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Future Retail & Foodservice Opportunities. James Degen J. M. Degen & Company, Inc. www.Degenconsulting.com 805-434-2400. Words of Wisdom.

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future retail foodservice opportunities

Future Retail & Foodservice Opportunities

James Degen

J. M. Degen & Company, Inc.

www.Degenconsulting.com

805-434-2400

words of wisdom
Words of Wisdom
  • “So like Noah said--you’d better wake up you don’t want to get stuck in this zoo. Cause when he leaves the dock he ain’t waiting round for you. Be prepared to change some too.”
    • Boz Scaggs--”Some Change”

J. M. Degen & Company, Inc.

undercurrents of change
Food At-Home

Working women

Time to prepare

Declining skills

Decline of “family meal”

Expectations

Food Away-From-Home

Labor cost

Labor skill/availability

Consistent quality

Safety

Menu differentiation

Profitability

Undercurrents Of Change

J. M. Degen & Company, Inc.

declining food expenditures
Declining Food Expenditures

J. M. Degen & Company, Inc.

food marketing and consumption have changed forever
Food Marketing and Consumption Have Changed Forever
  • Demographics
  • Wellness Culture
  • Search For Value
  • Value of Time
  • Channel Blurring

J. M. Degen & Company, Inc.

demographic drill down
Demographic Drill Down
  • 78MM Boomers enter new life Stage--empty nest, retirement
  • 73MM Gen Y’ers are becoming adults driving new culture cohort
  • 61% of population growth by 2014 due to immigration
  • 34% of U. S. households will be single person by 2010

J. M. Degen & Company, Inc.

wellness culture
Wellness Culture
  • Obesity and related heart health and diabetes concerns increasing--world-wide
  • In 2004 33% of U. S. Adults on a diet
  • 37% of health club memberships held by boomers
  • 32% of Americans dieting for health reasons in 2001
  • 71% of Americans believe that food & nutrition play a great role in maintaining overall health
  • Increasing consumer interest in digestion/gut health
  • Functional food category is estimated at $16+B
  • Fresh = Healthy

J. M. Degen & Company, Inc.

search for value
Search For Value
  • According to FMI, price is the leading reason for switching supermarkets (32%)
  • Households most likely to participate in frequent shopper programs is $75K+ (35%)
  • 39% of consumers shop at both Wal-Mart Supercenters and traditional supermarkets. In the South it is 92%
  • 82% of consumers participate in at least one frequent shopper program--93% of consumers over $100K in income

J. M. Degen & Company, Inc.

value of time
Value of Time
  • Convenience culture continues with “time” the currency of 21st century
  • 46% feel more stressed Vs 5 years ago
  • 46% don’t have enough time in the day--53% of boomers
  • 1/5 of all meals eaten in a car
  • Food prepared away from home continues to grow
  • Disappearance of traditional meal leads to more snack meals--4-6 meals/snacks per day

J. M. Degen & Company, Inc.

channel blurring
Channel Blurring
  • Traditional retail food channels blurring into multiple retail channels offering food
  • Traditional foodservice channels following similar patterns particularly snack meals
  • Food becoming a traffic building tactic due to purchase frequency
  • Value-priced food appeals to value-conscious consumers

J. M. Degen & Company, Inc.

non traditional channels impact retail food purchases
Non-Traditional Channels Impact Retail Food Purchases
  • Wal-Mart--U.S. food/beverage sales $67.6B (2003)
    • Supercenters
    • Sam’s Clubs
    • Neighborhood Market Stores
  • Membership Clubs
  • Dollar Stores/Extreme Value Retailers
  • Limited Assortment Stores
  • Convenience Retailers
  • Result: Supermarkets given up competing for center-store sales

J. M. Degen & Company, Inc.

supermarket s decline in relative food retailing importance
Supermarket’s Decline In Relative Food Retailing Importance

J. M. Degen & Company, Inc.

retail food channel growth rates
Retail Food Channel Growth Rates

J. M. Degen & Company, Inc.

foodservice is defined by chains
Foodservice Is Defined By Chains
  • Restaurants account for 63.6% of all foodservice industry retail sales.
  • Top 100 chains account for 96.3% of all restaurant sales
    • 96.3% of hamburger restaurant sales
    • 91.3% of all family steak restaurant sales
    • 83.4% of chicken restaurant sales
    • 57.6% of other sandwich restaurant sales
    • 50.7% of pizza restaurant sales

J. M. Degen & Company, Inc.

the most frequently used culinary utensil is the window control of a car harry balzer npd
“The most frequently used culinary utensil is the window control of a car.”--Harry Balzer, NPD

J. M. Degen & Company, Inc.

retail foodservice opportunities
Retail & Foodservice Opportunities
  • New retail and foodservice products are going to have to deliver against these changes in consumer definition, behavior and motivation

J. M. Degen & Company, Inc.

retail foodservice opportunities18
Retail & Foodservice Opportunities
  • Foodservice or food “prepared away from home” an opportunity for companies not already participating
  • Members of Gen-Y eat out on average 24 times per month--almost once per day (Technomic)
  • 51% of Gen-Y ate restaurant-prepared food growing up “sometimes” or “more often” compared with 12% of their baby-boom parents (Technomic)
  • “These (Gen-Y) are consumers of bagged lettuce and (healthful)prepackaged meals” (FMI)
  • “BATH restaurants (Better Alternative to Home), i.e., simple ethnic establishments” (Tim Zagat)

