Put your crash hat on and buckle your seatbelts, because it’s going to be a hell of a ride.
That’s the advice for food industry professionals from Dr David Hughes, emeritus professor of food marketing at Imperial College London.
“It’s going to be a good ride for those that can manage the longer term; but it’s the ups and downs of the short-term that are going to be particular challenging.”
Hughes, who will present at the AFGC’s Future Leaders Forum this week, spoke to Inside FMCG about current global challenges that will impact the industry’s future.
“For many of us, we have been through a difficult financial climate,” he said. “So we have got an increasingly savvier consumer. They are more aware of value and where to find it.”
Demographic changes are also influencing the purchasing behaviours of consumers. Once such example, Hughes said, is the trend toward solo eating.
“In an environment where there is either one or two people eating – no more than that – the better part of half of all meals are eaten solo,” he said. “That has huge implications for industry because it indicates that we tend to eat out more, we tend to snack more, we don’t buy ingredients. We now buy meal solutions, snack solutions and that’s happening everywhere.”
“The big shop is becoming less obvious,” he said. “People are shopping more often and when they do they buy fewer items, they don’t buy ingredients so much, they buy either the meal or components of the meal.”
Retail will be “tough”
“It’s going to be a tough decade for retailers,” Hughes said.
He predicts polarisation between discount retailers and those at the premium end will continue.
“There is a fair proportion of people [in Australia], as there are in the UK and the US, who are not particularly constrained in terms of their purchase … they want good value. As a result you see the move in retail from extreme value in discounters, towards the premium end and these are the two ends of retail that are growing.
“And it is the guys in the middle – for instance, in the UK majors like Tesco, Sainsbury’s, William Morrison – that have been losing shares over the last eight to 10 years.”
New entrants will be another big challenge for traditional supermarkets, Hughes said.
“If you take David Jones going in at the premium end, or if Costco, who has relatively few stores but looking to increase them, it is nibbling away at the grocery dollar.
“It’s going to be a really tough decade for retailers, it’s not going to get easier. And that is going to be reflected in the pressure that big retailer passes on to suppliers.”
