Introductory Workshop

Added Value Why do it? Meet customer needs Gain competitive advantage – unique Enter a new market / market segment To gain a bigger value added share Increase profit

What Value Can Food Have? Texture, taste and aroma Convenience Shape, size and flexibility Packaging Service Information and advice Reassurance and traceability Local production Storability (e.g. shelf life, freezability) Animal welfare Nutritional content

Why People Buy Solutions to Problems Want an Experience Good Feeling

Consumers want VALUE Value = Benefits – Costs – Risk ‘ Solution to my need’ Financial & Opportunity Costs Unfulfilled Promises

Creating Value Customer value Perceived benefits Perceived sacrifice Product benefits Monetary costs Relationship benefits Image benefits Service benefits Time costs Energy costs Psychological costs PositiveNegative Customer value Perceived benefits Perceived sacrifice Product benefits Monetary costs Relationship benefits Image benefits Service benefits Benefits must out-weigh the sacrifice

Where is the value in your business? What is your USP? How do you differentiate? What makes you better? What’s your story?

Source: Market Size and Forecast Estimated UK retail sales and forecast of locally sourced foods, by value, Mintel

Source: Share of Domestic Food Share of food consumed in the UK originating in the UK*, D EFRA /M INTEL *based on the farmgate value of raw food. Consumption of UK origin consists of UK domestic production minus UK exports

Source:Base: The Consumer – Which Issues Matter? Factors influencing choice when buying food and (non-alcoholic) drink, December 2012 and March 2013 “Thinking about buying food and non-alcoholic drink, which, if any, of the following factors are most likely to make you choose one product over another? Select up to three.” GMI/Mintel1,500 internet users aged 16+

Source:Base: The Consumer – Attitudes Towards Food Origin Words associated with foods of local, regional, British and detailed foreign origin, December 2012 “ When thinking about foods of local (ie food produced within a 30-mile radius), regional (eg Lancashire cheese), British (eg British pork) and detailed foreign origin (eg Parma ham, Greek feta cheese), which, if any, of the following words would you typically associate with each of these? Select all that apply.” GMI/Mintel 1,500 internet users aged 16+

Source:Base: The Consumer – Recollection of Logos Recollection of logos, December 2012 “Do you recall ever seeing the following logos on food and drink packaging?” GMI/Mintel1,500 internet users aged 16+

Source:Base: The Consumer – Attitudes Towards British Food and Drink Agreement with statements on British food and drink, December 2012 “When thinking about British food and drink products, by which we mean products that have been produced or grown in Britain, or made using British ingredients, which, if any, of the following statements do you agree with?” GMI/Mintel1,500 internet users aged 16+

Source:Base: The Consumer – Attitudes Towards British Food and Drink Agreement with statements on British food and drink, December 2012 and March 2013 “When thinking about British food and drink products, by which we mean products that have been produced or grown in Britain, or made using British ingredients, which, if any, of the following statements do you agree with?” GMI/Mintel1,500 internet users aged 16+

Source:Base: The Consumer – Attitudes Towards Provenance, by Alcoholic Drinks Agreement with statements on the provenance of wine, beer and spirits, December 2012 “Thinking specifically about the provenance of alcoholic drinks, which, if any, of the following statements do you agree with in relation to wine/beer/spirits?” GMI/Mintel 944 internet users aged 18+ who have drunk wine, 825 internet users aged 18+ who have drunk beer and 690 internet users aged 18+ who have drunk spirits in the last six months

The Local advantage How do you get your message across? What’s the personality of your business? How is that represented?

