Imagining what the world will be like in five years can be nothing short of impossible. That includes where the food and beverage industries will emerge as consumers' tastes and demographics continue to evolve.
Packaged Facts' American Consumers in 2020 report examines consumer trends looking ahead a few years. But what do the trends mean for food and beverage manufacturers?
More dining in
When asked what types of items consumers thought they would spend more on in the next few years as compared to the last few, groceries was in the top two, along with household utilities. Consumers are leaning more toward spending money on necessities, like groceries and household expenditures, rather than discretionary spending, such as eating out and away-from-home entertainment.
More grocery purchases and less eating out are good signs for food manufacturers who are struggling with falling sales. By making products more attractive to consumers who want to eat and prepare meals at home, manufacturers can tap additional spending on food necessities.
An aging population makes food choices
Another trend for consumers heading into 2020 is the aging of the population as more baby boomers become seniors.
"For the oldest group of consumers historically, people over 65, because their incomes are lower, generally speaking, they proportionately spend more on necessities — healthcare, housing, food, and home," said Robert Brown, a Packaged Facts analyst and author of the report. "So to the extent that the population ages, you would expect that that would have an impact as well on the food industry, that is that food at home will be proportionately a more important part of people’s expenditures because older people are going to be a bigger part of the population."
While millennials are a major target audience for food and beverage companies today, rethinking R&D and marketing strategies to include older generations could be beneficial. Bud Light recently recognized this trend and shifted away from its millennial-focused ad campaign to broaden its focus to include a wider range of consumer age groups.
Hispanic market grows, but also becomes more acculturated
Historically speaking, Hispanic families have spent more on fresh produce and less on processed foods. However, while that is still true, more Hispanics in the U.S., especially third- and fourth-generation Hispanic-Americans, are becoming more English-dominant families and are starting to buy more packaged foods than they had in the past.
On the other hand, according to Packaged Facts' survey data, whether a Hispanic household is English or Spanish-dominant in terms of the language spoken, both groups are still highly attached to traditional Hispanic foods, because many Hispanics tend to "have a strong sense of identification with their traditional heritage," said Brown.
"So there's a very strong affiliation that will continue through successive generations," said Brown. "For marketers, the fundamental thing is that you don't necessarily need to learn Spanish to communicate with Latino consumers, but you do need to understand their heritage and how they perceive it, and to respect and honor it."
Optimism about the safety of the food supply
Consumers have a less dystopian view of the future than expected. According to survey data, only about 24% of respondents believe the food supply will be less safe, and that's amid a number of food recalls over the past year, from Blue Bell ice cream to Kraft Singles, turkey bacon, and Macaroni & Cheese Dinner products.
The FDA and other groups are taking strides toward improving food safety through technology and guidelines for food and beverage manufacturers through the Food Safety Modernization Act.
Expansion of grocery technologies
Consumers are finding new ways to shop for groceries through various e-commerce options. Same-day delivery and meal-kit services in particular have spurred the growth of e-commerce in the food industry.
Many food and beverage manufacturers have announced their intentions to expand into e-commerce well ahead of this trend slated for 2020. Mondelez International included e-commerce as one of the pillars of its growth strategy, and two pushes in this area have included "buy now" buttons featured in shoppable ads and personalized packaging for its Oreo Colorfilled limited-time promotion.
Bud Light tapped the Internet of Things for its new smart beer fridge, the Bud-E Fridge, which lets consumers know when their beer supply is running low. PepsiCo announced a new leader for its e-commerce expansion efforts, and General Mills called e-commerce its "fastest growing food-channel" on a recent earnings conference call.
Online grocery shopping
Where online grocery shopping tends to fall short, however — and where food manufacturers may find an opportunity — is that many consumers still do not buy fresh grocery products online, according to about 23% of survey respondents. Even when consumers do buy fresh grocery items online, 57% reported finding quality or freshness lacking at least once in the past year.
For manufacturers looking to expand into the online delivery space, there is still room for improvement, as consumers noted that knowing products were recently picked or packaged or knowing products were sourced from a local farm could increase confidence in fresh food deliveries.
Meal-kit delivery subscriptions
In addition to online grocery delivery, meal kit delivery subscription services present another opportunity for manufacturers to reach consumers. If manufacturers can partner with these services, such as Blue Apron or HelloFresh, they could put products in front of more consumers without those consumers ever having to set foot in a store and be bombarded by other competitive offerings.
While meal-kits often focus on fresh ingredients, recipes could still require a packaged food, and that's where the opportunity lies for manufacturers.
At the same time, meal-kit subscription services can be troublesome for manufacturers as consumers use these services to bypass processed foods.
How food marketers might adapt
The same tactics used for in-store promotions may differ widely from those needed to attract consumers using desktops or mobile apps. When consumers shop online, payments happen automatically and the shopper bypasses a shelf of impulse buys like candy and snacks. Product assortments can also be tailored to a consumer's online purchase history. This presents both opportunities and challenges for marketers who may look to shift strategies to meet consumers in new shopping avenues by 2020.
Beyond the consumer health trend, these trends will also impact food and beverage companies. Awareness and adaptation of these trends will help companies compete in an increasingly challenging industry.