Blount - 16pg-Supplement - PG2019

INGREDIENTS FOR

A SPECIAL REPORT ON THE FUTURE OF FOOD (underwritten by Blount Fine Foods)

DECEMBER 2019

Blount-12pg-PG2019.indd 1

INGREDIENTS FOR GROWTH B

11/13/19 7:56 AM

THE NO-TIME-TO-COOK SOLUTION

Hot-to-go

BUTTERNUT SQUASH with Herb Roasted Chicken

Your deli customers can bring home our hot-to-go sides for a take-home meal experience that is quick, convenient and purely delicious. Carefully crafted with wholesome ingredients, layered flavors and culinary expertise, our sides are loaded with capabilities.

For more information on a sales driven hot-to-go sides program, contact your Blount sales rep at 774.888.1300 for more information.

Proven. Preferred. Profitable

TM

blountfinefoods.com/sides

Blount-16pg-PG2019.indd 2

11/20/19 12:47 PM

EDITOR’S LETTER:

here are a lot of angles to pursue when tackling a topic like the Future of Food.

After all, it’s a huge industry undergoing meaningful and rapid change, with lots of forces in play causing a tremendous amount of uncertainty.

We know the business of food retailing is being disrupted and transformed by innovative technologies and new business models. So much so that it’s really not possible to overuse the words disruption and transformation, which is really saying something because those words are used a lot. But there’s a good reason for that. Consumers today are presented with an abundance of choice; there are more ways to access more sources of information about more products and a dizzying number of purchase options. As a result, shopper expectations in the areas of convenience, quality, freshness, assortment, affordability and social responsibility reach new heights almost daily.

Retailers too are also presented with an abundance of choice about where to place their bets to pursue growth. They have to decide which pilot programs to undertake, which start-ups are worth taking a shot on and which technology investments will deliver an ROI. These are hard decisions because the cost of making a wrong decision can put a retailer at a competitive disadvantage. A disadvantage that can be difficult to overcome given the pace of change.

But enough with the gloom and doom.

Retailers are used to satisfying increasingly demanding shoppers even if expectations have never increased so much so fast. And retailers can also take comfort in the one simple, undeniable truth about the future of food: No matter how much technology impacts different aspects of food retailing, from decision-making to online order fulfillment, the future of food is ultimately all about food.

That’s the one thing the Progressive Grocer team kept coming back to as we undertook, “Ingredients for Growth: A Progressive Grocer Special Report on the Future of Food.” We recognized that as daunting as the current environment is, the good news for food retailers is they are in the business of satisfying the most basic of human needs. In good times and bad, amid periods of moderate change or tremendous disruption, food is a constant of humanity.

Accordingly, in exploring the topic of the Future of Food, we took an ingredient-oriented approach to explore the what, why, where, who and how of the Future of Food retailing. It may seem like common sense, but in today’s climate of disruption, transformation and uncertainty about many aspects of the food retailing industry, staying focused on the food is the most important ingredient for growth.

MIKE TROY Editorial Director, Grocery Group Mtroy@EnsembleIQ.com

DECEMBER 2019

Blount-12pg-PG2019.indd 3

INGREDIENTS FOR GROWTH

3

11/13/19 9:10 AM

WHAT:

Four Food Trends That Will Shake Up Retailers’ Sales What consumers will be eating in 2020 and beyond.

Hot new flavors, ingredients and consumer preferences, much like technology, shift more quickly than ever, requiring retailers to be more nimble than ever.

4

t is somewhat stating the obvious that the future of food involves food, but what kind of food? Hot new flavors, ingredients and consumer preferences, much like technology, shift more quickly than ever, requiring retailers to be more nimble than ever. That means offering shoppers products that adventurous eaters may not even know they want yet, alongside timeless classics and reimagined staples such as the humble lemon.

