Jan-Willem Grievink: Join forces

The boundaries between foodservice and retail are blurring, the consumer is becoming more powerful, ‘food is fashion’ and there is an ever-greater need for storytelling. But what does all this mean for the food processing industry? To find out, we interviewed Jan-Willem Grievink on the trends and developments in the out-of-home market.

‘Stronger together: “blurring” yet maintaining your core qualities’

The Food Service Institute (FSIN) is an independent institute for gaining and developing knowledge about the out-of-home market for food and drink consumption. Director Jan-Willem Grievink: “We’re focused on the day-to-day interrelationships between food shoppers and their favourite buying locations. We collect data, analyse the market effects of international developments and place the information in a scientific context. We study the changes and provide clear insights into the impact of those changes on the entire chain. We then translate those insights into concrete opportunities and future-oriented strategic decisions. It’s important to provide clarity because the pace of change is so high. A lot has changed recently – in fact, as much in the past couple of years as in the 30 years preceding them.” Here, Jan-Willem sums up the four most significant trends.

Trend 1: The concept of ‘one size fits all’ is under pressure

“One of the most notable changes has been the consumer shift away from the ‘mainstream’. Dutch consumers were traditionally very good at being ‘normal’ and ‘average’. Take Dutch supermarkets – they all look alike. But that concept of ‘one size fits all’ is now under pressure which is making things difficult, especially for the mid-segment of the market. Meanwhile, other segments are gaining ground – both the quality discounter (e.g. Lidl) and the premium channel. Manufacturers who combine customisation with quality and craftsmanship have got everything going for them.”

“Market leader Albert Heijn, for example, used to only work with suppliers who could supply all its stores (over 800 in total), but that policy is starting to change. The food retailer is increasingly open to working with smaller companies, even if they are only able to supply 150 stores, for example, providing that the supplier offers a truly distinct product: of excellent quality and with a good ‘story’ to tell, a product that makes the store unique and persuades consumers to choose that particular store over all the others.”

Trend 2: Disruption

“The food shopper is conquering the chain and online is growing fiercely. These ‘disruptive forces’ are rocking the entire chain, and the power that the supermarkets have enjoyed for the past few decades is now coming under pressure. The first major change was the decline in B brands and the rise of private label; we’re now seeing a power shift from the supermarket to the consumer. Today’s consumers have got an opinion about everything, and they are taking a growing interest in the relationships between food and the environment, sustainability and human rights. Food shoppers are active on social media and they are not reticent in sharing their thoughts. Hence, manufacturers, retailers and foodservice organisations are much more exposed to potential damage to their reputation than before. Disruption has been compounded by the financial crisis. Although the economy is now looking brighter once more, things will never be exactly the same again; in a sense, the crisis has formed the gateway to a new reality. But where are we heading? What will be the new business models, which players have the best prospects, and what are the keys to success? Those are the sorts of questions we strive to answer for our members.”

‘Food is fashion’: that’s where opportunities lie for manufacturers and retailers alike'

What impact is the shift in power to consumers having on suppliers and manufacturers?

“The shift is not necessarily a bad thing for a supplier or manufacturer. It can even be turned to their advantage if handled correctly. For example, this development is forcing suppliers to be more transparent. They gain from being honest and authentic, by delivering quality, by ensuring that the story they tell is true. Let consumers see the real picture, behind the scenes. Such openness in the chain is becoming increasingly important, especially for mainstream products.”

What can a supplier or food manufacturer do in practice?

“They can actively involve the consumer in the ‘conspiracy’ to get their products listed on retail shelves – and keep them there – using tools such as consumer taste panels, campaigns on Facebook and Pinterest, or competitions for amateur cooks to see who can devise the tastiest recipe. They can ensure that the entire ‘story’ behind the product and the company is watertight and transparent. Meanwhile, the mid-segment will have to sharpen its focus on margins by reducing the cost price and speeding up the rate of inventory turnover. And at the bottom end of the market, low pricing and optimal efficiency are essential.”

Trend 3: The concept of ‘real food’ is on the rise

“Industrialisation of manufacturing is unavoidable to some extent, but that doesn’t appeal to consumers. ‘Food is fashion’: that’s where opportunities lie for manufacturers and retailers alike. That’s reflected in the popularity of critical, investigative TV programmes (such as Keuringsdienst van Waarde and Tegenlicht in The Netherlands, or Food Unwrapped  in the UK) which lift the lid on shady practices and dishonesty. As a food supplier or manufacturer, you have to put yourself in the user’s shoes nowadays rather than approaching things from your own perspective. You might have got away with simply delivering crates of cauliflower to the supermarket before, but that’s no longer enough. Today’s user wants ready-to-cook cauliflower florets – plus a recipe so that they can try something different and preferably also including all the necessary herbs and other ingredients so that they can make the dish in its entirety.”

Trend 4: Blurring

“In The Netherlands, food and drink sales opportunities have traditionally been grouped into channels, each with its own revenue model. Today’s consumer is rebelling against that structure, however, and the boundaries between the various food channels are disappearing. Supermarkets are increasingly selling products to be eaten on the go. Specialised fresh food stores such as bakeries increasingly provide seating for food/drinks to be consumed on the premises. Nowadays, foodservice/food-retail combinations can be seen everywhere: railway stations (e.g. AH-to-go stores), petrol stations, bakeries, fishmongers and butchers. But blurring goes a step further, as the division between non-food and foodservice is also beginning to fade. One good example of that is the store of bag designer Omar Munie in The Hague.” (Ed.: Every two weeks, the designer organises a ‘Bag & Tea’ in the prestigious Omar Munie flagship store, which is described on the company website as being “where the combination of glamour and craftsmanship creates an authentic feeling of togetherness.”)

'the crisis has formed the gateway to a new reality'

“Consumers themselves seek out variety if they find it lacking in an existing sales channel. They will find new products on the internet, search for the best-quality or cheapest variety, they will drive to a farm to buy fresh products direct, or after dining at a restaurant they will purchase extra wine or coffee beans to enjoy at home. Concepts which capitalise on this trend are likely to be successful.”

“Nevertheless, physical stores are here to stay. It does not make financial sense for the consumer to drive several kilometres to a farm just for a couple of punnets of strawberries, and ordering them online would be too expensive. The strength of online grocery shopping lies in small products with a long shelf life which are consumed regularly – such as Nespresso capsules, for example. In contrast, a crate of beer is less suitable for buying online since the product is too big and heavy in relation to the price. Nor is it an option to order online if the product is needed urgently.”

The FSIN translates its insights into concrete opportunities and future-oriented strategic decisions. What can manufacturers, suppliers, retailers and foodservice organisations do in practice to become – or remain – successful?

“First of all, stop thinking in terms of channels!” advises Jan-Willem. “Secondly, utilise the new opportunities, because ‘online’ doesn’t have to be a threat. And thirdly, whether you’re a food manufacturer, a restaurant owner or a supermarket manager, it’s now more important than ever before to be aware of – and leverage – your core qualities. For a supermarket, the core qualities are efficiency and logistics. For a restaurant, it is about knowing how to make a product taste fantastic. The successful companies are the ones who manage to devise a new concept based on their core qualities.”