Thursday, December 7, 2017

Dairy Foods Forecast 2018: It’s All About Creating Disruption

Photo source: Starbucks

‘Tis the season for commentary on what to expect this coming year. So, of course, I must chime in. I would like to preface that many of my predictions come from observing, listening and looking beyond the traditional dairy departments. I highly recommend it.

It is exhausting- and time-consuming work, but remember, scanner data only tells you what consumers purchased in the past, and only in select channels. It does not tell you why they made those purchases. It’s also not a promise of what consumers will buy tomorrow.

Survey data should be helpful, but responses often include fabrications. (That’s a fancy word for lies.) Consumers say one thing and behave differently. It’s like parallel universes. They claim to avoid meat yet the popularity of In-N-Out Burger, which is located in some of the most health-conscious regions of the U.S., is at an all-time high. (For those of you unfamiliar with the chain, it only sells beef burgers (with optional cheese), fries, milkshakes and soda. That’s it. No salads. No grilled chicken sandwiches.)

It’s amazing what you can learn from real people going about their daily life.


Just two days ago at my gym, I overheard the woman in front of me at the coffee kiosk order a latte with almond milk (what many of us prefer to call almond juice). The barista informed her they were temporarily out but have soy as an option. I almost spoke up to say there’s real milk as an option, too! I refrained and was rewarded. The woman responded that she doesn’t do soy but will take cream. She then added, with a giggle, that she prefers cream but orders almond milk because it’s healthier.

Alright my friends, digest that for a moment. There clearly is an opportunity to educate about dairy nutrition while communicating its deliciousness.

Here’s an ah hah moment. This one happened standing in an almost two-hour long line—outside the store--on Saturday at Bath & Body Works’ Annual Candle Sale. Yes, this is a thing. It was my first—and likely last—time but as long as I was there, and it was a 60F day in Chicago in December, I figured why not stand in line for normally $24.50 candles now priced at $8.99, limit 15. (I maxed my purchase.)

After about 10 minutes of self entertaining on my phone, I started conversing with my line mates. Most were alone and equally bored. I was the elder in the group, surrounded by millennial women, professionals, a few were school teachers. They started sharing online coupons, app deals, pop-up sales. I quickly learned that many Millennials, though they appreciate quality over quantity, value deals. They shop sales. They might not be clipping coupons from the Sunday paper like me, but they are downloading and scanning all types of savings. Their personal device never leaves their side.

They also crave new and different. I bought five candles of each of my three favorite scents to reach the 15 limit. Two of my new acquaintances urged me to expand my horizons and try 15 different scents, some of which the store was only offering this holiday season. They explained how exploring the unknown is an important part of who they are.

When one of them queried about my profession, her response was that she could not survive without cheese snacks. She loves them all, from Hillshire to Oscar Mayer to Sargento. Her two complaints were there’s no cheese snack app with coupons and she would like more variety. Frankly, I think there’s a great deal of options in this space, but what do I know? Sounds like limited-edition and seasonal offerings make sense for cheese snacks, too. Opportunity?

I could go on and on, but I will end with this third observation. I arrived early to Northwestern Hospital for my annual checkup a few weeks ago. Early was planned, as I love their made-to-order omelet station for breakfast. So do a lot of patients and staff. While waiting for my order, I walked around to see what else was offered. There were a lot of portion packs of fresh food, such as two hard-boiled eggs, fruit cups and, wait for it, cottage cheese bowls. Imagine yogurt and fruit parfaits, but instead, lidded plastic bowls with hand-portioned cottage cheese. Then there were sides of berries, granola and other toppings.

Of course, I had to ask about this a la carte item. I was told it sells out daily. They can’t keep it stocked during the lunch hour.

This brings me to an item I featured a few weeks ago as a Daily Dose of Dairy. This dairy parfait cup concept from DMK Group is definitely a category disruptor. The assortment consists of three products: quark-creme, classic rice pudding and skyr. The clear plastic cups carry DMK’s Milram brand and are filled half way with one of the products. The cups are sealed to maintain freshness for about three-weeks. Retailers receive the sealed cups, along with dome lids and sealing tape, so they can turn the product into fresh parfaits with fruits, nuts, granola, etc., on an as-needed basis. This decreases waste in terms of on-site scooping of product into cups as well as reduced shelf life because of opened perishability.

“Ready-to-eat snacks with fresh ingredients are totally on-trend. Consumers expect ultra-fresh products with a hand-made character in this segment,” says Matthias Rensch, chief operating officer at DMK Brand. “The new to-go concept combines ultra-fresh convenience with well-known brand quality and minimal handling.”

This type of product can also be sold alongside a self-serve topping bar. Maybe cottage cheese is one of the products.

Here are the five opportunities I’ve identified for dairy in 2018.

1. Get your products placed in foodservice channels and in supermarket departments beyond the dairy case and ice cream freezer. Do this with innovative single-serve portion packaging and creative foodservice formats.

This week, the market research experts at Packaged Facts rolled out a free e-book featuring the firm’s top food industry trends for 2018. Unlike the company’s previous predictions focusing primarily on culinary foodservice and restaurant developments, this latest e-book highlights retail food and beverage trends. It’s a must-read for brands looking to stay one step ahead of the competition as they adapt to changing consumer preferences and prepare for major market shifts in 2018 and beyond. You can download it by linking HERE.

“Grocery retail has never been more cutthroat. With razor-thin profit margins and new pricing pressure from Amazon, Lidl and ALDI, U.S. food retailers must adapt quickly in order to remain competitive and appeal to shifting consumer preferences,” says David Sprinkle, publisher for Packaged Facts and author of the e-book.

In other words, they must disrupt and change their way of doing business.

Though the report focuses on the U.S., much of the content applies to all developed countries. The fact is that the current consumer landscape prioritizes quality over quantity, but still values a good deal.

2. Focus on quality over quantity. Connect with the consumer through social media and tell them a story about the product. Offer them a deal. Ask them for feedback. Build a relationship.

It’s important to remember that these days, the term quality, in regards to food and beverage, refers to ingredient sourcing, processing method and even nutrition profile. Food and beverage entrepreneurs are disrupting the way supermarkets and foodservice channels prepare, merchandise and sell food, which means dairy processors need to shake things up.

This is no longer your granddaddy’s dairy when the family name on the side of a truck was enough to get noticed. Have your granddaddy talk about the family farm on the company app and then offer a coupon via Facebook.

3. Limited-edition and seasonal flavors must be part of every product line: butter, cheese, ice cream, milk, yogurt, etc. This includes ready-to-drink single-serve beverages. This is an important segment of food retailing and tends to be highly profitable, for manufacturers, retailers and operators. Because turnover also tends to be quick, retailers and operators are often willing to try new concepts. Single-serve beverages tend to be easier to reformulate than many foods and limited-edition and seasonal formulations and promotions are an easy way to attract shoppers.

4. Natural, organic, non-GMO…these attributes are now mainstream. The Packaged Facts e-book states that the natural and organic foods market segment is worth nearly $70 billion. From 2012 to 2016, U.S. retail sales for natural and organic foods rose at a compound annual growth rate of 7%. By 2021, growth is expected to hit double digits. Dairy processors cannot afford to not be in this space. Choose your ingredients cleanly.

5. Deliciousness, consumers want it and dairy’s got it. You know it. I know it. Even vegans know it, which is why they try so hard to duplicate dairy’s deliciousness. Sometimes the dairy industry forgets to communicate the unmatchable deliciousness of dairy. Commit to it in 2018.

It’s no longer your granddaddy’s dairy. It’s time to get disruptive to differentiate in the crowded food and beverage sector.

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