“We’ve done a lot of research with consumers and buyers. Consumers hate seeds, and 80% of them hate seeds so much that they are willing to pay a premium to avoid them,” said Adam Cooper, senior vice president of marketing for The Wonderful Company, which has exclusive rights to a new seedless lemon the company launched in the U.S. and Canada in November. Cooper estimated that the company’s new seedless lemons, originally discovered in Australia, will command a 50% premium over seeded fruit.

The company is marketing the seedless, nonGMO fruit as “juicy and zesty — everything consumers love about lemons minus the inconvenient seeds,” making “preparing cocktails and cooking even easier.”

Consumers are looking for a frictionless experience not just with how they shop but also when it comes to what they are eating. It’s the same reason food retailers are able to sell pre-diced vegetables and cut up apples at significantly higher prices than their

INGREDIENTS FOR GROWTH

Blount-12pg-PG2019.indd 4

By Gina Acosta

whole counterparts and why prepared foods are what will set grocers apart in 2020.

This yearning for convenience along with flavor, sustainability and wellness are the four key categories that will shake up the grocery and consumer packaged goods industry in 2020 and beyond. From Wonderful brand frictionless lemons (convenience), to Cosmic Crisp brand apples that offer an ultra-crisp yet sweet experience (flavor), to plant-based burgers (sustainability), to beverages that perform a health function (wellness), 2020 is going to be the start of another rollercoaster decade in how consumers shop, drink and eat.

Here’s a look at the food trends that will stand out in 2020:

Convenience: Fruit that can be juiced without seeds falling into consumers’ drinks.

Hard-boiled eggs ready-to-eat with savory toppings. Drinkable bone broths, refrigerated cauliflower fried rice and meat-free/dairyfree protein packs are all heading to the cold section as fresh grab-and-go options. Some companies are making grab-and-go meals for retail that are meat-free, a category that is expected to expand as plant-based diets increase in popularity. When it comes to real meat, Americans increasingly want it to be convenient. According to the Food Marketing Institute, value-added beef, pork and chicken (meal kits, or meats already marinated or prepped in some way) are the top growth area in the meat department.

DECEMBER 2019

11/13/19 9:01 AM

Flavor: Tortillas made from jicama are making a splash. Whole Foods Market is already selling a private brand version of this crunchy, versatile vessel for everything a consumer would want inside a flour or corn tortilla, but with major raw plant-based flavor and nutrition. Asian and African flavors such as chili peppers, peanuts, ginger and lemongrass are hot and getting hotter.

Superfoods such as turmeric, moringa, ginseng, ginger and tamarind show no signs of slowing down. Mixing meat (mostly ground) with plants while retaining the beefy taste seems to be what consumers are yearning for; this segment rings up $878 million in annual sales, up 19%, with sales driven by Gen Z and Millennials. Now that plant-based has become mainstream, consumers are demanding plant-based foods that taste better. “People eating plant-based foods still want the flavors they want and they want the food to taste good,” said Megan Klein, founder and president of Field and Farmer, a Chicagobased startup that manufactures plant-based foods. “If it’s plant-based ranch dressing, they want it to taste like ranch dressing. Taste is critical.” Consumers are also demanding more plant-based foods in the frozen aisle, refrigerated case and hot bar. In 2020, the trendiest brands will be refrigerated (fresh) and slowing down on soy, which has traditionally dominated the plant-based protein space.

Some of the products touting “no soy” in the next year will be replacing it instead with innovative blends to mimic the creamy textures of yogurts and other dairy products.

When it comes to traditional dairy products, consumers are looking for foods that break the mold: alcohol-infused ice creams, flavored butters and spicy cheeses are just a handful of the types of flavor experimentation shoppers will be looking for in 2020.

Sustainability: Regenerative agriculture, which aims to reverse the negative impacts of farming and ranching on the environment, is all the rage as consumers demand to know more about how their food choices affect climate change. General Mills recently committed to employ the practice, which includes cover cropping, no-till, keeping a live root in the ground at all times and incorporating animals, on one million acres of their contracted lands.

DECEMBER 2019

Blount-12pg-PG2019.indd 5

Sustainability is also increasingly coming into play with how food is perceived by consumers.

