Introductory Workshop. Added Value Why do it? Meet customer needs Gain competitive advantage – unique Enter a new market / market segment To gain a bigger.

Introductory Workshop

Added ValueWhy do it?

• Meet customer needs• Gain competitive advantage – unique• Enter a new market / market segment• To gain a bigger value added share • Increase profit

What Value Can Food Have?• Texture, taste and aroma• Convenience• Shape, size and flexibility• Packaging• Service• Information and advice• Reassurance and traceability• Local production• Storability (e.g. shelf life, freezability)• Animal welfare• Nutritional content

Why People Buy

• Solutions to Problems

• Want an Experience

• Good Feeling

Consumers want VALUE

Value = Benefits – Costs – Risk

‘Solution tomy need’

Financial & Opportunity

Costs

Unfulfilled Promises

Creating Value

Customervalue

Perceivedbenefits

Perceivedsacrifice

Productbenefits

Monetarycosts

Relationshipbenefits

Imagebenefits

Servicebenefits

Timecosts

Energycosts

Psychologicalcosts

Positive NegativeCustomervalue

Perceivedbenefits

Perceivedsacrifice

Productbenefits

Monetarycosts

Relationshipbenefits

Imagebenefits

Servicebenefits

Benefits must out-weigh the sacrifice

Where is the value in your business?• What is your USP?• How do you differentiate?• What makes you better?• What’s your story?

Source:

Market Size and Forecast

Estimated UK retail sales and forecast of locally sourced foods, by value, 2007-17

Mintel

(£bn)5.5

Best case (£bn)7.1

Worst case (£bn)5.9

Mintel forecast (£bn)6.5

2

3

4

5

6

7

8

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mark

et

valu

e (

£b

n)

95%

Confidence intervals

90%

70%

50%Actual Forecast

Est.

0

Source:

Share of Domestic Food

Share of food consumed in the UK originating in the UK*, 1988-2011

DEFRA/MINTEL

0

10

20

30

40

50

60

70

80

%

*based on the farmgate value of raw food. Consumption of UK origin consists of UK domestic production minus UK exports

Source: Base:

The Consumer – Which Issues Matter?

Factors influencing choice when buying food and (non-alcoholic) drink, December 2012 and March 2013

“Thinking about buying food and non-alcoholic drink, which, if any, of the following factors are most likely to make you choose one product over another? Select up to three.”

GMI/Mintel 1,500 internet users aged 16+

21

5

14

7

14

11

14

15

21

11

21

23

34

27

6

6

7

10

12

13

14

1720

21

23

30

0 10 20 30 40

None of these

Detailed foreign origin (eg Parma ham)

Traceable (eg to farm)

Organic

Regional origin (eg Lancashire cheese)

Fair pay for farmers

Sustainable (eg fish)

Environmentally friendly

Local origin (ie 30-mile radius)

Fair trade

Free-from pesticides

Animal welfare standards

British origin

%

Dec-12 Mar-13

Source: Base:

The Consumer – Attitudes Towards Food Origin

Words associated with foods of local, regional, British and detailed foreign origin, December 2012“When thinking about foods of local (ie food produced within a 30-mile radius), regional (eg Lancashire cheese), British (eg British pork) and detailed foreign origin (eg Parma ham, Greek feta cheese), which, if any, of the following words would you typically associate with each of these? Select all that apply.”


Family-produced

Higher quality

Not mass-produced

Authentic

Environmentally friendly

Worth payingmore for

Distinctive taste

Well regulatedHigher farming

standards

Overpriced

No different from normal

Safe

Local origin

Regional origin

British origin

Detailed foreign origin

Source: Base:

The Consumer – Recollection of Logos

Recollection of logos, December 2012

“Do you recall ever seeing the following logos on food and drink packaging?”


88

53 51

32

21

109

37 36

55

65

75

39

13 13 14 14

0

10

20

30

40

50

60

70

80

90

100

Fairtrade RainforestAllianceCertified

Red Tractor Freedom Food Certified Farmers’ Market

ProtectedGeographical

Indication

%Yes No I don’t know/remember

Source: Base:

The Consumer – Attitudes Towards British Food and Drink

Agreement with statements on British food and drink, December 2012“When thinking about British food and drink products, by which we mean products that have been produced or grown in Britain, or made using British ingredients, which, if any, of the following statements do you agree with?”


