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Food Industry Solutions for Transition to E-commerce

Posted on:February 4, 2019
2018 PTT Biz/Food Industry Solutions for Transition to E-commerce - Darren Seifer
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WILL E-COMMERCE EVENTUALLY dominate food sales and, if so, what are brick-and-mortar food and beverage companies to do? Darren Seifer, Executive Director, Industry Analyst-Food Consumption, NPD Group, addressed these questions in helpful detail in his presentation titled “Food & Beverages Migration to E-commerce: The Tipping Point is Here.”

“We are now at the tipping point,” argued Seifer, noting Amazon’s acquisition of Whole Foods immediately turned it into a major player in the food category, forcing box stores, such as Walmart and Target, to try and catch up.

“All retailers and their supplier partners should collaborate and re- think what will happen within their box,” said Seifer, noting that there are important lessons to be learned from other categories’ e-commerce experiences.

Lesson one is that food and beverage companies need to expand their thinking in terms of offering solutions to consumers. Lesson two is that companies need to rethink just what “category leader- ship” means in the world of electronic commerce. Lesson three is that “brick-and-mortar stores are and will remain very important, but they will need to change quickly in order to survive,” said Seifer.

Even as total U.S. retail sales dipped slightly, Seifer said, growing e-commerce transactions captured about 7.7% of those sales in 2017. The food and beverage industry is only at the very beginning stages of transitioning to e-commerce, he continued. The food and beverage category today captures only 4% of its sales online, as compared to technology products (at 30%). In the middle of the range are prestige beauty products (14%) …what beauty products share with foods and beverages is that they, too, are products that consumers want to see, smell and otherwise test out before purchase.

People go online to find solutions, so “companies need to make sure their products are perceived as part of the ‘dinner’ solutions that people seek.” Seifer divided these into eight steps, starting with “deciding what to eat” and finishing with “cleaning” and “restocking.” Added Seifer: “Each presents their own e-commerce service opportunities.” For example:

• Carry it for me! Many consumers may buy some products in quantity, but they don’t want to carry large, bulky items home with them. Online delivery services provide a solution.
• Unpack it for me! Some providers, such as Amazon and Walmart, are experimenting with having consumers provide home access to their service providers, whereby they can directly stock pantries, refrigerators and freezers.
• Restock it for me! For certain products (e.g., pet food), companies can anticipate purchase cycles and provide direct-door delivery on a schedule.

However, there are barriers to be overcome, the biggest being that “consumers still want to pick out their own fresh items and they would rather not pay delivery fees,” said Seifer. He noted that benefits of direct store shopping include “reminding consumers of other things they need,” and that it is often “faster to drive to a store and obtain products as needed.” It is also true that “impulse buys” and “brand attachments” tend to plummet when consumers shop online, he added. E-commerce companies have tried using pop-ups and other tools to try to spur impulse buys.

E-commerce engenders other supplier opportunities. For example, whereas retail package designs are conceived so that they visually dominate crowded retail shelves, this is less important for online product sales. Retailers can thus design lower-cost packages to better fit in crowded consumer pantries, for example.

While online sales may render it more difficult to capture impulse buyers, it is a good place for replenishment buying, especially for “high-loyalty” brands, said Seifer. “Once consumers pick their site, they tend to stick with it.”

“Brick-and-mortar stores are not going away,” concluded Seifer, but if food and beverage retailers don’t heed the lessons learned from other industries’ shifts to e-commerce, they put their very survival at risk.

“Food & Beverages Migration to E-commerce: The Tipping Point is Here,” Darren Seifer, Executive Director, Industry Analyst-Food Consumption, NPD Group

This presentation was given at the 2018 Protein Trends & Technologies Seminar. To download free presentations and the Post-conference summary of this event, go to https://www.globalfoodforums.com/store/protein-seminars/

See past and future Protein Trends & Technologies Seminars at https://www.globalfoodforums.com/proteinseminar/


Cellular Technology Opens the Pathway for Clean Meat Alternatives

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2018 PTT Biz/Cellular Technology Opens the Pathway for Clean Meat Alternatives - Brad Barbera

(Photo Credit: ISRAEL21C/YISSUM: PHOTOGRAPHER)

Future Meat Technologies’ first cultured chicken kebab on grilled eggplant and tahini sauce at Jerusalem’s Machneyuda restaurant.