Food that is transparently produced without hazardous pesticides and chemicals, nonessential antibiotics or growth promotion supplements is trending more than ever.

Wellness: Health and self-care are really at the forefront of food trends. One of the most noticeable moves in this category will be toward alcohol-free cocktails. The gluten-free movement has encouraged experimentation beyond wheat-based flour to almond, coconut and other flour alternatives (cauliflower, bananas, tiger nuts) that are providing a protein and fiber boost. Sweeteners are getting a makeover as syrupy reductions from monk fruit, pomegranates and coconut arrive to complement mainstays such as agave nectar, stevia and honey. CBD is (still) not a federally approved additive for food and beverage, but it’s everywhere and poised to explode in popularity. Beverages and foods containing prebiotics and fermented foods are going to be ubiquitous. Kombucha is on its way out, but digestion-friendly apple cider vinegar drinks are poised to take off.

Products containing inflammation-fighting effects and calming effects are also predicted to be popular. Expect to see inflammationfighting salad dressings containing ginger, gummy supplements that calm nerves with chamomile, and sleep-inducing CBD sparkling water for bedtime.

Food that is transparently produced without hazardous pesticides and chemicals, non-essential antibiotics or growth promotion supplements is trending more than ever.

INGREDIENTS FOR GROWTH

5

11/13/19 9:01 AM

WHY:

Shoppers Seek Solutions and Flavor Why tastes are changing and the new retail ramifications.

By Jim Dudlicek

The basics of “why” really comes down to three things: Food needs to be healthy and convenient, but neither matters unless it tastes good.

6

he belly rules the mind,” says a Spanish proverb. Like in love, where the heart wants what it wants, so does the stomach when one is hungry.

You’d think that would make it easier to explain why consumers make the food choices they do amid the swirling trends and fads. And the answer is yes. And no.

On the one hand, food is a very personal, extremely emotional thing. Sights, aromas and tastes evoke visceral reactions, dredge up memories and set the mind ablaze. Bad experiences can be as indelible as good ones.

On the other hand, people want to eat better.

That is, in a more healthful manner. Or at least they say that they do; the nation’s obesity rates would suggest a disparity between what folks tell surveys and what they actually do.

The basics of “why” really comes down to three things: Food needs to be healthy and convenient, but neither matters unless it tastes good.

“You can tell them it’s healthy, but it has to taste good,” according to Sarah Deaton, North American shopper marketing manager for New Zealand kiwifruit marketer Zespri.

She explained why her company’s product is on trend for snackers in 2020: it’s a uniquetasting fruit that’s good for you (high in fiber with a moderate glycemic index) and easy to scoop and eat using a spoon that’s packaged with the product.

To be sure, what’s happening is product development is finally making healthier foods more tasty and convenient, bringing

INGREDIENTS FOR GROWTH

Blount-12pg-PG2019.indd 6

us closer to a world in which it will be just as easy (if not as cheap) to eat something that’s good for you as it is to eat junk food; and it’ll please the palate to boot.

For example, among the products that exemplify this trend are salad kits replete with vegetables enhanced by animal or plant proteins; multiple varieties of easy-to-prepare seasoned veggie-based side dishes; creamy, flavorful snack dips made from almonds and cashews; and 4-packs of avocados in various stages of ripeness, so one’s ready to eat each day after purchase. Other examples include noshells pistachios; protein-packed, fruit-forward Greek yogurt smoothies; keto-friendly protein shakes; shots designed to enhance immunity, digestion, energy, metabolism and overall wellness; and even cold-brew coffee spiked with CBD. Answering the “why” is going to be dependent on a perpetual study of consumer behavior, which is going to vary based on demographics like age, gender, ethnicity and regional influences.

“We are very dependent on data, but it seems to be siloed around retail, which is sales data,” said Dan’l Mackey Almy, president and CEO of Dallas-based produce marketing agency DMA Solutions. “We have piles and piles of it. But what we’re talking about is preference and a deeper understanding, and that just doesn’t come overnight. There’s a lot that has to go into that. But I do think that we will figure it out and when we do, it will be transformational for this space.”