24

29

30

40

48

52

53

55

57

59

68

71

37

35

30

48

37

28

34

37

34

28

26

22

39

36

40

13

15

20

13

8

9

13

6

6

0% 20% 40% 60% 80% 100%

I would be willing to pay more for food/drink with a ‘made in Britain’ label

I feel guilty about not buying British food and drink whenavailable

I do not feel any loyalty to buying British food and drink

British food is of better quality than imported

Price matters more than whether a product is British

I would be willing to pay more for British food and drink (egmilk) if the extra money went to farmers

I would buy more British produce if the benefits were cleareron-pack (eg supporting British farms)

British food is usually fresher than imported

Buying British food and drink is more environmentally friendly

It’s hard to know when food is really British

I t is the duty of the retailers to support British farmers/growers

I would be willing to buy misshapen fruit and vegetables thatare grown in Britain

Any agree Neither agree nor disagree Any disagree

Source: Base:

The Consumer – Attitudes Towards British Food and Drink

Agreement with statements on British food and drink, December 2012 and March 2013“When thinking about British food and drink products, by which we mean products that have been produced or grown in Britain, or made using British ingredients, which, if any, of the following statements do you agree with?”


33

49

68

74

24

40

59

68

0 10 20 30 40 50 60 70 80

I would be willing to pay more for food/drink with a ‘made in Britain’

label

British food is of better quality thanimported

It’s hard to know when food is really British

I t is the duty of the retailers tosupport British farmers/growers

%

Any agree

Dec-12 Mar-13

Source: Base:

The Consumer – Attitudes Towards Provenance, by Alcoholic Drinks

Agreement with statements on the provenance of wine, beer and spirits, December 2012

“Thinking specifically about the provenance of alcoholic drinks, which, if any, of the following statements do you agree with in relation to wine/beer/spirits?”

GMI/Mintel 944 internet users aged 18+ who have drunk wine, 825 internet users aged 18+ who have drunk beer and 690 internet users aged 18+ who have drunk spirits in the last six months

22

12

31

21

30

20

40

20

19

18

27

28

17

42

17

12

19

24

28

28

50

0 10 20 30 40 50 60

None of these

I prefer drinks made by smaller producers

I prefer drinks made by producers from a specificregion (eg Scottish whisky, Bordeaux, Bavarian

beer)

I would like to see a wider range of drinksproduced in my own country

I prefer drinks from the country they traditionallycome from (eg French wine, Belgian beer, Russian

vodka)

I always check the country of origin of the drink

I like to try drinks from different countries

%

Wine Beer Spirits

The Local advantage

• How do you get your message across?• What’s the personality of your business?• How is that represented?

Consumer Trust in Food Brands

Top ten most trusted food brands*, January 2012- April 2013

66.462.1 61.0

58.5 58.4 58.3 57.4 57.1 56.8 56.2

0

10

20

30

40

50

60

70

%

Base: Internet users aged 16+SOURCE: GMI/MINTEL

* Among the selected leading brands featured in Mintel’s brand research

Consumer Attitudes Towards the Food Industry

“To what extent do you agree or disagree with the following statements about the food industry?” April 2013

23

23

24

32

32

35

36

40

40

42

49

77

36

39

32

42

31

37

30

37

37

35

37

20

41

38

45

26

37

28

34

23

23

23

13

4

0% 20% 40% 60% 80% 100%

Food manufacturers encourage people to eathealthily****

Different elements of the food supply chain allwork effectively together***

Supermarkets care about British farmers

The food industry sources food responsibly

Supermarkets are aware of where theiringredients originate from

Supermarkets set fair prices for consumers

Food manufacturers** are aware of where theiringredients originate from

Supermarkets/ food manufacturers provideaccurate labelling* on food packaging

The food industry in general is well regulated bythe Food Standards Agency

The food industry is able to effectively react tofood scares (eg BSE, horsemeat)

The food industry provides food that is safe toeat

The food industry relies too much on mass-manufacturing

Any agree Neither agree nor disagree Any disagree

* (eg ingredients, origin)** (eg food factories)*** Full statement reads: Different elements of the food supply chain (eg farmers, manufacturers, supermarkets) all work effectively together (eg open communication)**** (eg by using minimum artificial ingredients)

