understanding how consumer attitudes towards food are changing

UNDERSTANDING HOW CONSUMER ATTITUDES TOWARDS FOOD ARE CHANGING NOVEMBER 2014

BY LAMINE LAHOUASNIA – HEAD OF PACKAGED FOOD RESEARCH

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INTRODUCTION London

Singapore

Shanghai

Dubai

Vilnius

Cape Town

Santiago

Tokyo

Sydney

Chicago

Bangalore

Sao Paulo

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Packaged Food =

Baby Food + Bakery + Canned/Preserved Food + Chilled Processed Food + Confectionery + Dairy + Dried Processed Food + Frozen Processed Food + Ice Cream + Meal Replacement + Noodles + Oils and Fats + Pasta + Ready Meals + Sauces, Dressings and Condiments + Snack Bars + Soup + Spreads + Sweet and Savoury Snacks.

Organic =

All varieties of Packaged Food which have been certified organic by a local authoritative board are included.

Definitions and Datasets

INTRODUCTION

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The State of the Food Industry

INTRODUCTION

0%

2%

4%

6%

8%

10%

12%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Y-o

-Y G

ro

wth

US

$ T

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World: The Performance of Organic and Non-Organic Packaged Food

Non-Organic Value Sales Organic Value Sales Non-Organic Growth Rates Organic Growth Rates

CONSUMER ATTITUDES TOWARDS

ORGANIC FOOD

ASSESSING CORPORATE STRATEGY

FINDING THE NEXT ORGANIC

Image: Courtesy of Walmart

© Euromonitor International

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Demand for Organic Food Varies Considerably Across the Globe…

INTRODUCTION

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• Average unit price for organic food is 58% higher than standard food

Is it just a question of price?

• Opposing views on the proven impact of organic food versus standard food

Is it better for you?

• Organic food works better in combination with other claims and positioning

Is it just a value multiplier?

…But What is Causing such a Difference in Acceptance?

INTRODUCTION

© Euromonitor International

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The ‘Processed’ Element of Packaged Food Hinders Organic Sales

CONSUMER ATTITUDES TOWARDS ORGANIC FOOD

0

10

20

30

40

50

60G

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Sp

ain

Fra

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Ja

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Au

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Consideration of 'Green' Product Features

Fresh Food Packaged Food

© Euromonitor International

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…As Does the Different Understanding of the term ‘Organic’

CONSUMER ATTITUDES TOWARDS ORGANIC FOOD

France

Russia

US

US

Japan

Japan

India

France

China

Russia

Germany

India

0 10 20 30 40 50 60 70 80

Natural

Is produced according to stringent regulations

Is healthier than non-organic

Is sustainably produced

Respects animal welfare (i.e. free range)

Is locally sourced

To me, an 'organic' product is one that is…

Weakest Belief Stronget Belief

© Euromonitor International

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Mass market

Health-driven

Pesticides and food additives

Convenience and pricing

Premium indulgence

Occasional

Higher quality

Beyond organic

Sceptical

Specialist retailers and niche brands

Conscious

Environment and ethics

Niche brands

Fairtrade

Organic Consumer Types

The Four Primary Organic Consumer Types

CONSUMER ATTITUDES TOWARDS ORGANIC FOOD

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Organic Penetration Varies Substantially Across Categories

CONSUMER ATTITUDES TOWARDS ORGANIC FOOD

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0.5

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2.0

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The Value Organic Food by Category, 2014

Retail Value Sales Retail Value Penetration

© Euromonitor International

12

0

2

4

6

8

10

12

14

16

18

20

04

20

05

20

06

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07

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08

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11

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% P

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Organic Baby Food by Region

Asia Pacific Australasia

Eastern Europe Latin America

Middle East and Africa North America

Western Europe

Sensitive

Premium

Ethical

Organic Baby Food Finds a Permanent Place on the Shelf

CONSUMER ATTITUDES TOWARDS ORGANIC FOOD

Images: Courtesy of Flickr user Alpha

© Euromonitor International

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Organic Credentials

Mass Market Brand

The Organic Conundrum for Food Companies

CONSUMER ATTITUDES TOWARDS ORGANIC FOOD

CONSUMER ATTITUDES TOWARDS ORGANIC

FOOD

ASSESSING CORPORATE STRATEGY

FINDING THE NEXT ORGANIC

Image: Courtesy of Walmart

© Euromonitor International

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Organic Penetration in Biggest Food Companies Remains Low…