Healthy lifestyle choices are increasingly impacting grocery retail, from shopper behavior to supply chain management.

DECEMBER 2019

11/13/19 9:01 AM

Today’s consumers (and increasingly, tomorrow’s consumers) are skeptical of brands and the corporate world, so they need to see proof that the food products they’re buying and consuming deliver real value for a given need-state.

Beyond strictly personal preferences, there are demographic and socioeconomic trends that to varying degrees can explain why the world will eat a certain way in the years ahead: an aging population, migration to urban areas, multigenerational households, a hunger for authentic flavors and experiences.

Interestingly, the United States is actually catching up with the rest of the world when it comes to multigenerational households — not so much Millennials in their parents’ basement, but younger folks who are taking on the responsibility of caring for aging relatives. That’s giving rise to, for example, a grandparent introducing a grandchild to legacy brands, and grandchildren introducing their grandparents to something newer and more innovative.

“There might be a whole new sort of cuisine created by multiple generation households, particularly in Asian-American or Latinx households, where there can be a really distinct difference in what the grandparent likes flavor-wise compared to DECEMBER 2019

Blount-12pg-PG2019.indd 7

the grandchildren,” says Jacob Krempel, senior director of procurement at meal kit company HelloFresh.

Younger generations are more open to experimentation, too. They’re demanding authentic experiences and bold flavors.

They want specific foods over whole cuisines, and they’re mashing up ethnic profiles. They’re showing a propensity to vary their preferences from one week or month to the next. They’re not necessarily vegetarians or vegans, but they’re eating more plant-based foods for reasons ranging from nutrition to animal welfare to sustainability, or they’re just looking for new taste experiences.

Maybe the “why” is as simple as wanting to do what makes you feel good.

In the words of the late Anthony Bourdain: “Anyone … who loves food, ultimately knows that all that matters is: ‘Is it good? Does it give pleasure?’”

Definitely a thought to keep in mind as retailers contemplate the future of food and understand why shoppers behave as they do.

Healthy lifestyle choices are increasingly impacting grocery retail, from shopper behavior to supply chain management.

INGREDIENTS FOR GROWTH

7

11/13/19 9:02 AM

Simple. Quick, Convenient Made With White Meat Chicken Raised Without Antibiotics

blountfinefoods.com/BFK

Blount-16pg-PG2019.indd 8

12/2/19 9:47 AM

Blount-16pg-PG2019.indd 9

12/2/19 10:37 AM

WHERE:

Shoppers Shun Retail Channel Mindset Where shoppers shop is driven by shifting new needs.

Lynn Petrak

hink back to your own meals over the past month. Were they all eaten at home, made with ingredients you bought at your store? Or did you mix things up a bit, with meals out or perhaps some food delivered to your door? Chances are, when you did shop at your grocery store, your cart included both fresh and packaged items as well as items that were at least partially premade, if not fully prepared for grab and go.

Shoppers JUST YOU, AND THE GROCERY aren’t THAT’S BUSINESS IS YOUR BUSINESS. siloed in One would be hard pressed to find consumers only shop for sundries at their local their buying who supermarket. Shoppers aren’t siloed in their behavior buying behavior — they are seeking to fulfill a at the time.

— they are need If the broadcast channels on today’s seeking to televisions and digital devices continue to so, too, do the retail channels in which fulfill a need expand, consumers buy products for themselves and at the time. their homes. Buying groceries these days is

10

INGREDIENTS FOR GROWTH

Blount-12pg-PG2019.indd 10

actually akin to streaming content, if you think about it, whether it’s television, music or news.

Based on your interests, needs and feelings, you might watch something new, as your interest might be piqued by a colorful bowl entrée at a foodservice-at-retail department or a new packaged product that looks cool and personally relevant. On other occasions, you binge watch, much like you would a supermarket stock-up trip on a weekend afternoon with an assortment of items from the center store and perimeter. At certain times, you might shut off all digital connections for a familiar and quiet source like a book, such as when you decide to make an entire meal from scratch.

