The year turns next week, and most businesses are deep in planning and finalizing their budgets for 2015.
So much about foodservice is changed. Traditional powerhouse companies like McDonald’s, Kraft and Coca-Cola are reeling from slipped sales. The days of mass market, low-cost producer products is ending. Consumers want natural, sustainable and healthful foods. While there remains a big market for mass produced products, especially at the low-end of the economic scale, middle and upper income consumers are ready and willing to pay a little extra for quality products.
Witness the downward trend of processed cheese. Consumers prefer natural cheese to processed cheese, perceiving the natural product as healthier and more nutritious. Consumption of natural cheese in all forms and markets has increased over the last 10 years, while processed cheese has declined. The USDA reports a 4% decline in 2013.
A recent report from Research and Markets, released the “Global Cheese Market 2014-2018”. The report outlines trends and growth possibilities for the next four years. The fast food industry is driving the current wave of global cheese popularity due to frequent use of cheese in products like pizza and cheeseburgers, according to the report. Growth of the global cheese market is expected to reach a CAGR of 5.14 percent from 2013-2018
So what’s in store for the cheese and dairy biz in 2015? Here are some mega-trends and suggestions to capitalize on them.
Consumers are very serious about corporate social responsibility. A recent study by Technomic found, “diners care that restaurant employees are treated fairly. Farm worker treatment and fair trade movements are also important, as are animal welfare, which has been mainstreamed in the past few years.” Dairy marketers better talk the talk AND walk the walk.
Dairy Solution: Companies that ignore consumers’ demands for green and sustainable agriculture, will witness disappearing market share and the decline of their brands’ loyalty. Your company better get with the program and look to institute and PROMOTE green and sustainable practices. The great news is that many initiatives reduce waste. Waste is profits unrealized. As an example, reducing energy and packaging costs improves the bottom line. Identify two or three high-profile green initiatives, make the changes, promote to prospects, customers, vendors, and channel partners.
Consumers can now customize their lives. Customized lives include “clock-less” eating. The traditional three-meal day has given way to snacking and grazing. Gone are the days of just salty chips for snacks. The dairy industry can say hello to protein snacks. Younger consumers demand petite plates, flexible portions and non-traditional day-parts. Late-afternoon, late-dinner crowds want small, protein heavy meals. Protein consumption is up, carb use is down.
Dairy Solution: The popper craze of the 80’s is ready for a makeover. Grocery stores feature meat-wrapped cheese snacks, like prosciutto and mozzarella curd. The dairy company that delivers a ready-to-eat solution will dominate. Foodservice operators do not want to deal with slicers or high dollar value meats subject to labor issues and theft. More drinkable and portable solutions aimed at foodservice for carry-out will win the hearts and wallets of time and protein starved consumers.
Technomic also predicts even more competition over foodservice market share, as retailers get aggressive with new offers. In addition, new startups focus on delivering meals directly to homes and even vending machines have become more sophisticated. C-stores and service delis are hyper-focused on fresh foods.
Dairy solution: Be everywhere. Ensure your cheese is used as an ingredient. Offer small portions for pick-up and carry out. Use dairy as a platform and pair with meat, vegetables and fruit. Create drinkable yogurt solutions. Look at the exploding success of jerky. Be the first to solve cheese jerky. Be convenient, be accessible. Packaging is important; operators that use specialty dairy products require re-sealable bags.
Bitter is the New Bold
Technomic said the 2015 pipeline includes darker coffees (Dunkin’ Donuts and Tim Horton’s recently added dark roasts to their coffee rosters), deeper chocolates, next-gen cruciferous veggies like cauliflower and collard greens, hoppy beers and cocktails with the bite of bitters. Root veggies are in!
Dairy solution: Offer something beyond sweet fruit-flavored yogurt. Healthy consumers want expanded flavored food choices. Market vegetable yogurt and tomato yogurt or add dark green veggies to cheese, there must be life beyond pepper jack?
Local is fast replacing organic. The critical shortage of organic milk, flour and other key components forced retailers and foodservice operators to seek and alternative. Local provides more flexibility and fits with the green initiative as well. “Anti-chain” attitude opens opportunity for small and mid-sized dairy companies to seek like-minded small and mid-sized foodservice operators who value unique products.
Dairy solution: Reject commoditized, lowest-cost dairy offers. The wave has moved to satisfy consumers who want customized and differentiated food experiences. Small and mid-sized dairies should focus on R&D that blends new flavors, items and proteins that are unique and convenient. The foodservice world does not need another cheddar plant selling 40# blocks at CME or below.
The turn toward 2015 is a time to share your dreams and your gifts. The world of three television networks has given way to 3,000 channels offering unique content 24/7. This is what consumers demand; a customized life.
Traditionally, dairy companies have been production driven, focused on high volume, lowest price offers. If you own a plant that processes 100 truckloads of milk a day, keep that up. For the rest of us, 2015 is the year to focus your vats on high-value, unique protein solution. Retail and foodservice customers are highly motivated to bring folks in the door with new items that are unique, bold flavored and produced by ethical companies with an eye on green and sustainable agriculture. Take the challenge to sell great items at a price that makes a profit rather than moving milk to satisfy capacity utilization.
Happy creating, happy selling and Happy New Year.