ASSESSING CORPORATE STRATEGY

0

10

20

30

40

50

60

70

80

Nestlé Mondelez PepsiCo Inc Unilever Danone Mars Kellogg Kraft GeneralMills

Lactalis

Re

tail

Va

lue

Sa

les

– U

S$

mil

lio

n

Top 10 Food Companies and their Organic Sales, 2014

Standard PK Other HW Organic

© Euromonitor International

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Organic Food Sales Growth Remaining Flat

Wider Corporate Ethical Positioning

Importance of M&A in the Organic Food World

…But Things Could be Changing

ASSESSING CORPORATE STRATEGY

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General Mills Seeks US Growth with Annie's Homegrown Purchase

ASSESSING CORPORATE STRATEGY

0

2

4

6

8

10

12

14

16

18

20

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Re

tail

Va

lue

Sa

les

– U

S$

bil

lio

n

General Mills: Packaged Food Sales in the US and the Rest of the World

USA RoW

© Euromonitor International

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WhiteWave Foods Becomes Largest Organic Food Company

ASSESSING CORPORATE STRATEGY

-

0.5

1.0

1.5

2.0

2.5

3.0

Hain Celestial Hipp WhiteWave Nature's Path Yili Mengniu Arla Amy'sKitchen

KoninklijkeWessanen

OrganicValley

Ma

rk

et

Sh

ar

e -

%

Top 10 Organic Food Companies, 2014

Pre-Acquisition Post Acquisition

© Euromonitor International

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So Does Organic Food Really Have a Future…

ASSESSING CORPORATE STRATEGY

0%

2%

4%

6%

8%

10%

12%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Y-o

-Y G

ro

wth

US

$ T

ril

lio

n

World: The Performance of Organic and Non-Organic Packaged Food

Non-Organic Value Sales Organic Value Sales Non-Organic Growth Rates Organic Growth Rates

CONSUMER ATTITUDES TOWARDS ORGANIC

FOOD

ASSESSING CORPORATE STRATEGY

FINDING THE NEXT ORGANIC

Image: Courtesy of Walmart

© Euromonitor International

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…It Could Do, But it Needs More

FINDING THE NEXT ORGANIC

0%

2%

4%

6%

8%

10%

12%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2014 2015 2016 2017 2018 2019

Y-o

-Y G

ro

wth

US

$ T

ril

lio

n

World: The Expected Performance of Organic and Non-Organic Packaged Food

Non-Organic Value Sales Organic Value Sales Non-Organic Growth Rates Organic Growth Rates

© Euromonitor International

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The Organic + Campaign

FINDING THE NEXT ORGANIC

Organic + consumer

group

Organic +

safety

Organic + functional

Organic + convenience

Organic +

lower unit price

Images: Courtesy of Flickr users Chung Chu, iT@c, Nora Kuby, Alpha, Sarah Barker

© Euromonitor International

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The Other Emotions Consumers Feel Towards Food

FINDING THE NEXT ORGANIC

Graph: Recreated from an original work by Rome’s La Sapienza University with support from Nestlé

Cu

ltu

ra

l E

ffe

cts

Ph

ys

iolo

gic

al

Eff

ec

ts

Social and Environmental Responsibility Traceability Proximity Safety

Territorial Identity Tradition Familiarity Innovativeness

Context Price

Preparation

Personal Memories Psycho-Physical Wellbeing Conviviality Group Belonging

Ability to Satisfy Digestibility

Lightness Organoleptic Perception

Composition Genuineness

Duration Recognisability

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Implications for the Pesticide and Veterinary Medicines Industry

FINDING THE NEXT ORGANIC

So where does this leave the industry?

In search of the next Organic…

The Rise of Organic Coming to an End?

Confusion over the meaning of Organic lead to growth rates slowing down as the Organic label loses its lustre

Produce vs. Processed

Consumer scrutiny of pesticide + veterinary medicines use on fresh produce likely to be more significant than for processed food

© Euromonitor International

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Moving from ‘Buy Local’ to ‘Buy Quality’

FINDING THE NEXT ORGANIC

Images: Courtesy of Flickr users Cyn Furey, Blake Buettner, Renata F. Oliveira and arbyreed

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National Food Identity City Food Identity Regional Food Identity

Recent examples from SIAL Paris 2014

FINDING THE NEXT ORGANIC

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Where the ‘Buy Australian’ Movement Could Take Off

FINDING THE NEXT ORGANIC

THANK YOU FOR LISTENING Lamine Lahouasnia | Head of Packaged Food Research Lamine.Lahouasnia@euromonitor.com

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