As consumers’ focus turns increasingly to health and sustainability, the food and beverage industry has to cater to more personalized eating choices – and the frozen food market is no different. The global ready-to-eat market is set to grow by over USD70bn by 2026, while the demand for products that are both convenient and ethical is higher than ever. As such, F&B companies from retailers to restaurants find themselves having to adapt at a similarly swift rate. By Farah Thalji, director, Dubai office, Simon-Kucher & Partners, and Mohit Agrawal, Manager, Dubai office, Simon-Kucher & Partners
More conscious lifestyle choices
The trend for conscious eating is set to become even more pronounced, driven by the demand for environmentally friendly, ethical, and organic products.
The Covid-19 pandemic has prompted consumers to take a more conscious approach when it comes to food and health. Sales of frozen food products soared by 94% in mid-March 2020 and consumers were introduced to a new world of fresh, healthy, diverse, and sustainable produce.
Consumers are demanding more transparency about where their food is from and how it is grown. North America and Europe account for 90% of global organic food sales, with organic sales reaching around 10% in some national markets.
Furthermore, more and more consumers are turning to alternative diets such as vegan, vegetarian, and flexitarian in the name of both animal welfare and climate change. The number of vegans in Europe doubled in the four years to 2020, while 30% of Europeans say they are making a conscious choice to eat less meat. The Frostkrone Food Group is one of many frozen food retailers to introduce a new range of vegetarian and vegan products to appeal to evolving dietary requirements.
In order to move forward with this trend, F&B players need to update and introduce new products to cater to changing lifestyle choices. The associated health benefits and sustainable features should also be made clear in a way that effectively engages consumers.
New foodservice models
Foodservice technology is advancing quickly in response to consumers’ increased expectations of speed, quality, and value for money. Based on a delivery-only model, cloud or “ghost” kitchens may have previously been seen as a novelty but have now entered the mainstream. They have multiple benefits such as increased efficiency, cheaper costs, and more opportunities for expansion.
Conservative estimates tip the global cloud kitchen industry to reach over USD71.4bn by 2027. This in turn is good news for frozen food providers. In India, where cloud kitchens are already dominating the foodservice industry, ready-to-cook foods account for up to 50% of the produce used at the most prominent chains.
Cloud kitchens are now operating across global markets. In Europe, the cloud kitchen market is expected to see a growth of around 13% between 2021 and 2027.
In order to rise above the increasingly fierce competition, traditional restaurants and kitchens should consider the viability of a lean foodservice model such as cloud kitchens. They should assess the trade-off between overhead costs vs growing revenue opportunities for both in-house and outsourced models. Frozen food retailers similarly need to determine what services they can offer and which partnerships they can nurture to make the most of what is clearly a growing market.
Increased demand for personalization
More than ever, consumers expect personalized communication, product recommendations, and promotions from companies. This trend is set to become all the more pronounced as communications take place across many channels in the digital sphere.
Leading retailers and eateries are using collected data to better understand and appeal to their existing and potential customer base. Retail corporations can harness data across various touchpoints – a centralized database, real-time data, and data from IoT devices – to pair customers with suitable products and deals through their preferred channel.
Alongside data collection, frozen food retailers and delivery services are increasingly using personalized nutrition as a means to engage with customers. For example, UK startup Allplants has tapped into a growing plant-based market. The brand has secured GBP38m in funding to develop its ready-meal delivery service, catering to consumers’ meal choices with flexible subscription options and a range of health-conscious dishes for customers to choose from.
A customer-centric approach will always improve lead generation and engagement, whether it be through data collection, communication, or branding. By investing in their personalization tools F&B businesses will be able to more effectively interact with and cater to consumers while retaining flexibility.
The way forward
These three key trends in the F&B landscape are showing no signs of disappearing – in fact, they are set to become more pronounced in 2022. Players now need to assess both the risks and opportunities that they present. The ability to adapt to consumer desires and optimize service models accordingly will define the success of any commercial strategy in the upcoming years.