Since 2020 went so wildly off the rails, the future of food seems as unpredictable as the rest of the economy.
But, as Dr. Shelley Balanko, senior vice president at The Hartman Group, pointed out during NEXT, TraceGains’ latest virtual event, there are a handful of macro trends that will weigh on the market for the foreseeable future.
“The COVID-19 pandemic accelerated the influence of several macro trends that gave rise to greater challenges and opportunities for the CPG industry,” Balanko said. “Innovation is more important than ever. Understanding which trends are gaining momentum and how they’ll disseminate and influence consumer shopping and eating practices will help businesses identify, create, and take advantage of emerging growth opportunities.”
With an extensive background in psychology, Balanko boasts years of experience researching how social and cultural shifts can disrupt consumer markets. As a member of The Hartman Group leadership team, Balanko is proficient at converting consumer behavior patterns and market shifts into business growth opportunities for CPG companies.
Changing Socioeconomic Dynamics
Shifting socioeconomic dynamics have emerged as a leading driver of change. It’s driven, Balanko argued, by the swelling demographic sea change that’s washing over the United States:
- Diversity is driving the growth of non-white consumers, which make up increasingly larger segments of younger generations.
- The segment of those over 65 years of age is climbing rapidly and will make up 22% of consumers by 2050. At the same time, those under 18 are disappearing and will fade to only 20% of consumers.
- Middle-class consumers keep disappearing.
- And traditional household patterns have fragmented, with 28% of households now a single person.
- Finally, traditional eating patterns have also diverged, with snacking emerging as a more significant factor.
As a result, Balanko said that food and beverage manufacturers must respond accordingly, whether it’s reevaluating product sizes to accommodate smaller households or shifting marketing messaging to cater to changing demographics.
Quality is King
“Quality, along with taste and price, are the top three attributes that consumers consider when choosing which food and beverage products to purchase in 2021,” Balanko explained. “Consumer expectations have continued to rise during the pandemic making the battleground to capture a share of their wallet even more intense.”
In an odd bit of juxtaposition, however, consumers have shown an increased willingness to pay more for healthier products yet value private label brands more than ever before.
Consequently, brand owners should pursue innovation at both ends of the spectrum – for premium products and value offerings. Balanko added that companies should place added emphasis on “distinct product attributes.”
“The past two years have brought about unprecedented challenges on multiple fronts, shifting consumer perceptions, concerns, and routines,” Balanko said. “They have also accelerated consumers growing to understand of sustainability and related issues as a complex web of mutually connected environmental and social issues that can’t be ignored.”
Consumers had begun shopping for more socially responsible products even before the pandemic:
- More than two-thirds of consumers “base their purchase decisions upon concerns for issues such as the environment and social well-being at least sometimes.”
- Nearly half of consumers are “now more concerned about the environment.”
As Balanko pointed out, consumers have also moved from “me to we,” with 70% of shoppers choosing sustainable products because it’s better for others.
Moving forward, CPG brands must heed these numbers since nearly two-thirds of consumers “have boycotted companies or brands for environmental, social, or labor reasons,” a 7% jump since 2019.
“As Millennials grow their families and develop their product preferences, social and environmental issues continue to play an important role in their food decision-making, and they are following through on making purchases that align with their values,” Balanko concluded. “Packaging has become a shortcut for consumers to determine how sustainable your products are – this should be a starting point when undertaking change.”
The pandemic accelerated consumers’ desire for health and wellness, including custom products and services that address individual consumer needs. As a result, plant-based products have emerged as a clear favorite – a market niche that’s far surpassed the size of the American vegetarian consumer base.
Mental health concerns have also emerged from the stigma of the past, with a growing number of consumers saying it’s just as important as physical well-being.
Accordingly, Balanko food and beverage makers should expand their marketing beyond physical wellness and highlight mental and emotional attributes, such as the benefit of an easy to prepare a healthy meal. Balanko added that companies should also pursue personalized products to keep up with demand.
Technology Takes Center Stage
“The pandemic accelerated consumer adoption of technology — from Zoom to online grocery shopping — seemingly overnight,” Balanko said. “Consumers are embracing innovation in every part of their food lives—from sourcing to cooking and even reimagining the makeup of the food itself.”
After years of anticipation, the pandemic pushed the industry’s embrace of technology to the forefront. Then, out of necessity, food on demand broke into the mainstream in the form of curbside pickup and home delivery.
But the rise of technology reaches beyond delivery, as analysts predict the global smart kitchen market to exceed $6.1 billion over the next three years.
Balanko expects technology to feature prominently in:
- Improved food quality.
- New food solutions.
- Increased supply chain transparency.
Moving forward, companies must leverage technology in developing new products while addressing consumer demand for better insight into where their food and beverages come from.
Shopping Made Easy
Finally, Balanko explained that manufacturers and retailers alike must adapt to consumers who’ve suddenly become comfortable with an on-demand marketplace. As a result, brand owners must prioritize convenience to keep their customers, whether contactless shopping or cashless transactions.
Brands must fight to keep up with this new reality, Balanko insisted, and consider how they “show up online” while getting a better grasp of how their products span various channels.
Balanko wrapped her presentation by addressing what she sees are areas of uncertainty in the years ahead. To hear more, check out her NEXT on-demand here.