Fresh market little big meal

In the consumer goods sector and, particularly, in the food industry, significant changes are being observed at speed never seen before. Fresh market little big meal the transformation of the characteristics and preferences of consumers have caused companies to react and adapt in various ways. To stand out in a highly competitive industry, they will have to define a strategy that helps them anticipate changes in the market in an agile way, incorporating their knowledge about the consumer into decision-making processes and being flexible to adapt to different scenarios.

The challenge of demographic changes: new consumers with new needs and Fresh market little big meal

Demographic characteristics are changing significantly and rapidly. 72% of food companies identify changes in consumers as a challenge for the business (EY CPR Balance Executive Survey,( 2016). Some of the main drivers and key trends that can be observed are the following:

• Smaller households. The average household size has decreased in Mexico from 4.3 people per household in 2000 to 3.7 in 2015, which can be explained by the following trends fresh market little big meal: families choose to have fewer children, there are more single-parent families, single-person households and the cohabitation of people without family or emotional relationships has also grown, according to data from the National Institute of Statistics and Geography (INEGI).

• Redevelopment of central spaces in cities. The middle and upper-class population prefers to be close to urban centers and work areas, unlike past generations who preferred to live in the suburbs. This trend impacts consumption patterns, and the demand for premium products increases in areas dominated by grocery and convenience stores.

• Increase in obesity and chronic diseases. There is an increase in chronic diseases in developing countries, mainly caused by decreased physical activity and poor eating habits. In Mexico, 73% of the population suffers from obesity or overweight, ranking first in this problem in the Organization for Economic Cooperation and Development (OECD). A considerable increase in the incidence of diabetes has also been observed in recent years, with which Mexico has gone from 10.8% in 2010 to 15.8% in 2017 ( OECD Health at a Glance, 2017). The deterioration of the population’s health is reflected in lower productivity and decreased quality of life. For this reason, there is pressure from governments to regulate the food industry and from consumers who prefer to buy more nutritious, natural and less processed foods.

• change in the buyer’s profile. The change in the configuration of households and the increase in the participation of women in the labor market, which went from 41% in 2003 to 48% in 2018 (World Bank, Online Databank, (2019), mean that there are more and more male and young buyers. This creates new sales opportunities for products focused on these consumers who spend more and more. In the United States, millennials already spend more than baby boomers, which means that there are more and more products focused on catering to the tastes of these populations.

Another challenge for businesses: consumer tastes and preferences are evolving with a focus on healthy lifestyle and sustainability

Another important disruption that can be observed has to do with consumer preferences. Each generation has tastes that define it. Therefore, the food industry has had to adapt to them. However, the changes in preferences and trends expected in the coming years are much more dramatic than in previous periods. Under this scenario, 80% of the leaders of the companies in the sector consider it difficult to innovate in response to consumer tastes and needs at the pace required ( EY CPR Balance Executive Survey, 2016).

Some key changes are:

Brand loyalty. Large food companies face new consumers with fresh market little big meal with less attachment to the brands they know. Beyond the name and the image it projects in the conventional media, young people are more interested in the quality of the product and the value for money and value aspects such as sustainability. People associate big brands with generic and low-customization products, so it will become increasingly important for the big food industry to differentiate its product offerings.

Healthier lifestyle. In reaction to widespread declines in health caused by less physical activity and poorer diets, people are cutting back on meat, processed foods, and sugary carbonated beverages in some more developed markets. In countries like Mexico, the consumption of these foods is expected to continue growing in the next three years ( Fitch Solutions, Latin America Food & Drink Report, 2019). However, more and more consumers are adopting new trends in food. For example, according to a Nielsen survey, 32% of respondents in Latin America consciously seek to reduce their sugar consumption (Nielsen, FMCG and Retail insights reports, 2016); however, between 75% and 95% of processed products have added sugar (Nielsen, Label insights, 2018). It is increasingly observed, especially in developed countries, that people are also reducing the consumption of sugars, gluten, dairy products, refined flours and hydrogenated vegetable oils due to the increase in cases of metabolic disorders, allergies and inflammatory reactions either by medical recommendation or even for prevention. This trend is expected to continue to grow in developed countries and in countries like Mexico, where the growth rates of chronic diseases are on the rise.

Attention to the labeling. In addition to demanding healthier products, consumers are increasingly looking at the ingredients of processed foods when deciding which to buy. In the case of Mexico, 47% of the people surveyed responded that they consider it very important to know what ingredients their food contains (Nielsen, Global study on health and perceptions of ingredients,( 2016). In this sense, they look for less processed products with more transparent labeling, more natural ingredients, or fewer harmful ingredients, such as additives, dyes, and preservatives.

Globalization of tastes. Social networks like Instagram have helped spread and shape people’s preferences, especially young people. There are certain foods considered healthy such as avocado, quinoa, powdered green tea (matcha) and chia, and superfoods (hemp seeds, among others) that were consumed until a few years ago in very diverse geographies. Specific or went unnoticed on the shelves but have had a significant increase in global demand.

