’It’s chic to be frugal’ International Egg Conference told
That’s the message from consumers in the current recession, according to Richard Lewis of CIES, the international food business forum. Some 400 retailers and manufacturers from 150 countries use CIES to exchange knowledge and information. Richard Lewis says current indications are that budget shopping is increasing – although the good news for free range egg producers is that ethical consumption is holding up well despite the economic downturn.
Richard outlined the latest consumer trends in a presentation to delegates at the London conference of the International Egg Commission. He said that consumer confidence was down – 27 per cent of people expected to be worse off in a year’s time and the OECD expected one in 10 people to be unemployed by the end of 2010. In the United States 67 per cent of people were spending less on utilities and 56 per cent less on going out and on clothing. This compared with the fact that only 7.6 per cent of Americans were out of work.
In the UK 33 per cent of consumers were spending more on budget brands and 21 per cent said they were switching from branded products to own label. Discount chains Aldi and Lidl were gaining share from the big four supermarket chains. Ironically, the Grocer magazine had recently reported that it was up to 61 per cent more expensive to shop in discount stores than in the big four supermarkets, he said.
The most recent CIES survey amongst the senior management of food companies around the world had shown that the economy and consumer demand was the primary concern of more than 56 per cent of those questioned. Food safety was the second most pressing priority, at 33 per cent.
Richard said the forecast was that there would be no turnaround in the economy before the end of 2010. And he said there was likely to be more economic nationalisation – there had already been protectionist moves by some Governments.
He divided consumers into three groups – those with less disposable income than before, those who were financially anxious and those who were immune from the current effects of the recession but who were sensitive to what was happening in the economy. For those in the first group, grocers needed to offer discount label lines and price deals and to drive costs down in the supply chain.
The second group needed to be assured that their buying decisions were sensible and canny. The aim should be to convince consumers that they were right to stay in the current price range rather than trade down. It could be an idea to change packaging or, perhaps, look at reducing pack sizes. "What if a consumer could buy three eggs, for example, rather than six. They may actually buy eggs more often," he said.
Although those in the third group were immune from the recession, they did not want to be seen to be consuming overtly. "Frugality is the new decadence. Frugality is chic," said Richard, who said there was a great deal of anti-greed sentiment. Simply changing packaging on food could give the impression that it was more of a value option than it seemed in its previous packaging, he said.
To survive and succeed in the recession, food businesses needed to serve all three groups, he said. He said the good news for eggs was that an IGD survey showed ethical purchases only six per cent down. To survive the recession, businesses needed to get back to basics, cut costs and drive efficiency.
"Now is the time to cut dead wood from your business. Recognise that many consumers do have money to spend and serve all three groups to win," he said.
The egg industry could look at packaging and package sizes and also the brand story to retain consumers. Who were the people producing the food the consumer was eating? This theme was also mentioned by Ken Dowling of Grey Worldwide in the United States. He told the conference that buying local was a growing trend. Farmers’ markets were on the rise. "I know these guys," was the thinking behind a consumer’s decision to buy locally. There was a quality association with buying locally and eating local food. In America, the local food trend had even reached the White House.
"Michelle Obama has dug up the grass and is planting vegetables, which she intends to feed to her husband," he said.
Ken spoke to delegates about his views on global consumer and food trends. He said that greater value was being placed on more natural foods – food with no additives. Traceability was an issue for consumers. "They want to know where it is from, how far it has travelled, how fresh it is, how it’s been produced. They are asking why something needs to be fortified. They believe natural food tastes better."
Like Richard Lewis, Ken Dowling said that consumers were seeking value for money. Value shopping was now cool. It made you look smart to get deals. Own label brands were growing. There was more confidence in store brands. The design of packaging meant store brands didn’t look like store brands any more.
Ken said there was a trend that people in the United States called ’hiving’. People were spending more time at home, preparing more meals at home rather than dining out. Because there was a lack of cooking skills amongst the public, brands that helped show consumers how to cook meals were doing well. Here in the UK the British Egg Information Service has been producing good value recipe ideas as part of its marketing drive. This initiative has proved very popular with the media.
Ken said there were five messages that consumers wanted to hear from food producers. They wanted a taste experience. They wanted to hear about health and safety. Consumers wanted their views to be heard by food producers. They wanted to know about the company’s purpose and philosophy and they wanted to hear about social responsibility – issues like transparency, sustainability and carbon footprint.
Both Ken and Richard said that consumers were increasingly looking at the prices they paid for their food.
However, Richard said he was heartened by statistics showing that ethical sales were still doing relatively well. "I think there is a real opportunity for the egg industry," he said.
