Amazon's splashy video for Amazon Go — an all-seeing, all-knowing store where customers can grab items, toss 'em in a bag or pocket and just walk out without ever waiting in line — has obvious appeal. So obvious, in fact, that another tech company proposed the exact same concept more than 10 years ago.
An IBM ad showcasing a smart store got major circulation on the airwaves in 2006 (when YouTube was nascent). It features a nefarious-looking character in a trench coat wandering the aisles of a supermarket, stuffing his pockets with items as other patrons and security guards shoot him looks of suspicion. As he exits the store through what looks like a security gate that "flashes" him, the guard calls out, "Excuse me, sir!"
The man stops and turns. The guard grabs a piece of paper dispensed from the gate: "You forgot your receipt."
The ad is more than a decade old, so it likely wasn't predicting the same technologies that make Amazon Go possible, those being AI, machine learning and computer vision, mainly. Instead IBM was showing "future store" vision powered by RFID, a tech in widespread use today. An IBM white paper from March 2009 discusses, among other things, how RFID readers positioned throughout a store could detect movements of products within it.
RFID is used in retail, but its presence is all but invisible to the customer, and most stores today still have a traditional checkout. We'll see in 2017 if the new technologies that power Amazon Go can finally bring IBM's vision of a "smart store" to reality.
Sales revenues have flat-lined in categories that were historically growth engines. Big food is not showing the revenue growth that it should, given its current valuations. Conversely, consumers are changing, and they don’t see big food companies changing with them.
Smaller, emerging brands gaining the upper hand is an enigma to many major players in the food and beverage industry. Do consumer really dislike big food companies? Is big food’s day of reckoning at hand?
These sobering questions were at the heart of a panel discussion at GMA’s 2016 Leadership Forum this past summer where I joined consultants from A.T. Kearney and Black Monk Consulting and a food executive from Cargill to deliberate issues and posit ways forward for big food companies. If there is an upside for big companies here, it is that consumers don’t have some sort of vendetta against them.
In truth, the heart of the matter isn’t if consumers hate big food companies; it’s about what they are looking for from any food and beverage company. What consumers are saying is, “I’m changing and looking for things that are healthier” — and they don’t see big food offering those options. This leaves consumers no other alternative but to look elsewhere for them.
Expecting more from food and beverage manufacturers reflects the social, economic and cultural shifts that are reshaping consumers’ eating and drinking habits. Specifically, who we are, what we do, how we shop and what we value are morphing. Acknowledging these macro dynamic shifts is essential to understanding eating culture and eating occasions today.
Examples of these macro shifts include:
Who we are is changing: There are fewer households with kids, more single-person households and the rise of men as primary shoppers.
What we do: We are eating alone and snacking more, and meal rituals are diminishing. We are increasingly turning to the food service sector to satisfy our food needs and wants.
How we shop: Multi-channel shopping is now the norm, and immediate consumption is rising.
What we value: We live in a changing culture of health and wellness where fresh is the symbol of quality in food and beverage, and there is greater appreciation for personalized, customized and global foods.
These shifts have led to a dynamic modern food culture, where the predictable, transactional days of cooking and eating have evolved into a contemporary eating culture where values are in flux, products are distinct and cooking is about discovery, not chores. Today’s food culture is more playful — and everything is about consumer choice.
Other consumer-driven trends reshaping today’s food and beverage landscape include: rising importance of transparency, consumer interest in minimal processing and freshness is on the rise, and consumers believe their purchasing decisions have a greater impact on society than their voting decisions.
Parallel to findings presented in an A.T. Kearney white paper Is Big Food in Trouble? (co-authored with The Hartman Group and distributed at the GMA Forum), Hartman Group analysis of attributes driving growth in the range of 10% to over 50% in xAOC sales data finds clear consumer preferences for formerly niche market segments. These niche segments include beverages with the attribute “minimally processed” and packaged foods with the attributes “how it was made,” “high protein, low sugar" and “culinary-grade flavor.”
While it’s often thought that consumer appreciation for what are often described as "premium" foods and beverages is strictly relegated to "upmarket" consumers with higher income and education, we are seeing that even lower-income consumers are seeking many of the same attributes, but they aren't always able to act on their aspirations because of more pragmatic concerns, such as price and access.
In order to regain some of the market momentum that smaller, more progressive food and beverage brands have taken from established brands, there is an array of options open to companies:
Brands that are not iconic can de-process their products to better reflect consumer desires for simpler ingredients.
Marketers can build new brands that resonate with modern food culture, utilizing ingredients and narratives that reflect sensitivity to authenticity and transparency.
Through acquisition of small and medium-size food and beverage brands, large producers can invest early in the food and beverage brand life cycles to capture growth and optimal returns.
For most large CPG companies, all of these options will need to be pursued in order to regain consumer interest and dollars.
Monday, December 5, 2016
Americans Divided Over Organic, GM Foods: Poll
Their opinions aren't driven by politics or income, researchers say
THURSDAY, Dec. 1, 2016 (HealthDay News) -- Americans are split on the value of organic foods and concerns about genetically modified (GM) foods, a new poll reveals.
