate from
Supermarkets set fair prices for consumers
Food manufacturers** are aware of where theiringredients originate from
Supermarkets/ food manufacturers provideaccurate labelling* on food packaging
The food industry in general is well regulated bythe Food Standards Agency
The food industry is able to effectively react tofood scares (eg BSE, horsemeat)
The food industry provides food that is safe toeat
The food industry relies too much on mass-manufacturing
Any agree Neither agree nor disagree Any disagree
* (eg ingredients, origin)** (eg food factories)*** Full statement reads: Different elements of the food supply chain (eg farmers, manufacturers, supermarkets) all work effectively together (eg open communication)**** (eg by using minimum artificial ingredients)
Base: 1,500 internet users aged 16+SOURCE: GMI/MINTEL
Consumer Attitudes Towards the Food Industry
Agreement with the statements ‘I would like to see stricter regulations in the food industry’ and ‘I am interested in knowing how the food industry is regulated’, by age, April 2013
40
3233
40 41
49 49
33 3330
34 32 34
39
0
10
20
30
40
50
60
All 16-24 25-34 35-44 45-54 55-64 65+
%
I would like to see stricter regulations in the food industry
I am interested in knowing how the food industry is regulated
Base: 1,500 internet users aged 16+SOURCE: GMI/MINTEL
Consumer Attitudes Towards the Food Industry
Agreement with the statement, ‘The food industry relies too much on mass manufacturing’, by age, April 2013
70 7077 79
84 83
0
10
20
30
40
50
60
70
80
90
16-24 25-34 35-44 45-54 55-64 65+
%
Base: 1,500 internet users aged 16+SOURCE: GMI/MINTEL
Who do Consumers See as Responsible for Selected Aspects of the Food Chain?
“Thinking about the UK food industry (eg supermarkets, farmers, food manufacturers), who do you think is most responsible for ensuring the following?”
14
20
23
26
39
39
49
59
62
14
37
5
17
42
14
13
19
29
14
14
38
2
2
10
2
28
15
49
5
2
32
12
4
9
10
7
1
15
4
6
0% 20% 40% 60% 80% 100%
Affordable food
That the UK food chain is as sustainable aspossible
That food is sourced from the UK as much aspossible
That food production has minimum impact tothe environment
That food is safe to eat
That food is easy to prepare
Providing quality ingredients
That food is healthy
Food manufacturers Supermarkets The government Farmers Don’t know
Base: 1,500 internet users aged 16+SOURCE: GMI/MINTEL
Factors Which Encourage Consumer Trust in Food
“Thinking about buying food, which of the following factors would persuade you to trust a food product?”
7
2
9
12
35
37
42
43
43
45
47
48
0 10 20 30 40 50 60
None of these
Not on special offer
Appealing packaging
Low calorie content
Has see-through packaging
Made by a well-known brand****
The taste
Has product origin on packaging
Contains no artificial ingredients***
Has an animal welfare certification** on packaging
Has manufacturing details on food labelling*
Contains British ingredients
%
* (eg where and when it was made)** (eg RSPCA/Red Tractor approved)*** (eg free from artificial colourants/flavouring)**** (ie a brand that I have used before)
Base: 1,500 internet users aged 16+SOURCE: GMI/MINTEL
Consumer Target Groups
Regulators are the most likely of the target groups to want to see stricter regulations in the food industry, reflecting their general lack of trust in it. However, a keen interest in seeing more manufacturing information on-pack suggests an easy route to improve their trust.
Compared with the other target groups, Brand Bankers are the most likely to trust a food product if it’s made by a well-known brand. They are also more likely than average to be interested in knowing how the food industry is regulated.
Traceability Trusters are notable for being the most likely to trust the level of traceability in the food industry, which is a positive finding considering it is the largest of the target groups.
Regulators(31%)
Brand Bankers
(32%)
Traceability Trusters
(37%)
Managing relationships
• What are your most important relationships?• How do you manage those relationships?• Who is your most important customer, and why?
Unemployment has been falling for a year The income squeeze is less, but will not go away altogether in 2013
The economy is weak, but may not be as weak as the figures suggest
Source: Office for National Statistics/Mintel Source: Office for National Statistics/Mintel
Consumer confidence recovering
• A steady upward trend for the last 18 months
• It has been consistently upward seemingly independent of the Jubilee and the Olympics
• Even so it is still well below the boom time levels up to 2007.
