Polarization is effecting change in the food industry, according to food & beverage industry consultant, David Henkes of Technomic. Mr. Henkes completed a study for Emerson Climate Technologies detailing the ways in which consumer demands will drive change in the food industry by examining key trends through 2020. Here is what he has to say about polarization.
Outside science, polarization usually refers to how people think, especially when two views emerge that drive people apart, kind of like two opposing magnets.
“The shrinking middle class is not going out as much because they can’t afford it. Food service industry operators have to address this group.” says NPD Group, a market research firm that provides consumer shopping trends, market information and advisory services to retailers and brands across 21 industries around the world.
Polarization is a growing factor affecting industry growth, pricing and profitability and policy. Value-oriented consumers are becoming more critical to growth. According to Emil Brolik, CEO Wendy’s, after disappointing 2016 third quarter sales, “If you look at the last 10 quarters in the industry, the price/value consumer growth has been stronger than the non-value customer.”
NPD Group reported that the third quarter of 2016 saw the largest decline in quarterly GDP in seven years, and the unemployment rate climbed. Inflation for groceries dipped below inflation for restaurants for the first time in two years, making restaurants less attractive for consumers.
Spending was up 2% and visits were up 1% in the third quarter, with spending outpacing food inflation. The average eater cheque kept pace with food inflation. A challenge is seen in the full service restaurant (FSR) segment in Canada when it comes to overall spend, (down 2%) but most sectors posted gains, (retail +15%, on-site +3% and QSR +2%).
Traffic performance told a different story. As Canadians cut back on restaurant visits, independent restaurants in particular, are suffering, with more than 6,000 closing in the past four years.
Rabobank, a leading partner to the corporate food, beverage, and agribusiness industry says that the food industry must adapt to an increasingly complex and disruptive landscape as consumers move away from heavily processed foods, towards less processed and more personalized options.