Foodservice Priorities: 2019 Expectations

Posted on January 7, 2019 by Caitlin Orosz under Industry News

With the kickoff of a new year, it’s time for foodservice manufacturers to adopt a profitable trade management strategy and note foodservice trends and consumer preferences.

2018 marked the 9th consecutive year of restaurant industry sales growth. The National Restaurant Association (NRA) says that in 2018, restaurant sales hit $825 billion.

Looking ahead, limited-service establishments will outpace full-service in sales. Transportation costs, legality issues and tariffs will continue to put pressure on margins. And, consumers will have less money to spend on food, while still evolving their tastes and demands.

NRA’s Hudson Riehle says that foodservice operators “should expect the same kind of growth environment in 2019 as they have in 2018. But history’s clear that certain externalities can act as a catalyst in altering the country’s economic growth.”

 

Food & Beverage 2019

What’s happening in the industry?

 

  • GPO Model Morphing

    • UniPro created the first foodservice distributor GPO (Unity Advantage Group or UAG) at the end of 2016. UAG has reached an agreement with Foodbuy, creating a direct Access GPO relationship between the two organizations. This partnership alters the traditional trading partner landscape and competition between distributors and GPOs. (Continue reading here)

 

  • Digital Consumers

    • CPG sales are growing 2x as fast as online sales in general, and in 2017 online sales surpassed $10 billion in the US for the first time ever. Digital customers know what they want: convenience, transparency and personalization. The proliferation of digital options has significantly fragmented the trade promotion market. (Continue reading here)

 

  • Grocerants

    • The grocery segment is enticing shoppers by rethinking its retail-centric approach. Grocery stores have incentivized shoppers with fuel perks, improved its prepared food game, and even offer sit-down dining in-store. In-store foodservice could generate serious payoffs for retailers who are used to thin margins. (Continue reading here)

 

  • Private Labels

    • Private labels are critical to retailers’ strategies. The rise of private label brands has diminished manufacturers’ traditional advertising and pricing power. Excessive promotions have trained the consumer to wait for a deal or to shift their focus from brand to price. (Continue reading here)

 

  • Analytics

    • Most trade analytics options are complicated and are not built for easy consumption of data; glorified versions of Excel with a lot of columns and rows in a tabular format. They measure and count endless points within a business, but do little to identify relationships and create opportunities to act. We’re on a journey to innovate the analytics experience and deliver exact information in an incredibly clear format. (Continue reading here)

 

2019 Priorities

 

Trends 2019

Demands: Convenience & Tech

Convenience isn’t a trend, it’s an expectation. Families are eating less than 5 home-cooked meals a week, so foodservice establishments are creating opportunities for delivery or to easily purchase on-the-go meals.

  • Consumers want food whenever and where ever suits them. Globally, almost 60 percent of consumer foodservice occasions are off-premise.
    • The larger trend here is really that off-prem is the new dining out. “One 100 percent of the growth we expect this industry to have in the next 5 years will be from off-premise,” anticipates Darren Tristano, longtime industry analyst. “Don’t expect dining in restaurants to grow.”
  • Consumers demand convenient options for ordering and receiving food outside a traditional in-house dining. A third (33 percent) of US consumers agree they would rather interact with people online than in-person.
  • Food delivery services are growing (think: Uber Eats, Doordash, GrubHub). Revenue is expected to show an annual growth rate of 7.5 percent, resulting in market volume of more than $24 million by 2023.
  • Consumers want flexibility, so operators are investing in in-store kiosks, online ordering, take-out and drive-through solutions. MTO (made-to-order) meals are increasingly common.
  • Mintel says more shortcuts will be available, offering new conveniences such as the expansion of individual meal kits sold at retail, foodservice-inspired packaged beverages, and a new generation of prepared meals, sides, and sauces that emulate the flavors and formats of restaurant meals.

 

Buzzworthy: Health & Wellness

Legacy food and beverage brands are trying to show consumers their relevancy. Globally, the health and wellness food market is expected to grow at a compound annual rate of 6.22 percent by 2021 says Technavio. Shoppers are looking for whole foods with minerals and vitamins.

  • Consumers like health-oriented options and are wary of additives and artificial flavors. They are gravitating toward foods that are natural.
  • Mintel research says that age presents a great opportunity for food and drink manufacturers. Take the beauty industry as an example, which successfully established a model for healthy ageing products that are marketed with positive language to people of all ages.
  • Plant-based foods (and diets) continue to grow in popularity. There’s been a 600 percent increase in people identifying as vegans in the US in the last 3 years.According to a report by research firm GlobalData, only 1 percent of US consumers claimed to be vegan in 2014.

 

Recurring Trend: Sustainability

It’s no secret how important sustainability was to consumers and manufacturers last year. This year is no different. Consumers spend their dollars on brands that value sustainability. Seventy percent of consumers want brands to be more transparent about their approach to addressing environmental impact and animal welfare.

  • Customers want sustainability to span the entire product life cycle.
  • Addressing food waste isn’t new (read more), but now technologies can help track inventory, ensuring that operators only place an order when there’s a need, rather than based off a stagnant schedule.
  • There’s a growing interest in how food is sourced. Thirty-two percent of consumers say they’d be more likely to buy and pay more for food and beverages that are locally sourced.
  • Recycling. Get involved by incentivizing consumers to recycle packaging and offering up-cycled goods.

 

Having a pulse on these trends will help manufacturers spend wisely, prepare for change, innovate products and processes, and better forecast volume demand. Manufacturers that understand the importance of technology, health and sustainability as industry differentiators, will be ahead of the game for 2019.