CHICAGO – Inflation, persistent supply chain problems and other factors are likely to affect consumer purchases and create a headwind for the snack category in the coming months.
“The big challenge for snack players is to increase the cost of products so that consumers are willing to pay higher prices for them,” said Anne Scott Livingston, a food and nutrition analyst at Euromonitor, during a presentation at Sweets & Snacks Expo. which occurred. May 23-26 in Chicago. “In the case of snacks, the value proposition includes not only the unit price, but also convenience, including packaging and delivery options.”
She said snack manufacturers have opportunities to add value by adopting digitization. Expanding remote work remains a top priority for 70% of companies surveyed by Euromonitor.
“This increase in time spent at home creates serious problems for snack players,” Ms. Livingston said. “While consumers who make impulsive purchases are declining, the number of those who buy products online continues to grow.”
Euromonitor data shows that almost half (46%) of global consumers now shop online at least once a month.
“The rise of e-commerce is one of the most significant consequences of the pandemic,” Ms. Livingston said. “Many companies have launched their own consumer-focused websites, not only to have a new sales channel, but also to better understand consumers and test new products.”
Marked by the desire of consumers for greater speed and convenience, delivery is playing an increasing role in the consumption of snacks. E-commerce has historically had low penetration into the spread of snacks. The underdeveloped infrastructure of the cold chain in many markets limits the rapid delivery of products such as ice cream and, in particular, yogurt.
A new generation of third-party platforms solves these problems by delivering snacks and other typical store products to shoppers in 30 minutes or less. These ultra-fast delivery services have their own execution centers, commonly referred to as dark stores.
“Dark stores are located close to the end consumer, allowing you to fulfill and deliver orders in minutes,” Ms. Livingston said. “With their short delivery times, these services allow urban consumers to use online orders for impulse purchases.”
She pointed to GoPuff as an example in ultra-fast delivery. The Philadelphia-based company, founded in 2013, operates hyperlocal execution centers that are strategically located in more than 900 cities. Late last year, it expanded to the United Kingdom, its first international market.
Dark GoPuff stores are provided with their own inventory of products, which eliminates the need for couriers to stop at regular outlets to pick up goods. This fast delivery has attracted the attention of investors. GoPuff was valued at $ 15 billion after raising $ 1 billion in funding last summer. The company has acquired several online stores and delivery services, including the Coffee and Ice Cream Shop Bandit, which work only with programs, the BevMo and Liquor Barn spirits chains and the European instant delivery services Fancy and Dija.
The ultra-fast delivery space is still facing challenges, Ms Livingston said. Many consumers are looking to return to shopping before the pandemic, which usually means prioritizing shopping at regular retail locations rather than shopping online.
“Also, when inflation reaches a level not seen in years, consumers seeking to mitigate this price increase may be more hesitant to pay a premium for super-fast delivery than they would have been last year, especially because snacks can still easy to get in the store, ”she said.
Live streaming is another tool that snack manufacturers can use to trigger impulsive online shopping. A 2022 Euromonitor survey found that a third of buyers use live broadcasts to purchase products or services. Live e-commerce has taken root in China, where 67% of consumers use the channel to shop. Snacks are among the best categories purchased through live broadcasts in the country.
Live e-commerce is just beginning to appear in North America and Europe, and major social networks are paying attention to it. Facebook, Instagram, Pinterest and TikTok have launched live broadcasts of e-commerce or online shopping features.
The Nestle KitKat Chocolatory team in 2020 introduced Australia’s first Facebook shopping experience. Digital experience was revealed by chocolate experts who demonstrated confectionery, demo versions of products and time-limited offerings. Viewers could shop directly through the live broadcast.
“The main reasons consumers use live broadcasts is that it allows them to get discounts from brands, and also makes it easier to understand the features of the product,” Ms. Livingston said.
According to Euromonitor, eight out of ten consumers watch TV or movies at least weekly, and half play video games at least once a week. The market research company also found that half of consumers eat snacks at home, while only 18% reported eating snacks on the road in 2022. Forty-three percent said they ate snacks while watching TV or streaming video content, reaching 53% for a 15- to 29-year-old demographer.
“Understandably, there are opportunities for snacks in these home entertainments,” Ms. Livingston said. “More brands of snacks need to develop products and promotions for these home activities.”
The partnership with PlayStation provides one example. Brands, including Nestle KitKat and PepsiCo’s Doritos, have partnered with a video game brand that gives players a chance to win a free game console when they buy snacks.
Another example is ICNOW (ice cream now) from Unilever. The platform is dedicated to finding opportunities for ice cream in the instant delivery space. Last year, he debuted a campaign in Spain that allowed gamers to watch the tournament live via the Twitch video platform to order a pint of Magnum in-stream. The company cooperated with the local on-demand delivery service to send orders within 10 minutes.
Snack makers are adopting digitization Food business news
Source link Snack makers are adopting digitization Food business news