MAPPING OUT THE NEXT FOOD RETAIL DESTINATIONS

The future of food, like the future of information and entertainment, will be all over the place, literally and figuratively. Already, consumers are shopping for groceries in different and non-traditional grocery channels. According to the 2019 “Future of Food Retailing” report from Inmar, Inc. sales in traditional grocery stores slightly declined in 2018, while dollar share across nontraditional grocery retailers increased. Inmar’s report found that people are buying more groceries at supercenters, discount stores, club stores, dollar stores and drug stores.

The Food Marketing Institute (FMI), in its 2019 “U.S. Grocery Shopper Trends” report, found that consumers patronize at least four different retailers to buy groceries in a given month, an increase from last year. It’s reasonable to expect a similar jump for 2020.

Competition from drug and dollar stores is an indication that the food retailing landscape DECEMBER 2019

11/13/19 9:05 AM

continues to shift, and underscores the likelihood of future disruption. Who would have thought a decade ago that people would add regular groceries to their basket at a dollar store? A future channel may well be a concept like an Amazon Go store, but it could also be a different kind of c-store/ limited assortment/discount hybrid that has yet to be invented.

And then there is food buying outside of brick and mortar stores, which also plays into the “where” of the future of food. FMI research shows that 43% of shoppers have ordered groceries online within the past year, including groceries from their traditional supermarket and other sources.

BACK TO THE FUTURE AT GROCERY STORES

Although much of the latest industry research points to an ongoing splintering of grocery purchases, there is some heartening information for traditional grocers. An overwhelming majority of shoppers — 92% — say there is one main store where they do the bulk of their shopping. For about half of those, the main store is the local supermarket.

That’s for now. What about the future? As today’s shoppers “leverage the strength and specialties of each retailer,” as the FMI report highlights, tomorrow’s buyers will likely do the same in 2020 and the short-term future.

They will buy the bulk of their groceries and look for meal solutions at their regular supermarket — using club and warehouse stores for stocking up on bulk products once or twice a month; checking out specialty items at specialty markets; and picking up essential “need it now” items at convenient locations that are on the way or where they already are at.

To keep the customers they have and attract younger shoppers accustomed to buying more on a whim than with any loyalty, stores have to recognize the new and future fractured food retailing sector and deliver what shoppers want, when and where they want it.

The answer to the “where” question may be surprising to some given the hype around digital. For example, today’s younger DECEMBER 2019

Blount-12pg-PG2019.indd 11

shoppers don’t shop in one place, much less one space. They’re also less easily defined than one would think, with Millennials driving online shopping and younger GenZ shoppers confessing a seemingly nostalgic interest in brick and mortar buying.

Members of Generation Z (born after 1994) visit 6.2 retailers a month, while Millennials go to five retailers a month to meet their grocery needs, according to FMI’s findings.

Other research from Nielsen confirms that GenZers are more likely to buy in stores than Millennials, and prefer stores to e-commerce.

That said, technology influences their in-store purchase behaviors, as they are constantly digitally connected while in the store.

A look to the future channels of grocery shopping wouldn’t be complete without a look at the Alpha Generation, born after 2010. They are considered the first digitally native generation, and will grow up in a world of interlinked shopping and technology.

Like GenZ, though, this generation can be enticed to shop in supermarkets. In a recent report, “Generation Alpha: Preparing for the Future Consumer”, Wunderman Thompson Commerce found that 75% of Generation Alpha members say they enjoy the experience of going to a retail store. Only 38% said they’d rather buy things online.

As today’s shoppers “leverage the strength and specialties of each retailer,” as the FMI report highlights, tomorrow’s buyers will likely do the same in 2020 and the short-term future.

INGREDIENTS FOR GROWTH 11

11/13/19 9:05 AM

WHO:

Winning the Total Meal Solution Opportunity Who are the retailers elevating shoppers’ expectations in fresh.

