The food industry’s revenue growth is now being driven by a consumer mega-shift from fast foods to healthy convenience food. The 2014 Cone Communications Food Issues Trend Tracker found that while “family satisfaction” still is priority number one in food shopping (97%) the issues of “health and nutrition” (93%) and sustainability (77%) are now key criteria beings used by consumers in deciding what to buy and who to buy from. Key issues tied to defining health, nutrition and sustainability for consumers are:
- 74% local food sourcing
- 69% sustainable packaging of food
- 69% animal welfare
- 67% non-GMO
- 65% protects and renews natural resources.
Why Chipotle’s stock is soaring…and Coke sales are falling
This trend has catapulted Chipotle’s stock to over $500 per share. It is reshaping your local 7-Eleven convenience store that now offers healthier food featuring freshly made sandwiches and fruits. And this consumer mega-shift is why The Coca Cola Company’s sale of its iconic sugary drinks are falling. Positive evidence on the health implication from Americans adopting a healthier diet is now surfacing with an encouraging report that the rate of diabetes for our youth is falling.
Price plus depressed income levels restrain sales growth
Market research points to 64% of consumers buying green products. One out of five consumers buy mostly green products. Another four out of ten buy a mix of green and traditional products. Less than two out ten consumers are “unconcerned” and buy products without regard to long-term health impacts or environmental consequences.
Price and income level are the economic headwinds confronting a massive shift toward healthier and sustainable consumer procurement. In this today’s economy 90% of consumers have not seen real income growth for over fifteen years. The pressure to balance household budgets and the higher price often associated with buying healthier food is the lid that is keeping this boiling pot of consumer demand for healthier diets from rapidly disrupting the food industry.
Three keys to winning the healthy convenience customer
Consumers are very clear on the three criteria they use in deciding if a food, and food companies, align with their expectations on health and sustainability. These three criteria are a “must have” for winning customers:
1. Transparency. No secrets. No hype. Consumers want understandable and quick evidence that your company is acting in a responsible manner. Consumers are reading food product labels. They expect them to be easy to locate on a package and to be readable. They are scanning labels for any ingredient they do not understand, recognize or that sounds like it is an artificial chemical. They want to know if the food is fresh and local. They want evidence that the food was farmed or caught in a responsible manner. If your food service business fails to satisfy these consumer expectations then think “pink slim.” This could happen to you. Now envision Chipotle’s food sourcing and preparation. It is right out front for the customer to understand and align with. It is a major reason for Chipotle’s sales success.
2. Choice. Making healthy food choices are now the norm for moms and the millennial generation. Offering “moo” milk is no longer enough. Consumers seek choices to include soy, almond and rice milk. Even though a small fraction of consumers are intolerant to glutens almost 30% buy gluten-free products. The millennial generation is the most diverse generation in U.S. history. They seek variety in what they eat. And they seek choice in when they eat. For example, limiting breakfast to morning hours and offering limited healthy choices is a recipe for losing sales with millennials that expect choices on what they buy and when they buy it.
3. Organic and Non-GMO. Organic food sales growth has again returned to an annual ten percent sales growth rate. This sales growth rate is double that of any other food category. This trend will accelerate from the growing consumer uncertainty on the health implications tied to genetically modified organism and as consumers come to understand that by definition an organic food is also non-GMO.
Authenticity drives food branding
The clearest marketing trend emerging from the consumer shift toward healthy convenience foods is the role authenticity now plays in defining a company’s brand alignment with customers. Customer questions on authenticity are at the core of McDonald’s stagnant revenues as it continues to price promote food items like Big Macs while also trying to market healthier food choices. Similar mixed authenticity messaging explains why The Coca Cola Company is facing declining revenues even as it aggressively grows its healthier product offerings. Stepping into this marketing opportunity are restaurants and caterers that have adopted a culture of authenticity built upon farm to fork menus, adoption of energy efficient kitchens and lighting plus commitments to recycling and composting. Authenticity built upon sustainability is now the food industry’s marketing path for winning customers and growing product revenues while it also increases profit margins through green supply chain management best practices and energy efficiency.
About the author
Bill Roth is an economist and the Founder of Earth 2017. He coaches business owners and leaders on proven best practices in pricing, marketing and operations that make money and create a positive difference. His book, The Secret Green Sauce, profiles business case studies of pioneering best practices that are proven to win customers and grow product revenues. Follow him on Twitter: @earth2017