The Pew Research Center poll of 1,480 adults nationwide found that 55 percent said organically grown produce is healthier than conventionally grown produce, while 41 percent said there's no difference.
Nearly four out of 10 respondents said GM foods are worse for health than other foods, while almost half said there is no difference. Ten percent said GM foods are healthier, the researchers found.
Genetically modified foods come from plants, animals or microorganisms in which their DNA has been altered by technology.
"The data suggest that people's divisions are linked to their interest in food issues and how they think food consumption ties to their well-being," said Cary Funk, lead author and associate director of research at Pew.
"Their views are not driven by their political attitudes, their level of education, their household income, or where they live," she noted in a center news release.
Some of the other survey results:
Thirty-four percent said some of the food they eat is organic. Six percent said most of it is.
Women care more than men about the issue of GM foods -- 20 percent versus 12 percent, respectively. And they're more pessimistic than men about the effect genetically modified foods may have on society.
Broken down by age, 18- to 49-year-olds were more likely than older adults to consider organic produce better for health. Similarly, many more young adults said GM food is worse for health than non-GM food, compared with those 65 and older.
Among those who care deeply about the issue of genetically modified foods, three-quarters consider GM foods worse for health, compared with 17 percent of those with little or no concern about GM foods.
The survey also found that 18 percent of respondents are focused on healthy and nutritious eating. These people are especially likely to believe that organic produce is healthier than regular produce.
Many respondents lack trust in scientists studying GM foods, the survey found.
More than one-third "say scientists do not understand the health effects of GM at all or not too well," Funk said. Meanwhile, "just 19 percent of Americans say scientists understand the health effects of GM foods 'very well.' "
Longo’s expands Grocery Gateway
Triples the size of Rexdale-based facility to 50,000 square feet to keep up with increased demand
By Chris Powell | December 01, 2016
Longo’s is expanding its Grocery Gateway business, with president and CEO Anthony Longo saying that the online grocery industry has officially “come of age” in the Toronto region.
Longo says that Grocery Gateway has seen a double-digit increase in shoppers since re-launching its website in June, while order sizes have been “rapidly increasing” over the past two years.
According to Longo, the average order on Grocery Gateway is now over $150. While he won’t disclose what percentage of Longo’s total sales Grocery Gateway represents, he describes it as the fastest-growing part of the company’s business.
“As consumers get more comfortable with online shopping and gain more confidence and trust in the product assortment and quality, they will typically move on to more categories when they shop,” says Longo, telling Canadian Grocer he is “very bullish” on the online grocery space.
Longo’s has spent approximately $8-million to triple the size of Grocery Gateway’s Rexdale-based facility to 50,000 square feet, enabling it to keep up with increased consumer demand.
That follows an approximately $2.5-million investment in a new Grocery Gateway website that includes new features such as themed grocery lists and the ability to add regular items to personal shopping lists.
Longo’s has also expanded Grocery Gateway’s product assortment from 10,000 to approximately 16,000 items, with a particular emphasis on frozen foods. Longo says that number of frozen products will expand from approximately 900 SKUs currently to roughly 2,000 in the coming months.
“Grocery Gateway consumers have been telling us that we don’t have enough depth in frozen, so we’re going to meet that need,” says Longo, adding that the company also plans to bolster its organics section.
Longo’s has also added new delivery vehicles to its fleet, bringing it to approximately 47 vehicles. The company is also testing hybrid vehicles, says Longo. In addition, the company has increased Grocery Gateway’s staff to about 375 people, including shoppers, drivers, etc.
The expansion comes as Grocery Gateway faces increased competition from online upstarts such as Urbery and InstaBuggy, while traditional rivals such as Walmart and Loblaws have also introduced and expanded their “click and collect” offering.
“We’re the only [grocer] doing direct to home delivery with a full assortment of fresh, frozen and ambient products, so I think we’re very well-positioned in this marketplace,” says Longo.
Online grocery shopping is not as fully developed in Canada as in other markets such as the U.K., where as many as half (48%) of consumers are online grocery shoppers – and 11% do all of their grocery shopping online – according toresearch from Mintel.
According to a November 2015 report from Mintel, only 9% of 1,728 Canadian internet users said they had shopped online for groceries in the previous six months – well behind categories such as clothing or footwear (43%), electronics or appliances (39%) or books/e-books (37%).
Grocery is one of the last major shopping categories to attract widespread customer adoption, with Mintel saying that one of its biggest hurdles is an inability to inspect and select fresh foods such as fruit and meat.
“Consumers generally say they do want to choose their own produce, so [we] have to build trust with them,” says Longo, who says that Grocery Gateway also offers a money-back guarantee for those customers who are not satisfied with their order. “Once they see that the product they’re receiving is of great quality, then they’ll go deeper in the category.”
Grocery Gateway was launched in 1999, and was acquired by Longo’s in 2004 after going into receivership.
Lidl joins Doncaster’s iPort with £70m distribution centre
iPort
Lidl is opening a distribution centre in Doncaster, becoming the latest household name to join iPort, Verdion’s £500 million multi-modal logistics development.