FOOD COMPANIES are now looking beyond traditional meat alternatives into the futuristic realm of cellular technology, and for good reason. Some consumers desire more healthful diets; others are concerned about the environment or food security for a growing population. Still others see animal welfare as an area of focus.

Three of the four primary measures for total environmental impact (not only greenhouse gas emissions) are 70-90% lower for meats produced via this new technology than through animal agriculture. These include total land and water use and localized pollution of soil and water. Energy, the fourth measure, is comparable to that of chicken farming and production, which is the most efficient form of animal agriculture, noted Brad Barbera, Director of Innovation, The Good Food Institute, in his presentation titled “Animal Protein Minus the Animal: The Rise of Cellular Technology.”

Consumers’ desire for more healthful products increases the demand for cleaner foods, which in turn draws consumers away from animals treated with antibiotics, due to health concerns. “A full 80% of the antibiotics used in the U.S. go into animal feed, not treating human illness,” said Barbera. The rest of the world has similar practices. Why? Factory farm conditions require massive use of antibiotics to prevent outbreaks of disease among the tightly confined animals, he explained.

In addition, there is no efficient method of funneling calories through a live animal to produce consumable food calories for humans, Barbera added. Most of the calories fed to animals go into their growth and metabolism, not into producing meat. This results in waste and inefficiency. For all these reasons and more, companies and their food scientists and bio-engineers are turning to cellular agriculture.

Between plant-based agriculture alternatives and animal-based alternatives, where does cellular agriculture fit in? As it turns out, there’s a spectrum of alternatives, ranging from pure plant-based offerings to hybrids of both protein sources to recombinant DNA (rDNA) and, finally, to cellular technology used to produce clean meat, clean fat and clean gelatin (and even non-food products, such as clean leather).

Ultimately, the goal of cellular agriculture in producing clean meat is to produce the same taste, aroma, texture and bite of animal meat, only produced without the animal. The method of doing so involves the creation of three different types of cells and combining them onto a matrix. Those cells include the protein source—the myocytes, or muscle cells; the adipocytes, or fat cells; and the fibroblasts and chondrocytes—the connective tissue that give the meat its texture, consistency and bite.

Clean meat production includes four major areas: cell lines, cell culture media, scaffolding and structuring, and bioreactors (the vessels used for production). Any one of these areas holds tremendous opportunities for investment, although the most significant opportunity for investment may be in cell culture media, noted Barbara. Cell culture media have been primarily developed for pharmaceutical-grade products, not necessarily food grade; the group that brings those costs down will be in high demand, he offered.

At the beginning of the process, a small biopsy of tissue, about the size of a grain of rice, is extracted from an animal. The cell culture media enables the cell to grow and proliferate. Cells are then deposited on a matrix called scaffolding, where complex 3D structures form, and cells differentiate. This is a new area where a variety of possibilities are being explored, such as 3D-printing. “If you can imagine 3D-printing with living tissue,” said Barbera, “that is the type of research in process.”

While plant proteins are a viable option, cellular agriculture will soon be a reality. The technology is one being explored globally. There’s a significant cluster in Silicon Valley in the U.S.—an area normally associated with digital technology. The Netherlands and Israel are other areas where start-ups are popping up, as is Asia, particularly Japan. The Good Food Institutes’ role in cellular agriculture is to make sure all organizations working on this technology have the best scientific and business knowledge necessary to support their growth, and to make this technology become a reality as soon as possible.

The next challenge may well be implementing policy that regulatory, food-industry associations and food manufacturers can live with. “Change is always hard on some in society. We’re looking for an easy and smooth transition,” Barbera concluded.