By Mike Troy

12

INGREDIENTS FOR GROWTH

Blount-12pg-PG2019.indd 12

fresh is representative of what is happening throughout the universe of food retailing. Fresh and prepared foods provide an experiential component to store environments which has become increasingly important as a point of competitive differentiation among traditional retailers and alternative fulfillment options. This is something Wegmans Food Markets recognized well before e-commerce emerged as a threat to store traffic, and the operator of 101 stores has continued to up its game.

For example, the company’s newest store in Brooklyn, NY measures 74,000-sq.-ft. and places such an emphasis on prepared foods that 157 of the 540 employees are part of executive chef Stephen De Lucia’s culinary staff.

A retailer needs that level of labor commitment when it provides seating for 100 and a product offering that includes fresh sushi, authentic Italian pizza, burgers, made-to-order salads and hot soup. The retailer’s food bars are mix

PHOTO BY VITO PALMISANO

Grocers offering prepared foods isn’t a new phenomenon, but what is new is the total meal solutions mindset now guiding retailers’ strategic decision-making, marketing choices, operating models and capital expenditure.

s the timeless questions of, “what’s for dinner?” has expanded to include breakfast, lunch and snacking, retailers are stepping up their offering of prepared foods in a big way.

Grocers offering prepared foods isn’t a new phenomenon, but what is new is the total meal solutions mindset now guiding retailers’ strategic decision-making, marketing choices, operating models and capital expenditure. For example, in early November Kroger hitched its wagon to a new branding campaign with fresh at the core.

The tagline, “fresh for everyone,” is a powerful statement about the value proposition Kroger believes will resonate with shoppers for years to come. As EVP and COO Mike Donnelly noted when the branding statement was revealed, “everyone deserves to have access to fresh, affordable and delicious food, no matter who you are, how you shop or what you like to eat.”

Kroger’s new articulation of its emphasis on

DECEMBER 2019

11/15/19 3:58 PM

and match, with hot and cold self-serve stations featuring entrees and sides, international foods, homestyle and vegetarian options along with wine, beer and cocktails.

The Brooklyn opening followed Wegmans arrival one month earlier in North Carolina where a 104,000-sq.-ft. store opened in Raleigh. Of the stores 475 employees, 120 are part of executive chef Rob Santiago’s culinary team. The Raleigh location, one of six planned for the region, is Wegmans’ southernmost market and puts the company in competition with Lakeland, FL-based Publix which has been expanding northward.

It would be extremely difficult to out-Wegman Wegmans, but Publix is elevating its meal solutions approach as well.

Publix has recently been opening a prototype store with an in-the-round deli department configuration for merchandising traditional deli favorites as well as prepared offerings under the Publix Apron’s brand. There is also a mezzanine level with seating for on-premises consumption.

There are roughly 10 such stores in Publix fleet of more than 1,200 locations.

Food service is also being elevated at Hy-Vee, where the company recently announced a $90 million investment to remodel 14 of its 24 stores in the Kansas City market. The scope of the renovation and department updates will vary by location; however, among the general renovations are new food service options such as Mia Pizza, Hibachi and sushi islands.

A shift to increase the emphasis on fresh and prepared foods can be found throughout the retail industry, among conventional supermarkets as well as others looking to make inroads in satisfying the needs of fresh consumers.

Giant Food Stores continues to expand its small format Heirloom Market concept which gives it access to unique real estate opportunities. The company recently opened a two-level, 13,000-sq.-ft. Heirloom Market store in Philadelphia, its third such concept, which features the fresh and prepared elements of the earlier locations, as well as an underground taproom and gaming area.

It is truly a unique concept with windows in the floor of the grocery store on the main level offering a peek into the taproom below. Branded as The Underground, the space will offer more than 40 craft beers, wines, hard seltzers and hard kombucha on tap, plus a gaming area with classic arcade games, shuffleboard and a Scrabble Wall.

“We continue to learn, and our new location will DECEMBER 2019

Blount-12pg-PG2019.indd 13

bring new innovations while featuring what customers love most about Giant Heirloom Market — fresh produce, locally made products and our Nature’s Promise brand,” said Giant Food Stores president Nicholas Bertram.