The new £70 million warehouse marks another milestone in the supermarket’s ongoing expansion plans within the UK, and follows the opening of Lidl’s newest regional distribution centre in Southampton.
The supermarket will occupy 628,000 sq ft (58,400 sq m) of logistics space with additional ancillary areas, on a 35-acre (14 hectare) plot within Phase One of the 6 million sq ft (557,400 sq m) logistics scheme, bringing 500 permanent jobs to the region.
Adrienne Howells, Lidl UK’s Head of Warehouse Expansion, said: “With more British customers choosing Lidl as their family supermarket we are laser focused on the sustainable growth of our business. We are, therefore, thrilled to be in a position to confirm our 13th distrubution centre in Great Britain, bringing investment to Doncaster, new jobs and additional support to our existing and future stores in the north of England.”
Lidl will join Fellowes, Amazon and CEVA who have also taken space at iPort within Phase One. Over 2 million sq ft (185,800 sq m) has now been committed.
A Planning Application for Lidl’s new warehouse and office space has been submitted, with construction anticipated to commence in 2017.
“Alligator pears” are China’s newest superfruit
An increasing number of Chinese consumers are adding "alligator pears" to their diet. (Reuters/Mariana Bazo)
Even outside of hipster enclaves like Brooklyn and San Francisco—whose denizens brunch on pricey iterations of avocado toast—it’s a great time to be in the avocado game. Around the world, the fruit is seeing high demand and higher prices, leading to an overall increase in global investment. Avocado theft—indicating a growing black market—is on the rise, and the fruit even has its own emoji. (It took the lowly taco an actual petition to get that far.) But for all their popularity, avocados are only starting to gain ground in a potentially huge market: China.
“Avocado is usually framed as a high-end product [here],” says Yi Chen, a former business development manager in Shenzhen, who acquired a taste for the fruit while studying abroad in California. “When you buy it, you are buying the feeling of luxury.”
China’s avocado consumption has long been dominated by first-tier cities like Beijing and Guangzhou, which have substantial populations of Western expats. It’s only recently that Chinese nationals have started to catch up. While still learning about the taste, preparation options, and health benefits of avocados—colloquially known as “alligator pears”—an increasing number of Chinese consumers are now adding the fruit to their diets. Thanks largely to increased demand by the country’s growing middle class, avocado imports to China jumped 375% between 2014 and 2015 according to Produce Report, a Chinese-based trade publication specializing in food and agricultural products.
“They’re looking at Western trends,” says Brian Gomez, vice president of avocado supplier Greenfruit Avocados. “[Chinese consumers] like to see what’s cool, what Americans and Europeans are doing.”
Americans and Europeans may be adorning their toast, salads, and sandwiches with the trendy superfruit, but they’re also fighting an obesity epidemic that has spurred broad interest in healthier foods like avocado. In China, health is similarly top of mind. Forty-five percent of Chinese respondents to a 2014 Nielsen survey considered themselves overweight; 47% were willing to pay a premium for “all-natural” foods.
“Chinese people are very concerned about their health,” says Mabel Zhuang, founder of Produce Report, which covers Chinese produce trends. Zhuang says the increased demand for avocados are a natural consequence.
Avocados aren’t linked to traditional Chinese cuisine, so getting them in front of consumers has been a gradual process. Western-style eateries—organic salad bars, juice and smoothie bars, Mexican-style restaurants—often have avocado products on their menus, but recently locals in cities like Beijing, Shanghai, and Shenzhen have also begun to purchase the fruit from upscale supermarkets, and online. The cost has fluctuated over the past two years, hovering around 15 yuan ($2.26) per avocado, on average, according to Shanghai Daily. That price point is on par with a little over one pound of chicken breast, or 1.5 liters of domestic beer.
But price isn’t the only hurdle: Specialty fruits supermarket Pagoda saw avocado sales soar after it started giving out recipes, preparation instructions, and free samples.
“Average sales were around 0.7 pieces” per day across all locations, says Frank Hong, Pagoda’s director of overseas procurement. “After this experiment, we found out sales could end up being 10 [avocados] per day.” The company, which has 1,400 locations in China and started its avocado-education initiatives three years ago, now sells an average of 35 avocados per day per location.
All this demand has put a strain on avocado exporters—imports of Mexican avocados to China have been growing by 200% a year, and both Peru and Chile have starting exporting to China. Organizations in South Africa, New Zealand, and the United States are also considering exporting avocados to China.
Efforts to grow the fruit locally, which have struggled in the past, may get renewed focus in light of the higher demand. Thibaud Andre, a senior consultant at Daxue Consulting, a market research and management consulting firm with a focus on the Chinese market, says that “there’s a willingness [by the government] to develop local production in specific sectors,” adding that the government can pass policies to help Chinese growers.
“Local production will be a little bit cheaper,” he says. “It will more easily get access to distribution channels.” That could open avocado consumption up to even smaller markets.
For now, the fruit remains a special treat for the health-conscious, one Chen of Shenzhen likens to a wearable fitness-tracker. “I don’t have to have a Jawbone app to remind me that I didn’t walk enough today,” he says. “Who would like to have it comes down to who really cares about their health.”
