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Global 250: Manufacturers race to keep pace with market challenges

The blurred-line habits of consumers shopping at traditional supermarkets while gravitating toward local fresh foods, restaurant meal delivery and online purchasing force food producers to up their game.

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There is no one-word description or concise phrase to sum up the challenges and triumphs of the global food and beverage manufacturing industry. The marketplace continues to evolve toward e-commerce, healthier eating, more snacking occasions, clean labels and locally sourced goods. In addition, the convenience and single-serve trends show no sign of abatement.

The recent blockbuster announcement that online retail giant Amazon will purchase Whole Foods Market for $13.7 billion shocked many food industry insiders. Whether or not the majority of consumers will buy the bulk of their groceries online any time soon remains to be seen. But with the blurred-line habits of consumers still shopping at traditional supermarkets while simultaneously gravitating toward restaurant delivery of meals and the online purchase of meal kits, online grocery buying is certain to gain momentum for those seeking convenience. Walmart still remains the retail grocery leader, and it has made headway into meeting consumer demands with its Neighborhood Market line, featuring the quick, fresh foods that shoppers crave.

All of these consumer trends have traditional food and beverage manufacturers racing to keep pace with market changes as their margins erode. According to a recent report in Forbes, two-thirds of the top CPG brands saw sales decline in 2015, and the top five lost $13 billion in sales. People are not eating less, the report says, but they are choosing brands that more closely mirror their needs and values, says author Phil Lempert. 

According to PMMI’s “2017 Trends in Food Processing Operations” research report, consolidation in the food industry has increased, leaving fewer global producers. Over the next 15 years, PMMI’s research predicts the likelihood of much shorter supply chains because of transportation expenses and the growth in local production. 

In the battle to gain market share, the world’s leading 250 food and beverage manufacturers listed in this issue are implementing the following product formulation changes:

  • Cleaner labels 
  • Plant-based products 
  • Sugar reduction 
  • Authentic foods 
  • Personalized nutrition to fill consumer needs beyond hunger and cravings 
  • Blending of industry boundaries 
  • Seeds and grains, such as quinoa, chia or flax.

Maintaining relevancy

According to Euromonitor’s report “How We Eat: The Changing Face of Global Mealtimes,” changing lifestyles have led to a breakdown in the structure of meal times, with more people snacking and grazing throughout the day, rather than eating three traditional meals per day. It has also led to a blurring of the boundaries between snacks and meals. Snacks are no longer connected to confectionery or potato products, but are more likely to include yogurts, meat snacks and vegetables and more likely to be healthy, protein-centric and fresh. As snacking widens and snack/meal times become blurred, Euromonitor reports that confectionery companies are moving into new areas. For example, Hershey acquired U.S. beef jerky manufacturer Krave, while Mars launched GoodnessKnows snack bars in the United States during 2015. 

To meet the growing demand for fresher foods, processed food makers need to come to terms with a rising product category called grocerants, defined as prepared, ready-to-eat food items that are usually sold in the deli department of a supermarket. Examples include rotisserie chicken and prepared sandwiches and salads.

According to Paul Bulcke, Nestlé’s chairman of the board, Europe’s leading food and beverage maker is focusing on organic growth and permanent innovation for its continued success. At an investor briefing earlier this year, Bulcke said it is important to be relevant to what consumers want, whether that is through new ways of engaging them or through the use of e-commerce sales.

Embracing the fourth industrial revolution and the changes it will bring are key challenges for major food and beverage manufacturers, and Nestlé is no exception. At the Global Business Summit of the Consumer Goods Forum held in Berlin in June, Nestlé CEO Mark Schneider said, “Size does not protect you from the winds of change.” As a result, Nestlé is focusing on:

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