Base: 1,500 internet users aged 16+SOURCE: GMI/MINTEL


Agreement with the statements ‘I would like to see stricter regulations in the food industry’ and ‘I am interested in knowing how the food industry is regulated’, by age, April 2013

40

3233

40 41

49 49

33 3330

34 32 34

39

0

10

20

30

40

50

60

All 16-24 25-34 35-44 45-54 55-64 65+

%

I would like to see stricter regulations in the food industry

I am interested in knowing how the food industry is regulated



Agreement with the statement, ‘The food industry relies too much on mass manufacturing’, by age, April 2013

70 7077 79

84 83

0

10

20

30

40

50

60

70

80

90

16-24 25-34 35-44 45-54 55-64 65+

%


Who do Consumers See as Responsible for Selected Aspects of the Food Chain?

“Thinking about the UK food industry (eg supermarkets, farmers, food manufacturers), who do you think is most responsible for ensuring the following?”

14

20

23

26

39

39

49

59

62

14

37

5

17

42

14

13

19

29

14

14

38

2

2

10

2

28

15

49

5

2

32

12

4

9

10

7

1

15

4

6

0% 20% 40% 60% 80% 100%

Affordable food

That the UK food chain is as sustainable aspossible

That food is sourced from the UK as much aspossible

That food production has minimum impact tothe environment

That food is safe to eat

That food is easy to prepare

Providing quality ingredients

That food is healthy

Food manufacturers Supermarkets The government Farmers Don’t know


Factors Which Encourage Consumer Trust in Food

“Thinking about buying food, which of the following factors would persuade you to trust a food product?”

7

2

9

12

35

37

42

43

43

45

47

48

0 10 20 30 40 50 60

None of these

Not on special offer

Appealing packaging

Low calorie content

Has see-through packaging

Made by a well-known brand****

The taste

Has product origin on packaging

Contains no artificial ingredients***

Has an animal welfare certification** on packaging

Has manufacturing details on food labelling*

Contains British ingredients

%

* (eg where and when it was made)** (eg RSPCA/Red Tractor approved)*** (eg free from artificial colourants/flavouring)**** (ie a brand that I have used before)


Consumer Target Groups

Regulators are the most likely of the target groups to want to see stricter regulations in the food industry, reflecting their general lack of trust in it. However, a keen interest in seeing more manufacturing information on-pack suggests an easy route to improve their trust.

Compared with the other target groups, Brand Bankers are the most likely to trust a food product if it’s made by a well-known brand. They are also more likely than average to be interested in knowing how the food industry is regulated.

Traceability Trusters are notable for being the most likely to trust the level of traceability in the food industry, which is a positive finding considering it is the largest of the target groups.

Regulators(31%)

Brand Bankers

(32%)

Traceability Trusters

(37%)

Managing relationships

• What are your most important relationships?• How do you manage those relationships?• Who is your most important customer, and why?

Unemployment has been falling for a year The income squeeze is less, but will not go away altogether in 2013

The economy is weak, but may not be as weak as the figures suggest

Source: Office for National Statistics/Mintel Source: Office for National Statistics/Mintel

Consumer confidence recovering

• A steady upward trend for the last 18 months

• It has been consistently upward seemingly independent of the Jubilee and the Olympics

• Even so it is still well below the boom time levels up to 2007.

