Live From GMA: Changing Preferences Cut Across All Groups
More consumers favor evolving preferences such as health and wellness, safety and social impact on their path to purchase, and both retailers and manufacturers need to respond accordingly.
That’s the overall message conveyed by the results of a study conducted by Deloitte Consulting, the Grocery Manufacturers Association and the Food Marketing Institute, and discussed during the second day of GMA’s Leadership Forum this past weekend at The Broadmoor in Colorado Springs, Colo., in a session entitled, “Driving Growth Among Disruption: Capitalizing on the Shifting Consumer Food Value Equation,” moderated by FMI SVP Mark Baum.
The study, which included more than 5,000 consumers and 40 industry executives, revealed that more consumers are including a wider set of drivers in their purchasing decisions. These “evolving” drivers – health and wellness, safety and social impact” are overtaking the historic drivers of taste, price and convenience as the leading reasons for choosing particular products over others.
Deloitte’s Tom Phillips sees the shift as a “big, nuanced” move toward these new drivers. Overall, 51 percent of consumers surveyed emphasized these evolving preferences more heavily over traditional drivers, Phillips noted.
Perhaps most significantly, this shift is consistent across all ages, income levels and geographic regions. For example, these evolving drivers are cited by 52 percent of consumers age 18 to 34 and 35 to 49, and 51 percent of those age 50 to 80. Further, consumers are defining “safety” as being free of harmful or artificial ingredients, clean labeling and nutritious content.
“It’s not a niche area for business – it’s something that needs to be addressed,” said panelist Beth Ford, EVP and chief supply chain and operations officer for dairy co-op Land O’Lakes.
Carolyn Sakstrup, VP of Target’s guest center of excellence, noted that Target is forging partnerships with multiple manufacturers to create products for its “Made to Matter” brand that address these in-demand product attributes.
Jim Borel, EVP at DuPont, asserted that transparency is essential in this new normal: “If you don’t provide the information, consumers assume the worst.” Ford argued that technology in food makes consumers uncomfortable: “It’s a marketing and communication challenge, because the facts are quite friendly.”
Rob Aukerman, president of North American commercial operations for Elanco, warned against overreacting to preference changes lest manufacturers invest heavily in what may turn out to be soft trends. Aukerman argued that the study results demonstrate a demand “for choice in the marketplace.”
In response, Borel urged manufacturers and retailers “to work together to tell these great stories in a way that resonates with consumers.”
That will ultimate determine who wins and loses in the years to come, as good communication will define what a company is to consumers, Ford said, and success will belong to “the companies that are the most agile in responding to consumers.”
Sunday’s other concurrent sessions included “Using Digital to Enhance the CPG/Retailer Partnership” and “Leadership 2020 and Beyond.”
CEO panel
A panel of CPG’s top executives discussed “The New Era of Value Creation: Agile Efficiency and Growth,” moderated by Accenture’s Keith Barringer.
The panel discussed the impact on their operations and the overall market by fluctuating consumer demand, channel blurring and greater expectations for product customization. Barringer presented 2015 CAGNY data showing that a focus on power brands, innovation and supply chain efficiency are leading priorities of CPG companies.
J.P. Bilbrey, chairman, president and CEO of the Hershey Co., noted that he is paying greater attention to activists, which has impacted his company’s cocoa procurement and drove its move toward simpler recipes for its products.
“Millennials are the best thing to happen to us,” declared Kees Kruythoff, president of Unilever North America, because they believe in the idea of a “social enterprise.” Kruyhoff noted that his company’s fastest-growing brands are those with a social purpose.
In discussing Amazon’s impact on CPG companies, Justin Skala, president of Colgate North America and global sustainability for Colgate-Palmolive, said manufacturers must view it “through the lens of how my core consumers are going to be viewing the brand.” Skala said it’s “an opportunity to get closer to our core consumers” in building brands more effectively.
Talent will be a key element of CPG operations moving forward. “We rely on people to drive our agenda,” said Thomas Greco, CEO of Frito-Lay North America at PepsiCo, explaining that his company’s business strategies are built around capabilities, culture and talent. Kruythoff stressed the importance of employee well-being and personal development in maintaining an effective workforce.
The panelists expressed optimism for the coming years. “There’s no better time to be working in consumer products that today, except for the future,” Greco declared. Bilbrey concurred: “There’s never been a more exciting time – anything is possible.”
Rounding out the day were David Gergen, senior political correspondent for CNN and former advisor to presidents including Reagan and Clinton, speaking on leadership, accountability, trust and the current state of politics; and a rousing performance by Frankie Valli and the Four Seasons during the closing dinner celebration.