'The U.S. consumer has changed'

by Keith Nunes
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NEW YORK — Such traditional factors as price, taste and convenience hold less sway over consumer purchasing decisions, according to a report published by the consultancy Deloitte in a study conducted with the Food Marketing Institute and the Grocery Manufacturers Association. New purchasing influences, such as health and wellness, safety, social impact, experience and transparency, are motivating consumers and forcing food and beverage manufacturers and marketers to adapt.

Jack Ringquist
Jack Ringquist, a principal with Deloitte Consulting L.L.P. and global consumer products leader

“Contrary to conventional wisdom, it’s not just the millennials or most affluent putting these evolving drivers in the mix,” said Jack Ringquist, a principal with Deloitte Consulting L.L.P. and global consumer products leader for the company. “Our research reveals that the preference for these attributes does not differ by generation, income level or region, but is pervasive across these groups. The U.S. consumer has changed in a fundamental and impactful way, and people’s preferences are becoming even more fragmented than the food industry may have anticipated.” 

The research included a survey of 5,000 U.S. consumers, interviews with food and beverage industry executives from 40 companies, and secondary research from Deloitte, the F.M.I. and the G.M.A. A report about the research effort titled “Capitalizing on the shifting consumer food value equation” was released Jan. 25.

Adding to the complexity of the new environment food manufacturers and marketers face is how consumers define each of the emerging purchasing influences. Health and wellness, for example, is no longer strictly associated with health and nutrition. It includes organic production, natural ingredients and fewer ingredients perceived as artificial, according to the report. The situation is similar with the topic of safety, which applies to such product attributes as an absence of allergens and fewer ingredients as well as complete and accurate labeling.

Health and wellness now includes organic products in the eyes of the consumer.

Social impact relates to local sourcing, sustainability, animal welfare and fair treatment of employees. Experience includes retail store layout and service as well as brand interaction and personalized engagement spanning pre-, during and post-purchase.

The study identified transparency as an “overarching” influence that includes such attributes as clear labeling, certification by trusted third parties and the access and trust of manufacturers.

Those consumers most susceptible to be influenced by the new drivers are those who are actively engaged in social media and digital channel use. The tools have disrupted the traditional reliance of manufacturers and retailers on traditional communication and marketing efforts, according to the company.

Mark Baum, the F.M.I.’s chief collaboration officer

“Food retailers are inherently ‘shopper advocates’ and they respect that their customers want both genuine and transparent shopping experiences,” said Mark Baum, the F.M.I.’s chief collaboration officer. “Our study sheds light on how companies can better understand the intersection of these new consumer food values and their own growth strategies.”

As a result of the emerging purchasing influences, the report predicts consumer tastes and preferences will continue to fragment, the retailer’s role in influencing purchases will continue to grow, smaller and newer companies will remain competitive as they leverage new technologies to earn consumer trust, and market success will be determined by those companies that can build purpose-driven competitive advantages.

Jim Flannery, senior executive v.p. of operations and industry collaboration at the G.M.A.

“Today’s consumers have a higher thirst for knowledge than previous generations and they are putting the assessment of that information into their value equation,” said Jim Flannery, senior executive vice-president of operations and industry collaboration at the G.M.A. “There is no doubt that the consumer value equation has changed — as taste, price and convenience are now only the foundation with the need to leverage the emerging value drivers. Brands that win with consumers will likely be those that provide the information they seek, well beyond what is on the label.”

Of concern to larger food companies is the level of distrust consumers have for such businesses. A social media survey conducted by Deloitte in 2014 found that consumers are 3.4 times more likely to have negative perceptions about food companies than larger companies in other industries.

“The tendency toward distrust appears particularly true of millennials,” the report said. “According to a recent Mintel report, two in five U.S. millennials agree they do not trust large food manufacturers compared to just 18% of non-millennials. Concerns with trust were overwhelmingly reflected during our interviews with food and beverage industry executives who say the issue of trust represents a growing challenge.”

The full report may viewed on-line by clicking here.
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