Despite the tough economic conditions, many consumer goods companies are refocusing on market share gain in more mature markets such as North America and Europe.
There may be a squeeze on spending, but consumers in developed markets remain relatively wealthy and they are prepared to pay for value-added benefits. There are still significant opportunities for growth. For example, Danone recently highlighted the performance of its Oikos Greek Yogurt brand, which is enjoying strong sales growth in the US.
Emerging markets offer long-term growth opportunities and food & beverage companies are taking advantage of those, too. For example, Heineken is looking to purchase Singapore-based Asia Pacific Breweries.
Innovation is an integral part of food and beverage companies’ strategies. As part of IGD’s Customer Engagement Survey of 25 of the world’s leading retailers and 35 multinational suppliers, retailers said they were keen to support new products, but only when they are considered genuinely innovative and contributing to category growth.
From our survey, it appears that other elements such as pricing, promotional activity and understanding the shopper are more important, due to the difficult economic conditions in a number of markets.
On the other hand, innovation is crucial to support long-term growth in developed countries. It helps to add value for consumers, with health and wellness benefits for example, and differentiate products in the increasingly competitive retail environment.
It’s not only product innovation that’s important – it’s also innovation in the ways in which suppliers can better engage with customers and grow sales. For example, this could involve better packaging, marketing or social media engagement.
The appetite for health and functional products is likely to grow in developed and emerging markets in the future. There’s an opportunity to help consumers in emerging and developed markets live healthier lifestyles. In developed markets in particular, an ageing and increasingly health-conscious population is looking to food & beverage companies to provide added health benefits in their products.
Jon Wright is a senior retail analyst at food and grocery expert IGD.
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