Consumer cautiously hoping for better times

Feb

09

Apr 0

9

Jul 0

9

Nov 0

9

Feb

10

Apr 1

0

Jun

10

Aug 1

0

Nov 1

0

Jan

11

Mar

11

May

11

Jul 1

1

Sep-

11

Nov-1

1

Jan-

12

Mar

-12

May

-12

Jul-1

2

Oct

-12

Dec-1

2

Feb-

13

3.4

3.5

3.6

3.7

3.8

3.9

4.0

We

igh

ted

av

era

ge

on

1-5

sca

le

Source: GMI/Mintel

All spending on food, drink at tobacco: £123.5bn in 2012

Source: Mintel

Market Size and Forecast

• All food, drink and tobacco forecast to grow at 3.3%pa to £145bn in 2017

• Soft drinks: forecast to grow at 4.5%pa to £18.2bn in 2017

• In-home alcohol sales – forecast to grow at 2.1%pa to £35.9bn in 2017

• Tobacco sales – forecast to grow at 2.1%pa to £20.1bn in 2017

Stead growth expected in the key markets

Sales of in-home food 2007-2017f

Source: Mintel

Channels of distribution for food, drink and tobacco, 2012

The majors dominate, but convenience may start to catch up

Source: Mintel

Online food retailing – share of spending by product, 2012

Tobacco

Bread and morning goods

Confectionary and snacks

Snacks

Foreign & ethnic

Ready meals

Desserts

Soft drinks

Store cupboard basics

Dairy products

Beer,cider

Meat, fish and seafood

Fruit and vegetables

Wine and spirits

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

3.3

4.2

4.5

4.5

4.7

4.7

4.8

4.8

4.8

4.9

4.9

5.1

5.2

6.7

Share of spending %

• Online food retailing is growing

• But it is dominated by the major supermarkets – where people do their main weekly shop.

• For the majors it is primarily a service to customers.

• Leading online players in wines and spirits take over a third of online sales

Wine and spirits the only specialists to have made a significant impact

Source: GMI/Mintel Base: 2,000 adults online, ages 16+

Supermarket shoppers–profile by age and socio-economic group, 2012

Sainsbury’s customer base now younger than Tesco’s – and important measure of its recent strength

37 38 39 40 41 42 43 44 45 46 47

3.2

3.4

3.6

3.8

4.0

4.2

4.4

Age

SE

G o

n 1

-5 s

cale Sainsbury(o)

Tesco(o)

Ocado

Asda(o)

Tesco(i)

Waitrose(i)

Aldi (i)

Morrisons(i)

Asda(i)

Sainsbury(i)

Note: o = online; i = instore

Source: GMN/Mintel Base: 2,000 adults online, ages 16+

The Consumer - Satisfaction levels with supermarkets are high

• The huge emphasis on price in supermarket marketing may have raised expectations on prices and promotions that can’t be met.

• The promotional strategy has not changed in the last year and may now becoming stale

But are lowest for prices and promotions

Source: GMN/Mintel

The Consumer - Attitudes to buying food and drink

• Consumer confidence has recovered in the last year.

• That can be seen in the reduced emphasis on promotions.

• But almost half prefer low prices to multi-buys. Time for a change in promotional strategy, perhaps

Evidence of consumers becoming less cautious

I can get all my needs from my C-store

I don’t trust supermarkets promotions

I like health information on receipt(a)

Problems with promotional discounts (b)

I use preferred store not my nearest

I would like clearer labelling

I try to buy locally-sourced goods

I prefer lower prices to multi-buys

There is too much packaging

I buy products on promotion

0 10 20 30 40 50 60 70 80

6

15

17

20

22

23

30

46

47

63

10

16

32

35

56

71

2012 2013

%

Source: GMN/Mintel Base: 2,000 adults online, ages 16+

(a) I like the idea of information on the receipt informing me how healthy my basket is(b) Specifically where promotional discounts haven’t been deducted from the bill

Retail Brands – M&S ranks top - again

• Little to pick between the Big 5 – the retailers that dominate the main shopping market.

• The other businesses are in some way complementary to the Big 5.

But the Co-op faces a major challenge

Waitrose

AldiLidl

I celand

The Co-operative

Morrisons

Marks & Spencer

Asda

Sainsbury'sTesco

0

10

20

30

40

50

60

0 10 20 30 40 50 60

Diff

ere

nti

ati

on

(%

)

Trust (% )

Base: 2,000 adults online, ages 16+Source: GMI/Mintel

The market opportunity

• What is your next target?• How are you going to approach that market?• Why are you looking at that market?• When will you get there?

Next Steps• Topics• Date & time of next workshop• Homework!

Introductory Workshop. Added Value Why do it? Meet customer needs Gain competitive advantage – unique Enter a new market / market segment To gain a bigger.

Documents

british food

value value

sacrifice slide

mintel slide

uk exports slide

farmgate value of raw

food origin words

bigger value