“Animal Protein Minus the Animal: The Rise of Cellular Technologies,” Brad Barbera, MBA, Director of Innovation, The Good Food Institute

This presentation was given at the 2018 Protein Trends & Technologies Seminar. To download free presentations and the Post-conference summary of this event, go to https://www.globalfoodforums.com/store/protein-seminars/

See past and future Protein Trends & Technologies Seminars at https://www.globalfoodforums.com/proteinseminar/


Business Strategies for High-Value Protein Ingredients

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2018 PTT Biz/Business Strategies for High-Value Protein Ingredients - David Lafond
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AS TECHNOLOGY PIPELINES continue to pump new plant and animal protein options into food and beverage domains, it is critical that marketers learn to develop strong, compelling and clearly understandable narratives to properly explain these emergent technologies to consumers. So, argued David Lafond, Ph.D., MBA, Principal, Lafond Food Technology, LLC, in his presentation “Emerging Protein Ingredient Technologies for Business Development.”

Nettle protein, engineered yeasts and meat cell cultures, you say? Read on.

“Consumers want healthy ingredients,” began Lafond. “They look for the absence of negatives and the presence of positives. They also look for recognizable ingredients and clean labels…they want to understand what these ingredients represent and why they are in their foods.”

Time is of the essence when introducing new technologies, as start- up economics eventually yield to commodity economics. Success eventually transforms high-value specialty ingredients to low-value commodities, as more suppliers enter the same space. Consequently, suppliers should always be looking ahead to identify the next high-value protein spaces, said Lafond.

“Suppliers tend to focus too much attention on protein content and agronomics…the cost of growing and extracting protein…when determining what proteins to invest in for the future. I suggest that there are other factors to consider as well,” Lafond added. “We need to ask what compelling messages we can provide about these proteins?”

Nutritional messages are one, but they need to be supported by clinical data, which can be prohibitively expensive. There are also regulatory constraints on what can be said using clinical data. On the other hand, ancient grains, such as quinoa and teff, have succeeded in large part because their rich and compelling histories have added to their mystique.

Such captivating narratives provide opportunities for companies to build relationships with their consumers through social media. Lafond cited a company—One Degree Organic Foods—that put QR codes on its products to link consumers to videos and other displays about the farms that produced each of the ingredients in the company’s products. “Another area rich in narratives is ethnobotany,” Lafond said, citing the histories of Chinese and Indian Ayurvedic medicine. Native American plant medicines have not been as well-documented yet and may provide unique opportunities.

Recently, Lafond and ethnobotanists at the University of Kansas screened 50 Native American plants for food and nutritional values, based on historical use data. They determined that nettle leaves had the highest protein content of the plants surveyed—37% on a dry-weight basis (vs. peanuts at 24% or quinoa at 14%)—together with a 41% dietary fiber content. They were used by a number of Native American tribes and come with “a unique, not unpleasant flavor,” said Lafond. “This is a narrative waiting to be developed.”

Lafond also expects great things to emerge from fermentation technologies. Fermentation is highly sustainable and leaves a negative carbon footprint. “Algae can produce very high protein contents with balanced amino acid profiles.”

“If you haven’t heard of CRISPR-cas9, you will,” claimed Lafond. It is a breakthrough genetic modification technique that allows researchers to “cut and paste” very specific gene sequences into the genomes of yeast or algae. For example, yeast has been modified to grow animal proteins as “clean meat” alter-natives. “With this technology, we can modify yeast to produce milk or eggs without cows or chickens,” announced Lafond. One company is already making a beef burger analog using this technology. Another company is making “fish without fish.”

“It is still very early, but one start-up company in San Francisco, one in Europe and possibly one in Canada are marketing protein ingredient systems designed by computer algorithms using AI and large data sets to match protein composition and structure to end-use functionality,” stated Lafond. “I’ve seen an egg substitute made from mung bean protein using this predictive model. It is pretty amazing.”

Exciting as they may be, “ultimately, the key to the success or failure of these technologies will depend upon how well we manage the narratives in ways to which consumers can relate,” concluded Lafond.