The taproom concept is being tried by other food retailers as well. In early 2019, Southeastern Grocers Winn-Dixie banner introduced its version of a taproom to several locations near its Jacksonville headquarters. In addition to everyday favorites and local craft brews, Winn-Dixie’s concept also featured meals, subs, wings, pizza and ribs.

The emphasis on fresh innovation and its role in store experience extends to smaller retailers as well, some of whom are setting new standards for larger competitors. A three-unit chain in Portland called Basics Market opened a new location recently that blends prepared foods with an educational component to help shoppers cook at home. The new Basics location features seasonally rotating meal stations, nutrition classes and cooking demonstrations.

“Our hope is that this store will be an oasis of meal inspiration and delicious ingredients, making it easier for people to get dinner on the table with foods they trust,” said Fernando Divina, president of Basics markets.

Trust, transparency and authenticity are words used frequently in the food retailing world these days as consumers have embraced a desire to better understand what is in the food they eat and how it was prepared. Retailers are taking these new sentiments seriously, especially Earth Fare.

The natural and organic grocery, whose tag line is “live longer with Earth Fare,” went so far recently as to hire a new Chief Medical Officer. Filling the position was Dr. Angela Hind who will work across all departments to enact and oversee a corporate health and wellness strategy to ensure the retailer provides the healthiest assortment.

“Grocery stores have enormous power and responsibility to step up and be part of the solution by providing healthy food to everyone,” Hind said at the time of her appointment.

As retailers position themselves to win the future of food, there is widespread acknowledgement that innovation is the key to staying relevant to consumers of fresh and prepared foods who are seeking total meal solutions.

Trust, transparency and authenticity are words used frequently in the food retailing world these days as consumers have embraced a desire to better understand what is in the food they eat and how it was prepared.

INGREDIENTS FOR GROWTH 13

11/13/19 9:06 AM

HOW:

Get Fit to Survive in Food Retailing’s Future How food will be produced, shipped and sold.

By Lynn Petrak

The future of food (and successful food retailing) starts where it always has: in the land and water.

harles Darwin knew a thing or two about the importance of adaptation. “It’s not the strongest or most intelligent who will survive, but those who can best manage change,” he famously declared.

Those words resonate today, with the survival of the fittest at stake in the general food industry and in the specific food retailing business amid an era of profound change. One might argue that intelligence and strength play into it, too, but managing change will be the pivotal point between future success and languishing within a soon-to-be-outdated model.

The change, of course, stems from new and different ways that people are shopping and buying, both online and across more channels.

But changes are impacting the entire food chain, from the way food is produced and sourced to

the way finished products are shipped, sold, consumed and disposed. From vertical farms to old-is-new-again pastures for organics and from the in-store use of AI to the rollout of new graband-go meals with natural ingredients, the food chain is regularly removing old links and adding new ones.

Such a focus on nimble ingenuity will help forward-thinking brands and retailers throughout the food chain manage change and come out intact if not stronger. “Established CPG brands and grocery retailers need to embrace new strategies for driving growth in a marketplace where sales volume and profit are suffering continuous contraction, with an increased focus on innovation,” agrees Jim Hertel, senior vice president at Inmar Analytics, which recently released its 2019 “Future of Food Retailing Report.”

THE ROOT OF IT ALL

The future of food (and successful food retailing) starts where it always has: in the land and water. Humans have consumed foods and beverages derived from plants, animals and water since the dawn of civilization. Today, though, as consumers and brands are focused simultaneously on efficiency and sustainability, the practices of growing, raising and harvesting food sources from the earth and sea are being managed based on change.

Part of the change is fueled by improvements in technologies that enable smarter and better production. The global smart farming market, for example, is projected to grow to $23.14 billion by 2020, according to a report from BIS research, led by demand for higher crop yields and the advent of better technology.