Consumer cautiously hoping for better times
Feb
09
Apr 0
9
Jul 0
9
Nov 0
9
Feb
10
Apr 1
0
Jun
10
Aug 1
0
Nov 1
0
Jan
11
Mar
11
May
11
Jul 1
1
Sep-
11
Nov-1
1
Jan-
12
Mar
-12
May
-12
Jul-1
2
Oct
-12
Dec-1
2
Feb-
13
3.4
3.5
3.6
3.7
3.8
3.9
4.0
We
igh
ted
av
era
ge
on
1-5
sca
le
Source: GMI/Mintel
All spending on food, drink at tobacco: £123.5bn in 2012
Source: Mintel
Market Size and Forecast
• All food, drink and tobacco forecast to grow at 3.3%pa to £145bn in 2017
• Soft drinks: forecast to grow at 4.5%pa to £18.2bn in 2017
• In-home alcohol sales – forecast to grow at 2.1%pa to £35.9bn in 2017
• Tobacco sales – forecast to grow at 2.1%pa to £20.1bn in 2017
Stead growth expected in the key markets
Sales of in-home food 2007-2017f
Source: Mintel
Channels of distribution for food, drink and tobacco, 2012
The majors dominate, but convenience may start to catch up
Source: Mintel
Online food retailing – share of spending by product, 2012
Tobacco
Bread and morning goods
Confectionary and snacks
Snacks
Foreign & ethnic
Ready meals
Desserts
Soft drinks
Store cupboard basics
Dairy products
Beer,cider
Meat, fish and seafood
Fruit and vegetables
Wine and spirits
0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0
3.3
4.2
4.5
4.5
4.7
4.7
4.8
4.8
4.8
4.9
4.9
5.1
5.2
6.7
Share of spending %
• Online food retailing is growing
• But it is dominated by the major supermarkets – where people do their main weekly shop.
• For the majors it is primarily a service to customers.
• Leading online players in wines and spirits take over a third of online sales
Wine and spirits the only specialists to have made a significant impact
Source: GMI/Mintel Base: 2,000 adults online, ages 16+
Supermarket shoppers–profile by age and socio-economic group, 2012
Sainsbury’s customer base now younger than Tesco’s – and important measure of its recent strength
37 38 39 40 41 42 43 44 45 46 47
3.2
3.4
3.6
3.8
4.0
4.2
4.4
Age
SE
G o
n 1
-5 s
cale Sainsbury(o)
Tesco(o)
Ocado
Asda(o)
Tesco(i)
Waitrose(i)
Aldi (i)
Morrisons(i)
Asda(i)
Sainsbury(i)
Note: o = online; i = instore
Source: GMN/Mintel Base: 2,000 adults online, ages 16+
The Consumer - Satisfaction levels with supermarkets are high
• The huge emphasis on price in supermarket marketing may have raised expectations on prices and promotions that can’t be met.
• The promotional strategy has not changed in the last year and may now becoming stale
But are lowest for prices and promotions
Source: GMN/Mintel
The Consumer - Attitudes to buying food and drink
• Consumer confidence has recovered in the last year.
• That can be seen in the reduced emphasis on promotions.
• But almost half prefer low prices to multi-buys. Time for a change in promotional strategy, perhaps
Evidence of consumers becoming less cautious
I can get all my needs from my C-store
I don’t trust supermarkets promotions
I like health information on receipt(a)
Problems with promotional discounts (b)
I use preferred store not my nearest
I would like clearer labelling
I try to buy locally-sourced goods
I prefer lower prices to multi-buys
There is too much packaging
I buy products on promotion
0 10 20 30 40 50 60 70 80
6
15
17
20
22
23
30
46
47
63
10
16
32
35
56
71
2012 2013
%
Source: GMN/Mintel Base: 2,000 adults online, ages 16+
(a) I like the idea of information on the receipt informing me how healthy my basket is(b) Specifically where promotional discounts haven’t been deducted from the bill
Retail Brands – M&S ranks top - again
• Little to pick between the Big 5 – the retailers that dominate the main shopping market.
• The other businesses are in some way complementary to the Big 5.
But the Co-op faces a major challenge
Waitrose
AldiLidl
I celand
The Co-operative
Morrisons
Marks & Spencer
Asda
Sainsbury'sTesco
0
10
20
30
40
50
60
0 10 20 30 40 50 60
Diff
ere
nti
ati
on
(%
)
Trust (% )
Base: 2,000 adults online, ages 16+Source: GMI/Mintel
The market opportunity
• What is your next target?• How are you going to approach that market?• Why are you looking at that market?• When will you get there?
Next Steps• Topics• Date & time of next workshop• Homework!