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Food and Product 2020

Our Point of View

23rd August, 2014

2 Copyright © 2014 Deloitte Development LLC. All rights reserved.

Consumer value equation for food has

fundamentally shifted

BENEFITS COST VALUE

… causing a shift in

the derived value Taste Convenience Price Safety

Sustainability Health Transparency

Consumer expectations from food has evolved…

Nutrition

Source: Industry Interviews; Deloitte Analysis


Wellness

Dye concerns Run Into Mac & Cheese, Other Foods

Business Week | November 01, 2013

Sustainability

QSR chain commits to begin buying sustainable beef by 2016

Thousands rally against use of conflict palm oil

Meat processor drops pork supplier amid animal cruelty

claims

Arkansas News | August, 11 2014

Foodmagazine | May 21, 2014

GMA members are at the receiving end of substantial

pressure and criticism for not doing enough on food

safety

While the industry currently segregates these issues into silos…

‘Fed Up’ Links Obesity Epidemic to Sugar, Industry,

Government

FDA Seeks to Revoke GRAS Status for Trans Fats

Food Safety Magazine | November 7, 2013

NPR, May 19, 2014

Transparency

150,000 Oregonians Put GE Labeling on the November Ballot

Center for Food Safety | July 2, 2014

Safety

Food recalls cost billions each year

Toxic Jerky treats linked to more than 1,000 dog deaths

E. Coli Outbreak Prompts Nationwide Recall of Nearly 2

Million Pounds of Tainted Beef

70 Percent of Ground Beef at Supermarkets Contains

‘Pink Slime’

Grocery chain to label all genetically modified products by 2018

USA Today | March 08, 2013

Consumer Products Industry

Source: Factiva News Articles; Deloitte Analysis

CNBC | January 7, 2014

ABC News | March 07, 2012


Fox News | May 19, 2014

Food Production Daily | September 11, 2013


Good for me

Good for the planet

Transparent to me

Safe for me

Consumer-View

Dye concerns Run Into Mac & Cheese, Other Foods

Business Week | November 01, 2013

QSR chain commits to begin buying sustainable beef by 2016

Thousands rally against use of conflict palm oil

Meat processor drops pork supplier amid animal cruelty

claims

Arkansas News | August, 11 2014

Foodmagazine | May 21, 2014

GMA members are at the receiving end of substantial

pressure and criticism for not doing enough on food

safety

…Consumers perceive these as interrelated issues

‘Fed Up’ Links Obesity Epidemic to Sugar, Industry,

Government

FDA Seeks to Revoke GRAS Status for Trans Fats

Food Safety Magazine | November 7, 2013

NPR, May 19, 2014

150,000 Oregonians Put GE Labeling on the November Ballot

Center for Food Safety | July 2, 2014

Food recalls cost billions each year

Toxic Jerky treats linked to more than 1,000 dog deaths

E. Coli Outbreak Prompts Nationwide Recall of Nearly 2

Million Pounds of Tainted Beef

70 Percent of Ground Beef at Supermarkets Contains

‘Pink Slime’

Grocery chain to label all genetically modified products by 2018

USA Today | March 08, 2013

Source: Factiva News Articles, Deloitte Analysis

CNBC | January 7, 2014



Fox News | May 19, 2014

Food Production Daily | September 11, 2013


The pressure and criticism is emanating from a

variety of influential avenues with different

agendas…

State and Local

Federal

Traditional

Media

Retailers

Social Media

Legal

Advocacy

Groups Suppliers Consumer

Products

Industry

Source: Deloitte Analysis


State and Local

Federal

Traditional

Media

Retailers

Social Media

Legal

Advocacy

Groups Suppliers


…However, it is primarily a consumer driven

phenomenon


Consumers have an expanded definition of “safety”

75% Safe Packaging

66% Accurate Labeling

Expanded definition of “safety”

Social Media Posts on Health & Wellness

and Food Safety (40M)