“Emerging Protein Ingredient Technologies for Business Development.” David Lafond, Ph.D., MBA, Principal, Lafond Food Technology, LLC

This presentation was given at the 2018 Protein Trends & Technologies Seminar. To download free presentations and the Post-conference summary of this event, go to https://www.globalfoodforums.com/store/protein-seminars/

See past and future Protein Trends & Technologies Seminars at https://www.globalfoodforums.com/proteinseminar/


Diverse Drivers of Protein Demand Pose Marketing Challenges

Posted on:January 30, 2019
2018 PTT Biz/Diverse Drivers of Protein Demand Pose Marketing Challenges - Steve French
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ACROSS THE GLOBE, but especially in America, the drive to add more animal and plant protein to human diets continues unabated, even as consumers remain somewhat vague as to their reasons why. In his presentation titled “Consumer Trends in Protein; What is the Real Marketing Opportunity,” Steve French, MBA, Managing Director, NMI, raised some interesting concerns. For example, French stated: “We can’t rely upon the status quo to feed a global population that will reach 10 billion by the year 2050. We need to make changes that are better not just for human health, but also the health of the planet.”

That said, he let the sometimes counter-intuitive numbers tell their tale. While only 14% of the U.S. population feels deficient in protein, 43% of consumers seek more protein in their diet, said French. In 2017, 59% of consumers said that they actively sought out foods high in protein, a 51% increase over 11 years. “It’s hard to find any other market growth trend as high as this.” The reasons why vary. “The primary reason that consumers cite for adding protein to their diet is all about having energy…having less fatigue, getting out of bed and being more competitive. The secondary reasons are man-aging weight and maintaining muscle mass.”

French noted that all of these reasons track well with aging population trends. Interestingly, 69% of consumers also cite “a healthy mind” as a primary driver. These drivers are especially trending in Asia, where the focus is both on healthy cognition and cosmetics…i.e., mitigating the physical signs of aging.

“Protein benefit perceptions vary by age, so it is important to know one’s target consumer segment, in terms of understanding the benefits that resonate the most,” continued French. For Millennials, it is about building muscle, while for (especially female) Boomers, it is about increasing bone density and perceived cosmetic benefits. French referred to NMI’s breakdown of consumer segments by their appetites for innovation:

• The Well Beings (26% of consumers) represent the proactive trendsetters.
• The Food Actives (14%) are mainstream, healthy consumers that seek self-directed balance in all things.
• The Magic Bullet group (20%) exhibits lower commitments to healthy lifestyles, preferring quick fixes instead. This is also the least healthy group.
• Fence Sitters (23%) are more “wannabee” healthy consumers looking for quick and easy solutions. This is unsurprising, as many are raising families.
• The Eat, Drink and Be Merry consumers (17%) may not be “healthy active,” but that doesn’t mean they aren’t healthy.

While Well Beings may be the more obvious group to pursue, French suggests that Fence Sitters offer a secondary target, as measured by consumers that continue to use high-protein foods and those consuming plant proteins over the course of a year.

But it is important to remember that protein is not the only driver in consumer food and beverage choices. “Traditionally, the four main drivers have been taste followed by price/value, nutritional value and convenience,” he observed. That said, “this year is t he first year that we saw nutritional value rise to the number two position of drivers.”

In terms of what types of proteins consumers prefer, only 7% of consumers believe plant-based products represent the “best source” of protein, whereas animal protein still rules, with 50% support. The prevailing consumer sentiment is that animal proteins provide essential nutrients not present in plant sources. Nonetheless, French spots countervailing trends that should provide opportunities for plant protein-based foods
and beverages. “There is a groundswell in the U.S. and other parts of the world against the use of hormones and antibiotics in foods…41% of consumers that we surveyed responded that they believe plant- based proteins are more environmentally friendly than meat.”

Thus, he concluded, consumers will continue to integrate animal and plant proteins into their diets and lifestyles—even as the U.S. protein market, at least, shows signs of maturing.

“Consumer Trends in Protein; What is the Real Marketing Opportunity?”, Steve French, MBA, Managing Director, NMI

This presentation was given at the 2018 Protein Trends & Technologies Seminar. To download free presentations and the Post-conference summary of this event, go to https://www.globalfoodforums.com/store/protein-seminars/

See past and future Protein Trends & Technologies Seminars at https://www.globalfoodforums.com/proteinseminar/


A Global Perspective on the Sports Nutrition Market

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2018 PTT Biz - A Global Perspective on the Sports Nutrition Market - Carolina Ordonez
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PROTEIN POWDER REMAINS the undisputed top contender in the global sports nutrition category, affirmed Carolina Ordonez, MBA, Senior Consumer Health Analyst, Euromonitor International (affiliation during seminar). In her presentation “Global Trends, Drivers and Prospects in the Sports Nutrition Market,” Ordonez provided insights into the how and why this continues to be…and why the industry should pay particular attention to the rise of category micro-influencers.