Local consumption. Some consumers with greater purchasing power look for local products with certain characteristics: small-scale production, organic and seasonal foods, free-range, and without hormones or antibiotics. This presents a challenge that forces companies in the sector to rethink business opportunities and traditional supply chains.

Fad diets. 83% of those surveyed by Nielsen in Mexico (Nielsen, Global Study on Health and Perceptions of Ingredients, 2016) state that they follow some diet that limits or restricts certain foods or specific ingredients, a proportion well above other countries in the Americas Latin. Some diets, such as vegan (stricter than vegetarian, excludes all foods of animal origin such as dairy and eggs), (inspired by the diet before the agricultural revolution, eliminates dairy, legumes and grains) and the ketogenic diet, which extremely low in carbohydrates), have had greater diffusion through social networks and have influenced the tastes and preferences of consumers. In the forecasts of the weekly The Economist for 2019, the vegan diet is expected to become popular in a significant way (The Economist, The World in 2019). These trends create both opportunities and threats in the food market.

Concern for the environment. In addition to health considerations, awareness of sustainability in consumption is a clear trend. 73% of people globally acknowledged being willing to change their consumption habits to reduce their impact on the environment (Nielsen, FMCG and Retail Insights, 2019). Companies that adapt and position their products as healthy and sustainable before their competitors could appeal to a growing number of consumers and gain market share.

Companies are reacting to a disruptive landscape: those that quickly adapt to change are the ones that win in the market.

In the United States, sales of natural products represent only 10% of the food market, but it is a fast-growing sector. For example, in 2017, the average annual growth in sales of natural products was 7.7%, while that of conventional products was only 0.2%. However, certain products grew in double digits ( Whipstitch Capital.

Healthy Living Consumer Products, 2019):

Annual growth

47%

plant-based yogurt

24%

Healthy functional drinks

24%

Vegetable alternatives to meat

21%

 Snack wellness

21%

Food supplements

17%

Coffee and tea to drink

This trend of fresh market little big meal is consistent with new consumption patterns in all markets and largely explains why large food companies are increasingly interested in competing with products identified as healthy and natural.

Companies in the food sector are reacting to changes in consumer characteristics and preferences. Some are adding new products to their portfolios, others are choosing to buy brands positioned as natural, and some are changing the ingredients and presentations of their products to make them healthier.

How to take advantage of the disruption to stand out from the competition?

Faced with a landscape of rapid change, the key to the success of companies is the ability to respond and adapt. A quick self-assessment exercise would identify how fast the food market is changing and analyze responsiveness to it. Can represent These two dimensions on a graph with four quadrants. The company would like to avoid the upper left quadrant, as it is unsustainable in the long term to move slower than changes in the market.

It is not enough to react: you have to imagine the future and anticipate it.

To better anticipate the future in the food industry, it is necessary to think differently and incorporate different perspectives to imagine scenarios 5, 10 and 20 years from now.

Take into account global trends. In addition to changes in consumer preferences, it is important to consider big trends such as the exponential growth in the potential use of big data, climate change, population aging, and the increase in life expectancy.

Leverage in-house wisdom. Companies have a lot of specialized knowledge, but experiences are rarely shared between different areas since the priority is to meet short-term objectives and metrics. By including all company areas in planning (research, marketing, design, production, finance, logistics, etc.) and with a push from the leadership, can align effort into a coherent and unified strategy.

Timing. Companies that manage to adapt their business models in a more agile way will be able to increase their market share and increase their income. In the face of disruptive changes in the competitive environment, only those with flexible and resilient business models will be able to face the challenges promptly and take advantage of the change in their favor. The longer they take to adapt their business models to these trends, the greater the risk of being irrelevant, so a sense of urgency must prevail.

Going further: some reflections to stand out and differentiate yourself

Companies in the food industry that want to take advantage of consumer trends fresh market little big meal will need to ask themselves some of the following questions:

• How can the business be proactive in assessing and responding to changing demographics and consumer preferences?

• What new business models will have to be proposed, or what needs to be done to improve them to adjust to what consumers are looking for?

• How to find new supply options and evaluate and address gaps in the product portfolio?

• Which distribution channels are most profitable and have the greatest growth potential? What kind of strategies must be implemented to take advantage of this potential?

• What are the most successful business models in other parts of the world, and how could they be adapted to the Mexican context?

• How can product changes be adopted quickly and before competitors to gain market share?

• can implement what strategies to improve the communication of the positive characteristics of the products?

EY is immersed in a constant task to understand the challenges faced by companies of all sizes and latitudes, which is why it seeks to create solutions focused on solving the specific challenges in each context.

Summary

Significant changes in the fresh market little big meal are observed in the food industry sector. The transformation of the characteristics and preferences of consumers has caused companies to react and adapt. To stand out in a highly competitive industry, they will have to define a strategy that helps them anticipate changes in the market in an agile way, incorporating their knowledge about the consumer into decision-making processes and being flexible to adapt to different scenarios.