Health & Wellness

86%

Food

Safety

14%

Source: Deloitte Food Safety Survey, 2014; Deloitte Social Media Study, July 2014 analyzing social media posts

from the U.S. on the topics of “food safety” and “health and wellness” between July 13 to June 14; Deloitte

Analysis

Attributes Included in Food Safety Definition

30%+ Natural & Organic

Posts included:

8M on Transparency (20% of total)

2M on Sustainability (5% of total)


Consumers are demanding greater transparency

Demand for greater transparency

49%

22%

21% Food Additives

GMO

Labeling

8% Others

Source: Deloitte Food Safety Survey, 2014; Deloitte Social Media Study, July 2014 analyzing social media posts

from the U.S. on the topics of “food safety” and “health and wellness” between July 13 to June 14; ; Deloitte

Analysis

87% Consider Labeling important in

purchase decision

70% Likely to buy brands communicating

commitment to food safety

61% Wish for more info. on ingredients &

production processes

Key Transparency Topics Importance of Transparency


Consumers have lower level of trust in food brands

Decreased trust, increased skepticism

Social Posts Sentiment Analysis1

90% 10%

16%

66% 34%

84%

Brands

Across

Industries

Leading

Beverage

Brands

Leading

Food

Brands

Positive or

Neutral

Negative

Note: 1. Social posts sentiment analysis for brands across industries is based on a representative sample of brands across retail, financial services, auto, airlines, and technology over a 3 month period between Oct-Dec 2013; Analysis for

beverage brands represents socials posts for a representative sample of beverage brands over a 3 month period between Oct-Dec 2013; Analysis for food companies is based on a representative sample of leading food companies/brands

over a period of 12 months between July 13 and June 14

Source: Deloitte Food Safety Survey, 2014; Deloitte Social Media Study, July 2014 analyzing social media posts from the U.S. on the topics of

“food safety” and “health and wellness” between July 13 to June 14; Deloitte Analysis

64% Unlikely to purchase a brand

even after 6-12 months of recall

66% Wiould forgive brands they

trust on food safety

40% Trust commitments made in

advertisements and on websites

Attitudes to Brand Trust


This changing landscape is leading to a “New Normal”

TO… The “New Normal” may require companies and the industry as a whole to

consider developing a broad consumer centric view

• No presumption of safety and wholesomeness

• Demand for visibility into production processes, ingredients

• Purchases driven by not only Safety concerns but also Health and

Wellness, and Sustainability

Consumers

• Public opinion shaped by “social chatter” with limited regard to science,

regulatory or legal requirements

• Negative stories can result in swift and lasting brand damage

• Iconic brands make good targets

Information

Exchange

• Regulators are more empowered and resourced (e.g. FSMA)

• FSMA means whole scale change for much of the industry

• Consumer brands could assume more illness / recall liability

Regulators

Expanded definition of “Safety”

Demand for greater transparency

Decreased trust, increased skepticism

Drivers New “normal”



Proactive and

Leading

Independent and

Siloed

Cost Centric and

Inefficient

Compliant and

Reactive

Middle Management

Topic

Holistic View of

Consumer

Attributes

Growth Centric and

Efficient

C-Suite

Issue

To…

From…

Food and Product 2020

Consumer

Wellness

Sustainability

Transparency

Safety


The “New Normal” provides an opportunity to rethink

approach to Food and Product Safety to create value


Food & Product Safety in Your Organization: Key

Questions to Consider

Is it considered a business and shareholder value driver

or just a necessary cost?

Are you ahead of the consumers and regulators or just

meeting compliance requirements?

Is the responsibility and ownership in the C-suite or is it

relegated to mid-management?

Is it a consumer centric function or just a technical

product quality function?

Thank you

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Copyright © 2014 Deloitte Development LLC. All rights reserved.

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food and product 2020 our point of view - grocery ... · source: deloitte food safety survey, 2014;...

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