“Eighty-two percent of the global sports nutrition category today is represented by protein products,” said Ordonez. It is also growing at the fastest rate found within the broader consumer health products industry. “This category was valued at $13.6 billion globally in 2017 and is expected to grow at a 6.8% annualized rate between 2017-2022. This surge is also reflected in sports nutrition-product e-commerce sales, which grew at an 18% annualized rate between 2012-2017, to reach $3.2 billion in the U.S. by 2017.”
Globally, sports protein powders generated $11.2 billion in sales in 2017. Ordonez predicted that they would experience 7.1% annualized growth over the next five years.

For now, U.S. sales in toto represent about 62% of the global sports nutrition market, but Asia-Pacific s ales are also surging, e specially in Japan, China and India, said Ordonez. And, “don’t overlook Latin America,” she counseled. Though sales volumes ($1.0 billion in 2017) remain relatively modest, Latin America represents a prime U.S. protein supplement export destination, due to their perceived high quality.

Ordonez noted that consumer drivers behind sports protein consumption are changing. “It’s not that people don’t want to lose weight anymore, but they do want to use fitness and weight management strategies to get there. They no longer believe in magic pills.” Thus, she notes a gradual shift in focus from pure athletics to a more broad- based approach to lifestyle issues, perhaps reflective of an aging population demographic.

In the U.S., the sports nutrition protein category switched from being dominated by bodybuilders to people who chose sports nutrition for a variety of health, weight or lifestyle reasons, noted Ordonez. While the number of older people consuming protein powders to avoid sarcopenia, or a loss in muscle tissue, has increased, the number of younger consumers influenced by vegan, vegetarian and flexitarian practices has also grown. This has been driving growth in plant-based protein sales.

Ordonez recalled a conversation with Geoff Palmer, Chief Executive of Clean Machine (Pompano Beach, Fla.), a company that sells vegan supplements online. Palmer is a 55-year-old, self-styled vegan bodybuilder. In 2017, Palmer’s company introduced a protein powder consisting of pea protein blended with “water lentils” (duckweed). He claimed the product quickly developed a “huge following” among vegan bodybuilders.

Also, Ordonez believes the emerging Generation-Z (also known as iGen – ed) merits a closer look. She estimates that vegetarian, vegan and flexitarian trends will grow under their influence. This emerging generation of consumers is a heavy follower of micro influencers.

What is a micro-influencer? Whereas traditional market research focuses on fitness or lifestyle demo-graphics, “We need to consider how human beings associate to form crowd or tribal cultures that help define our social, fitness and health practices,”
explained Ordonez. It’s that influence that defines a micro-influencer.

She cited the examples of Josh and Sarah Bowmar, an online fitness training and nutrition ad-vice-giving couple who developed an online presence that now claims about one million followers. “In one trade show I attended, the longest and slowest line that I observed was at the Bowmar’s booth. The Bowmars saw an opportunity to launch their own sports nutrition company, following the success of their website [www.bowmarfitness.com].”

The next evolution of online marketing will involve close coordination between online suppliers of protein products and such micro-influencers, according to Ordonez. There are plenty more people out there, like the Bowmars, for every fitness and nutrition “tribe” imaginable, she concluded.

“Global Trends, Drivers and Prospects in the Sports Nutrition Market,” Carolina Ordonez, Senior Consumer Health Analyst, Euromonitor International (affiliation during seminar)

This presentation was given at the 2018 Protein Trends & Technologies Seminar. To download free presentations and the Post-conference summary of this event, go to https://www.globalfoodforums.com/store/protein-seminars/

See past and future Protein Trends & Technologies Seminars at https://www.globalfoodforums.com/proteinseminar/


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