Food and beverage industry consultant, David Henkes of Technomic, completed a study for Emerson Climate Technologies detailing the ways in which consumer demands will drive change in the food industry by examining key trends through 2020. This is what he says about specialization and deconsolidation.
It is on the rise. It will affect menus, operations and the number and type of industry participants. Market segments will become blurred and the overall market structure is changing. Single item specialists will flourish. Traditional retail and innovative foodservice alternatives will take share from others by diminishing restaurant advantages of enjoyable experience, quality and convenience.
The market structure is changing. Consumer options are expanding into all kinds of areas that did not exist on a large scale as early as five and 10 years ago. Areas such as next generation vending, kiosks and ‘pop-up’ stores will grow to 10 – 20 billion dollars. Personal/private chefs are providing everyday meals and special occasion dining. Food trucks, ‘grocerants’ (food as theatre e.g. Eataly), and snack boxes are on the incline. Fresh meals/kits and a larger variety of fresh prepared foods in the grocery store are more examples of specialized food service growth market segments. Internet subscription sites, like Amazon Fresh, Instacart and many others, including community supported agriculture farms and urban gardens, are expanding exponentially. Delivery services and food lockers like Blue Apron will grow to 3 – 5 billion dollars.
Traditional retail FPF will grow dramatically. 3,000 – 5,000 square foot mini-fresh stores like Little Waiterose, Rewe on the Grow, Goodness Me and Farm Boy are all in expansion mode. Farmer’s markets are expanding into year round operations.
Growth in the nontraditional* retail market between 2014 and 2024 is expected to be around 5.5% versus 1.5% in the traditional** retail market. Nontraditional retail represents 33% of growth versus 13% among traditional retailers.
In the foodservice industry, independent restaurants are expected to achieve 21% share of growth compared to Top 500 chains at 17% and all others at 16%.
In conclusion, business is fundamentally changing, change has major implications, supply chain will undergo a re-vamp, and innovation, reach and efficiency are critical.
*Includes club stores, dollar stores, c-stores, fresh format, limited assortment, drug, on-line and other.
**Includes Supermarkets, supercentres, and mass merchandisers.