J. M. Degen & Company, Inc.

rise of culinology
Rise of Culinology
  • With most consumers growing up on eating out, food quality expectations and experiences are high
  • The research chef has joined with the food scientist to create the culinary linkage between the supermarket, foodservice and food processing industries called Culinology
  • Consumer and foodservice operator demand for nutritionally improved, convenient to prepare foods with acceptable sensory characteristics has created unique challenges for food scientists and research chefs.
  • Prepared foods must replicate scratch-made quality in flavor, aroma and authenticity

J. M. Degen & Company, Inc.

retail foodservice opportunities20
Retail & Foodservice Opportunities
  • Food Movements
    • Organic foods
    • “Free range” meats/poultry
    • Artisan foods
    • Vegetarian
    • Slow foods
    • “Locally grown”
    • Pedigreed/heirloom foods

J. M. Degen & Company, Inc.

retail foodservice opportunities21
Retail & Foodservice Opportunities
  • Next Big Food Wave--Pan-Asian
    • Consumers seeking more variety and new tastes
    • Bigger and more diverse than Latin
    • Beyond food to the importation of culture
    • Asian foods deliver against many consumer food demands
      • Healthy
      • Craftsmanship from complex recipes
      • Exotic
      • Fresh perceptions

J. M. Degen & Company, Inc.

retail foodservice opportunities22
Retail & Foodservice Opportunities
  • The “G” word replaces the “C” word
  • Low-carb trend (always a U.S. phenomenon) fades (Mintel)
  • Other parts of the world look to low glycemic
  • Reduces food intake decisions to a number
  • Can be difficult to understand but can be simplified for consumers

J. M. Degen & Company, Inc.

international food labelling program
International Food Labelling Program
  • Registered trademark in Australia/USA/UK
  • Foods must be GI tested by accredited laboratory
  • Must meet nutritional criteria (eg saturated fat, salt)

J. M. Degen & Company, Inc.

retail foodservice opportunities24
Retail & Foodservice Opportunities
  • Recap
    • Less money spent on food
    • Price motivation to purchase on deal and at non-traditional channels
    • Food prepared away from home including foodservice and “restaurant quality” prepared foods
    • Diminishing consumer cooking skills and limited time to cook
    • More snacking and smaller portions
    • Foods that travel including dashboard dining and “Desk-fast”

J. M. Degen & Company, Inc.

retail foodservice opportunities25
Retail & Foodservice Opportunities
  • Recap (Continued)
    • Weight control foods including the trend towards glycemic testing/labeling, nutrient-dense foods, etc.
    • Food as medication including Pharmafoods directed at heart health, quality of life improvement, pre/probiotics, etc.
    • Shift from Western European cuisine to ethnic alternatives including Pan-Asian
    • Rise of Culinology
    • Demand for “fresh” ingredients that implies healthy

J. M. Degen & Company, Inc.

retail foodservice opportunities26
Retail & Foodservice Opportunities
  • SUPER TRENDS
    • Cleaner labels
      • Fewer ingredients
      • Recognized ingredients
      • Natural and organic ingredients
      • Nutritional label claims
      • Natural label claims
    • Big Flavor
      • Higher consumer expectations
      • Ethnic flavors including regional ethnic flavors, Latin, Asian
      • New flavors and flavor combinations

J. M. Degen & Company, Inc.

retail foodservice opportunities27
Retail & Foodservice Opportunities
  • Meeting the challenges of clean labels and big flavor, naturally
    • Multi-functional commodities
    • Fewer processed food ingredients
    • Nutritional and functional improvements
    • Flavor enhancement capabilities
    • Flavor contributions
    • Multiple ingredient forms

J. M. Degen & Company, Inc.

retail foodservice opportunities dried plums
Composition

Fiber

Sorbitol

Malic Acid

No Sucrose

Low Glycemic Index

Antioxidants

Benefit

Fat replacement

Sugar replacement

Antimicrobial agent

Flavor enhancement

Preservation

Natural color

Extend shelf life

Retail & Foodservice OpportunitiesDried Plums

J. M. Degen & Company, Inc.

retail foodservice opportunities mushrooms
Composition

Low calories

Glutamate

Fat-free

Sodium-free

Sugar-free

Selenium

Low Carbohydrates

Benefits

Consumer satiety

Flavor enhancement

Savory flavor

Meat replacer/vegetarian

Increased value perceptions

Retail & Foodservice Opportunities Mushrooms

J. M. Degen & Company, Inc.

retail foodservice opportunities almonds
Composition

High protein

Low carbohydrates

Glutamate

Fiber

Vitamin E

Low in unsaturated fat

Benefits

Consumer satiety

Flavor enhancement

Nutrient dense

Crunchy texture

Baked breading alternative

Protein replacer

Increased value perceptions

Retail & Foodservice Opportunities Almonds

J. M. Degen & Company, Inc.

retail foodservice opportunities31
Retail & Foodservice Opportunities
  • Dried Plums, Mushrooms, Almonds demonstrate multi-functional ingredient benefits
    • Fresh perceptions
    • Replace artificial ingredients
    • Add nutritional improvements
    • Eliminate duplicated ingredients
    • Increase and enhance flavor and texture characteristics
    • Communicate favorable consumer perceptions

J. M. Degen & Company, Inc.

final words of wisdom
Final Words of Wisdom
  • "As you discover changing times you must have the strength to endure. As you discover a changing world you can\'t be guessing, you must be for sure. In these ever changing times.”
    • Earth, Wind & Fire

J. M. Degen & Company, Inc.

future retail foodservice opportunities33

Future Retail & Foodservice Opportunities

James Degen

J. M. Degen & Company, Inc.

www.Degenconsulting.com

805-434-2400

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