As another year comes to a close, many dairy processors are likely reflecting on the ups and downs of the past 52 weeks — and looking forward to the year ahead with cautious optimism. Unfortunately, none of them have access to a working crystal ball to help ensure success in 2018.
But dairy processors that follow and react to important goings-on in the market will have a leg up on the competition. Here are a few to consider.
Although transparency has been a buzzword for some time now, its meaning is expanding in consumers’ eyes — going beyond just product-related information to information about the companies that manufacture and sell those products.
According to the Food Marketing Institute’s “2017 U.S. Grocery Shopper Trends” report, U.S. grocery shoppers now want transparency that engages them, offering assurances of food safety, the pursuit of health and wellness, the appetite for discovery and a closer connection to food. Essentially, they’re looking at five categories of transparency from food companies and retailers: easy access to relevant product information, clear quality standards, productivity and accountability, fair treatment of employees and openness in relation to business practices.
Opportunity: Dairy processors that endeavor to communicate more clearly and honestly with consumers across all of the above categories stand to win in 2018.
And they should also understand that consumers do not expect perfection. For example, a recent study from Cone Communications found that the majority of consumers — 75% — believe a company does not need to be environmentally perfect, as long as it is honest and transparent about its efforts.
Benefits vs. form and brands
In the past decade, consumers’ choices have shifted from a focus on form (e.g., milk) and brand “to an emphasis on benefits for the buyer,” notes Rima Nair, principal, IRI consumer and shopper marketing – innovation, in the market research firm’s September Point of View, “Realigning for Growth: Win by Innovating Across CPG Market Segments.” Many consumer packaged goods companies are changing to match this new direction — she points to Cheerios Protein and V8 Veggie Blends as examples — but “many more need to do so.”
Opportunity: Dairy processors could triumph by identifying the specific consumer benefits they want to pursue and focusing product development (and marketing) efforts on them.
Halo Top is a success story here, homing in on calorie reduction benefits while still delivering on taste. And Dunkin’ Donuts recently launched ready-to-drink coffee and milk beverages that not only provide the benefit of on-the-go convenience, but also cross more than one product category (another growing trend).
The in-store experience
Faced with growing competition from online shopping and alternative formats, many grocery retailers have upped their game in recent years when it comes to the consumer shopping experience. Consumers need only walk a store’s perimeter to savor the aromas and tastes from hot-and-ready meal stations, interactive cooking demos, coffee kiosks and even wine bars.
The approach seems to be working. In fact, in a 2017 survey from the Hartman Group, 71% of consumer respondents said they had not placed an order online for grocery items in the prior three months. Why? Almost half of them — 48% — said the main reason is that they enjoy shopping for groceries in person more than they do online.
Opportunity: Great packaging and merchandising do wonders to spur sales of dairy products at the shelf. But forward-thinking dairy processors could partner with retailers to be a bigger part of the consumer-beloved in-store experience.
A regional cheese brand, for example, could partner with a retailer on in-store sandwich shop offerings. Via signage, the retailer then could communicate to shoppers that it proudly tops its sandwiches with “Brand X” cheeses. A bonus? Such a partnership would also mesh well with consumers’ desire for local products.
Millennials still might be getting all of the press, but some new kids are coming onto the block — a whole lot of them. The members of Generation Z, born between 1994 and 2010, now comprise the largest portion of the U.S. population, edging out millennials 26% to 24.5%, according to an October article in Work Design Magazine.
And as it turns out, Gen Zers behave more like baby boomers than like millennials, notes a new study from the Center for Generational Kinetics. They make plans to work during college, avoid personal debt at all costs and save for retirement.
Opportunity: The oldest members of Generation Z are now entering the workforce and starting to spend money. To succeed in the coming year and beyond, dairy processors will want to learn as much as they can about the wants and needs of this soon-to-be-powerful generation.