Food at a Crossroads Exploring New Dimensions in Value FDIN 19 th June 2008

1. Food at a CrossroadsExploring New Dimensions in ValueFDIN 19th June 2008

2. Your Future is a specialist Brand, innovationand insight company that helps Clients stay one step ahead of their consumers and competitors

3. What I’ll cover • Who we spoke to • What is going on with value? • Three new price ‘+’ value models • Micro-managing value in a downturn • A snapshot of value in the future

4. Who we spoke to • 3 ‘frontline’ panels, 2 in the UK and one in the US • Retail, nutritional and food technology experts on the subject of value today and tomorrow • In the process of conducting interviews with 20 board marketing directors from some of the UK’s leading food and drink companies • Input from our ‘Big Britain’ study of Middle Britain’s attitudes

5. What is going on with value?

6. Negative media New Experience for Consumers Under 30! Good Times are Over? Fire (inflation), Ice (recession) Evaporating “feel good” Credit Crunch Lower confidence House price decline/ crash

8. But is it all about price? Surely we are not going to fall out of love with our new religion?

9. Evidence suggests we will end up paying more for food due to market forces and our aspirations • Medium term indicators suggest that the cost of food will not come down due to under supply • To meet the demand the UN estimates food production will need to increase by 50% by 2030 • History suggests we are coming out of a period of cheap food (as a proportion of our income) • Our experts believe other factors are supporting our investment in food - we are expecting much more from our food e.g. health, environment, convenience, indulgence

10. Three factors are combining to produce a focus on ‘value’ • Consumer perceptions of ‘value’ per se has become more important in an economic slump • Food is getting more expensive • ‘Value’ in food and drink has re-based …. it is now price +

11. Value has re-based fundamentally because we expect far more from food – our basic standards are higher • Diabesity epidemic • Moving beyond the industrial model • Being optimally well • From ‘health’ to ‘performance’ • New concepts in human potential

12. What is Value? ? PRICE ? + ? ?

13. Three new price ‘+’ value models

14. Ski Valley

15. From U to V – Markets are increasingly polarised

16. Bifurcation Value Model Multiple Niches Lowest Price Acceptable Compromises Simple / paired back Money for Values Enjoyment First Health Second SKI VALLEY Fantasy Honourably Mass Produced Augmented Performance Basic choices always available Individually tailored living

17. Money for Values Value for Money versus

18. Money for Values Value for Money versus

19. Money for Values Value for Money versus

20. Money for Values Value for Money versus

21. Money for Values Trend Description Many of the traditional trappings of success such as status or wealth have become devalued in a society which is questioning ‘unthinking’ consumerism and homogenous products. Instead we are seeking new paths to personal meaning and new ways to keep up with the Jones

22. Bifurcation Value Model Multiple Niches Lowest Price Acceptable Compromises Simple / paired back Money for Values Enjoyment First Health Second SKI VALLEY Fantasy Honourably Mass Produced Augmented Performance Basic choices always available Individually tailored living

23. Acceptable Compromises will be key Consumer Mindset? When I can’t afford to eat super healthily or unadulterated natural foods I’m prepared to compromise on the source, provenance and personalisation in order to get all the basic nutritional essentials

24. Honourably Processed Consumer Mindset Not able to afford entirely local goods I’m keen to buy goods which have been produced in the most honourable way. I want to buy from recognised standards of manufacturing excellence in terms of ingredient quality, environmental and ethical standards – fair cost to me low cost to the environment

25. Honourably mass produced Communicating the positives in what you are already doing

26. Honourably mass produced Recipes for Mums by Mums

27. Collective Intelligence Value Model

28. “We-Think – my term to comprehend how we think, play, work and create together en masse… Charles Leadbeater We-Think, mass innovation not mass production

29. How the Collective Intelligence is Changing Value

30. Big Britain’s Collective Intelligence – It’s Linking Thinking “The Collective Intelligence is a middle ground between our personal and public conscience”

31. Personal Desires QUESTIONING / CHALLENGING REVALUATING New World Collective Intelligence Bottom Up Intelligence Value Model Old World Public Conscience TENSION Collective Intelligence

32. A Dynamic Consumer Force • More than the impact of the internet and word of mouth. These are some of the Media of the Collective Intelligence. • The Collective Intelligence is the way that people will increasingly narrow down their choices and decide what to choose • It will influence the choice and ultimate sales of a brand whether one chooses to engage it or not.

33. Its Already Revolutionised the Music Industry • and Travel? - Trip Advisor… • Beauty – Expert blogs… • Finance – Face book protest over Student overdraft fees • Who is next?…

34. Collective Intelligence Business Model • Innovation that comes from multiple sources within and outside the company • Choosers not consumers • Open and collaborative organisations • Shared ownership

35. Examples - Doritos Communication – “you make it, we play it”

36. Examples – Innocent People – consumer involvement

37. Micro Managing Value in an economic downturn

38. “We have moved to a system of “value-based demographics”. This is about mixing lasting values, such as quality, price, availability, presentation, product branding, etc, with emerging micro values, such as sustainable packaging (i.e. compostable resin packaging made from 100% corn – an annually renewable resource), or realizing that some “guest” are more concerned about free and fair trade, while other want environmental friendly and yet others are driven by health concerns or the desire for natural.” Margaret Wittenberg,  Global VP, Quality Standards and Public Affairs

39. It’s more important than ever to optimise your mix of ‘messages’ to deliver ‘best’ value in category Nothing artificial✔ 100% fish ✔ A natural source of Omega 3 ✔ = Best in category value

40. A snapshot of value in the future

41. Creating Future Value It’s clear that value will be different again!

42. The latest neuroscience on the workings of the human brain reveals “We are not thinking machines. We are feeling machines that think” Dr Richard Restak, The secret life of the brain” To persuade effectively we have to direct our primary stimulus to impact that “Feeling Machine”

43. We will continue to see these drivers converge Pleasure/ Experience Convenience Conscientious Food Health What new evolution of these drivers will emerge to produce consumer value in the future?

44. Natural Resource Scarcity

45. Transhumanism Revolutionising technologies Nutrigenomics Nano food Bio-engineering

46. One possible future value model Unprocessed and wholesome (local) High tech performance nutrition Acceptable Compromises (GM etc)

48. Keeping our Clients one step ahead of their consumers and competition