How fast-moving consumer goods (FMCG) has changed in the food and drink industry

- Posted by workex in Food & Drink

The food and drinks industry has changed immensely in the past year, with many people forced into lockdown and, subsequently, unable to eat out. As a result, they turned to the supermarket shelves to provide them with the luxuries restaurants no longer could to bring them some comfort and pleasure during this unprecedented time.

 

Looking after a brand can be challenging as the whole marketing mix needs to be considered, but it is also rewarding seeing your label on the shelf. A day could involve anything from sending out product packages to retailers and data reporting to speaking to consumers and planning a product launch.

When planning a product launch, it is often first discussed as part of the three-year planning cycle. From starting the project, it then typically takes around 10-12 months to launch, but this can vary depending on how long product development takes.

Products could be sold exclusively to a particular retailer or across all of them. Products generally enter the market when each supermarket has their range review for that category, which is typically twice a year.

During this process, range rationalising can take place. This is where supermarket buyers could remove any number of products and add in as many or as little as they like. Range reviews could also be one-in-one-out where they simply swap out products. This creates a pressure for products to perform or risk losing the space to a competitor or new disruptive brand.

In this time, we need to consider the five Ps – product, price, promotion, place and people.

First of all, the ‘people’ aspect is considered. Consumers are the backbone of this industry and if your product doesn’t address a consumer need, they’re unlikely to buy it and your product won’t be staying on the shelf for very long. Fortunately, this fast-paced environment and high product turnover does provide an opportunity to be responsive and adapt to evolving trends, lifestyle attitudes and shopping habits.

Finding this insight can be done in several ways – for example via focus groups. These are challenging to do during lockdown, but still possible. Consumers are only a phone call away meaning it is easy to conduct consumer interviews or even join them for a virtual shopping trip. This will provide you with an opportunity to find out what they like to do in their spare time, their interests, what motivates them, places they like to go and what influences their behaviour. This all helps to get into the psyche of the shopper. It is also essential that you speak to all kinds of consumers from a range of demographics and backgrounds, including those who don’t regularly buy the product, if at all, to find opportunities to turn them into loyal customers.

Following this – once a gap has been identified – product is the next step. This includes product development and packaging. Product development can often take several weeks and with the levels of competition in the FMCG market, you need to produce something unique. To help find the perfect product, an ‘inspiration day’, such as visiting a local market, a city, a certain café or restaurant, or taking a lesson in something like cookery can help you to learn about how products and flavours can be combined. Testing ideas with consumers along the way can also help to establish whether it will be a winner when it reaches the supermarket shelves.

In terms of packaging, it is important to consider the characteristics of competitor products and brands in the category as a whole by inspecting the colours and messaging used. Once this analysis has been undertaken, it is important to provide a detailed brief to the designer so they can create a visual that is unique and sets itself apart on the shelf.

Price and promotion is next in line. When reviewing price, the first port of call will be to look at competitors in the category and to adjust depending on whether the product is going to be sold for a premium or is intended as a value item. For example, if the item is part of a range extension, it is important to consider how it will look next to the current range. Costs associated with producing the item should also be carefully considered so profit margins are maintained. It should be noted, however, that the final price is at the sole discretion of the retailer.

In terms of promotion, consider the ‘people’ part of the five Ps again, as well as ‘place’ – what forms of media do they interact with most and when? What is their purchasing journey? Younger consumers may use social media more, but that doesn’t necessarily mean they positively respond to being bombarded with adverts while browsing.

Other forms of promotion could include digital and online, press, print, radio or TV and these mediums should be carefully utilised depending on the profile of your target demographics. Visiting supermarkets and identifying how they are leveraging big initiatives such as Valentine’s Day, Easter or the Back to School initiative can also provide vital inspiration and help you to formulate ideas for your marketing and advertising strategy.

Sometimes it may be difficult to see which trends are short-term and which are long-term but sources like The Grocer, Kantar and Nielsen are often useful to predict this. In FMCG there are three big trends that seem to be here to stay: health, environment, and discounter business models.

First up, health. With more product options available to consumers, brands are turning to added health benefits as a point of difference and, as a result, consumers are becoming more aware of the additional benefits food can provide. The rise of fitness and food influencers on social media also means consumers are more aware of what they are eating. Protein is often heavily associated with health due to its perceived benefits of muscle growth so more food products are adding variants to their range.

As consumers are becoming more environmentally conscious, brands must adapt to stay competitive. Some retailers no longer take new products packaged in polystyrene, a non-recyclable plastic, and have even de-listed their own brand products that are made using the material. Consumers are also taking to alternative flexi, vegetarian or vegan diets to reduce their impact on the environment and, as a result, trends such as dairy and meat alternatives are here to stay.

Finally, discounter business models have been increasingly popular in recent years, with Aldi and Lidl giving consumers the ability to buy both branded and private label products cheaper than they would find them in the ‘top four’. As a result, retailers are moving to an everyday low price model, with lower prices but fewer promotions. Recently, Sainsbury’s announced an Aldi price match campaign across several products. As part of this, retailers are also rationalising their range and having fewer products but each with more availability.

In summary, FMCG is a fast-paced industry and brands must keep ahead with the latest trends in order to be successful. To do this, it is important to plan ahead for the next three years and start product launches around 12 months in advance. It is also important to see what trends are crucial to the target consumer and focus intensely on meeting their needs. The best way to do this is to speak to consumers as much as possible. In this industry, the consumer is always your greatest asset and harshest judge.

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