Another catalyst for change is basic supply and demand, tempered by concerns about 14

INGREDIENTS FOR GROWTH

Blount-12pg-PG2019.indd 14

DECEMBER 2019

11/13/19 9:06 AM

climate change and overpopulation. Concerns about sustainable production, malnutrition and food waste, among other issues, are leading to new methods of producing both plant- and animal-based foods, encompassing red meat, poultry, seafood and a plethora of crops.

Those concerns are also leading to a variety of collaborations. In Europe, for example, the wholesale store chain METRO has a Food Innovation Hub that has developed an indoor vertical farm after teaming up with a startup farming group: an in-store farming platform has been installed in a METRO store in Paris with 40 plants growing over seven levels.

Meanwhile, plant-based alternatives are expected to continue to change the protein marketplace. Among members of Generation Z (born between 1995 and 2007), 65% say they find plant-based foods appealing and 75% report cutting back on meat consumption.

Flexitarian diets are booming across most demographics. In addition to plant-based alternatives like the Impossible Burger, the market for lab-grown meat will continue to garner interest; research from Surveygoo found that 40% of Americans are willing to try labgrown meat.

INTEGRATION, AUTOMATION AND DIGITIZATION

In addition to different or updated practices in agriculture and meat and seafood production, new business models and converging technologies are also impacting the production, packaging and transport of products to the retail store and onto the end consumer.

Integration and collaboration will be a hallmark of these models. Walmart, for example, is distinguishing its fresh offerings at a time of ramped-up competition from other large retailers by developing an end-to-end supply chain for Angus beef.

New product development from forwardthinking brands will continue to shape the food retail market. The ongoing spate of new products on the market are aimed at today’s discerning consumers who are interested in sustainability, health, quality and convenience, in addition to the all-important taste and satisfaction factors. “There are no shortages when it comes to innovative products — from plant-based protein to non-milk to clean meat to DECEMBER 2019

Blount-12pg-PG2019.indd 15

CBD oil-infused, the ongoing proliferation of ‘alternative’ offerings would appear to promise real opportunity for successfully activating a shopper base that is seriously committed to dietary improvement involving sustainability and responsible sourcing,” observes Hertel.

With so many new products in the pipeline or on the books joining those already on shelf or in the case, CPGs and retailers can utilize technologies and data to see what really meets the interests and needs of their consumers.

“The first step toward successful innovation is determining which trends are here to stay through accessing existing data. Mining and modeling that data for actionable insights is the second,” Hertel says.

Within the grocery sector, retailers can deploy data and an array of technologies to grow for the future, such as click-and-collect, 3D store navigation and AI-enabled offers, among other tools.

According to a report on “The Future Supermarket” from consulting firm Oliver Wyman, online retailers are increasingly transferring some of their digital efficiencies to brick and mortar stores, while striving to maintain the enjoyable experience of shopping. “Upgrades could include superior fresh-food offerings, food courts, gastronomic areas, and cooking classes.

Each of these features will need to be combined with expert advice; this will be labor-intensive and, therefore, expensive. To fund this investment, stores will need to deploy modern automation technologies that free up staff from routine operations.”

Finally, at the end of the food chain, after products are consumed, the fullcircle nature of the system will be evident with innovations like sustainable packaging and packaging materials made from food waste. The survival of the fittest continues.

New product development from forwardthinking brands will continue to shape the food retail market.

INGREDIENTS FOR GROWTH

15

11/13/19 9:07 AM

REINVENTING THE HOT-TO-GO

ith shoppers looking for variety and convenience in their food choices, hot-to-go soup has become an increasing segment of the prepared food section of the deli. With an increase in dollar sales of over 11% ( 3 YA *), let Blount help you increase sales and profits by developing a hot-to-go soup program that uses carefully crafted, wholesome ingredients, layered flavors and culinary expertise.

For more information on our hot-to-go soup programs contact your Blount sales rep at 774.888.1300 for more information.

Proven. Preferred. Profitable

TM

blountfinefoods.com/htg

Blount-12pg-PG2019.indd 16

* Source: IRI Liquid Data 52 Week -March 2019)

11/12/19 4:28 PM