McDonald’s 4% U.S. sales decline further documents that the American consumer is in active revolt against conventional foods. But that is just half of the story. The Supermarket News’ survey presented at the Natural Product Expo West found that health and wellness product sales are growing at three times the rate of conventional foods. Eighty percent of survey respondents reported increased sales of health and wellness products with a third reporting double-digit sales growth of twenty percent or more!
Winning customers in today’s consumer food revolt
The current market reality is that most food retailers are playing catch-up with their customers’ accelerated shift into healthier food sourced-sustainably by trustworthy companies. Here are key attributes consumers now demand of food products:
- Gluten/allergen free
- Simple ingredients
As evidenced by the sales success of Chipotle and Smashburger, the food industry’s lagging response to this mega-shift in consumer expectations is creating revenue growth opportunities for businesses that can align with the consumer’s health and wellness expectations.
Five keys to growing food sales
The following are 2015 best practices that win customers and grow sales in the food and restaurant industry:
1. Customer education. Consumers are confused and distrustful about food. They have a jaundiced view of conventional foods’ advertising. They are losing trust in package labeling especially with increased reports of regulatory actions. Consumers are confused over conflicting health research like the recent reversal removing dietary cholesterol as a human health risk. One proven best practice for growing food sales is to provide an in-store dietitian to answer questions or provide healthier recommendations. Another sales growth winner is the provision of in-store “beacon” digital technology that engages the customer’s smart phone. Yet, while the food industry is aware that consumers are confused and that solutions like in-store dietitians or beacon digital engagements will grow sales they are not mass adopting these best practices because these best practices require increased investment. Instead most stores are letting their customers use their smart phones to figure it out themselves at the substantial risk that their customer will leave the store for a healthier choice.
2. Serve “food-tribes.” Americans are increasingly self-identifying with food tribes. For examples, the sale of gluten and allergen free foods extends well past people who suffer from Celiac disease. The gluten-free “tribe” consists of consumers seeking organic and healthier foods. Interestingly, men are more likely to be in this tribe than women. Other types of food-tribes include “exploring moms,” “millennial generation urban dwellers” and “generation z home chefs.” A sales and marketing best practice is to identify the food tribes meaningful to your sales growth and design your messaging and products to align with their expectations.
3. Simple ingredients. Consumers want foods with ingredients they understand and trust. This shift in expectations is creating a growing competitive advantage for products without chemical addictives. This has obvious implications for the fast food and convenience food industry because over the last year the American consumer has self-educated themselves to understand that food convenience is achieved through chemical preservatives. In grocery stores, customers are deserting the inner store shelves with their preservative-laced products. Instead, consumers are heading to the fresh produce department and refrigeration sections in search of foods that do not have chemical preservatives.
4. Align with your customer’s definition of local. The definition of local is a point of contention between consumers and food suppliers. Some consumers view local as food sourced from their county or one nearby. Others view it as food sourced within their state or within a few hundred miles of their homes. Still others view local as sourced from the USA. A sales best practice is to align your food products with the sourcing expectations of your customer. For example, California-sourced arugula may be local to a consumer in Vermont but California-sourced maple syrup is not. This customer-centric definition of local has created a new marketing focus called “best sourcing.” Under best sourcing foods are represented based upon the advantages a farm or ranch has for sustainably-sourcing a food. For example, consumers may accept eating Australia cattle because of that country’s ability to sustainably herd grass-fed, free ranging cows if the beef can be shipped using flash freezing without preservatives.
5. Stand for a “wow” tied to human health. Chipotle’s commitment to sustainably-sourced food has made them the huge winner with a stock price above $600. Their unique marketing videos have won the hearts of the millennial generation. But with notably few exceptions like Chipotle, the food industry currently has a marketing void in terms of wowing customers. There is a huge revenue growth opportunity for companies that can sell the sizzle of health and wellness products.
Case Study: Applegate
Can bacon or hot dogs be healthy? My heart hopes Applegate is the company that will make it so. Their “natural and organic meats” are an example of the sale growth opportunity created from offering healthier food products with their products now being sold in Whole Foods, Vons, Target and Trader Joes.
Applegate’s health-based competitive advantage comes from using animals that are never administered antibiotics or growth hormones. Their animals are fed 100% vegetarian diets organically-sourced. Their bacons and hotdogs are nitrate and nitrite free. There meats contain no artificial ingredients including fillers or preservative chemicals.
Applegate hotdogs are all natural. They contain just beef (no meat processing scraps), water, salt and spices. They are sold out of a store’s refrigeration case to preserve the hotdogs without the use of chemical additives. I grilled a few hotdogs and they are tasty. My next question is whether eating an all-natural hot dog will pass the acceptance barrier with my key food tribe, my wife and millennial generation kids?
The other marketing challenge for Applegate is that their animals are sourced from Australia and Uruguay. My first reaction was to disqualify them as a food I would eat because their meats were not locally sourced. Jerry Edwards, Applegate’s Senior Director Sales Strategy, explained to me their best sourcing plan was focused upon raising grass-feed animals and that Australia and Uruguay has an abundance of grasslands that enables the sustainable raising of cows. He further explained how Applegate uses flash freezing to ensure a non-chemical delivery to the customer.
Green wins customers and will grow sales
Your customers are going green and this mega-trend is reshaping your company’s path to revenue growth. Evidence abounds of how consumers are finding their own path to a more sustainable and healthier lifestyle. For example, solar sales are booming in states that enable rooftop installations because they provide homeowners with a guaranteed lower electric bill plus zero local emissions. Commercial businesses from Apple to Walmart are investing in energy efficiency and solar because they generate double-digit annual ROIs while also building their brand alignment with key consumer groups like the millennial generation. Sales for health and wellness products are soaring while conventional food companies like McDonalds and the Coca Cola Company struggle to create top line revenue growth. The bottom line is that Green Builds Business.
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