Consumer Trust in Food Brands Top ten most trusted food brands*, January April 2013 Base: Internet users aged 16+ S OURCE : GMI/M INTEL * Among the selected leading brands featured in Mintel’s brand research

Consumer Attitudes Towards the Food Industry “To what extent do you agree or disagree with the following statements about the food industry?” April 2013 * (eg ingredients, origin) ** (eg food factories) *** Full statement reads: Different elements of the food supply chain (eg farmers, manufacturers, supermarkets) all work effectively together (eg open communication) **** (eg by using minimum artificial ingredients) Base: 1,500 internet users aged 16+ S OURCE : GMI/M INTEL

Consumer Attitudes Towards the Food Industry Agreement with the statements ‘I would like to see stricter regulations in the food industry’ and ‘I am interested in knowing how the food industry is regulated’, by age, April 2013 Base: 1,500 internet users aged 16+ S OURCE : GMI/M INTEL

Consumer Attitudes Towards the Food Industry Agreement with the statement, ‘The food industry relies too much on mass manufacturing’, by age, April 2013 Base: 1,500 internet users aged 16+ S OURCE : GMI/M INTEL

Who do Consumers See as Responsible for Selected Aspects of the Food Chain? “Thinking about the UK food industry (eg supermarkets, farmers, food manufacturers), who do you think is most responsible for ensuring the following?” Base: 1,500 internet users aged 16+ S OURCE : GMI/M INTEL

Factors Which Encourage Consumer Trust in Food “Thinking about buying food, which of the following factors would persuade you to trust a food product?” * (eg where and when it was made) ** (eg RSPCA/Red Tractor approved) *** (eg free from artificial colourants/flavouring) **** (ie a brand that I have used before) Base: 1,500 internet users aged 16+ S OURCE : GMI/M INTEL

Consumer Target Groups Regulators are the most likely of the target groups to want to see stricter regulations in the food industry, reflecting their general lack of trust in it. However, a keen interest in seeing more manufacturing information on-pack suggests an easy route to improve their trust. Compared with the other target groups, Brand Bankers are the most likely to trust a food product if it’s made by a well-known brand. They are also more likely than average to be interested in knowing how the food industry is regulated. Traceability Trusters are notable for being the most likely to trust the level of traceability in the food industry, which is a positive finding considering it is the largest of the target groups. Regulators (31%) Brand Bankers (32%) Traceabilit y Trusters (37%)

Managing relationships What are your most important relationships? How do you manage those relationships? Who is your most important customer, and why?

Unemployment has been falling for a year The income squeeze is less, but will not go away altogether in 2013 The economy is weak, but may not be as weak as the figures suggest Source: Office for National Statistics/Mintel

Consumer confidence recovering A steady upward trend for the last 18 months It has been consistently upward seemingly independent of the Jubilee and the Olympics Even so it is still well below the boom time levels up to Consumer cautiously hoping for better times Source: GMI/Mintel

All spending on food, drink at tobacco: £123.5bn in 2012 Source: Mintel

Market Size and Forecast All food, drink and tobacco forecast to grow at 3.3%pa to £145bn in 2017 Soft drinks: forecast to grow at 4.5%pa to £18.2bn in 2017 In-home alcohol sales – forecast to grow at 2.1%pa to £35.9bn in 2017 Tobacco sales – forecast to grow at 2.1%pa to £20.1bn in 2017 Stead growth expected in the key markets Sales of in-home food f Source: Mintel

Channels of distribution for food, drink and tobacco, 2012 The majors dominate, but convenience may start to catch up Source: Mintel

Online food retailing – share of spending by product, 2012 Online food retailing is growing But it is dominated by the major supermarkets – where people do their main weekly shop. For the majors it is primarily a service to customers. Leading online players in wines and spirits take over a third of online sales Wine and spirits the only specialists to have made a significant impact Source: GMI/Mintel Base: 2,000 adults online, ages 16+

Supermarket shoppers–profile by age and socio-economic group, 2012 Sainsbury’s customer base now younger than Tesco’s – and important measure of its recent strength Note: o = online; i = instore Source: GMN/Mintel Base: 2,000 adults online, ages 16+

The Consumer - Satisfaction levels with supermarkets are high The huge emphasis on price in supermarket marketing may have raised expectations on prices and promotions that can’t be met. The promotional strategy has not changed in the last year and may now becoming stale But are lowest for prices and promotions Source: GMN/Mintel

The Consumer - Attitudes to buying food and drink Consumer confidence has recovered in the last year. That can be seen in the reduced emphasis on promotions. But almost half prefer low prices to multi-buys. Time for a change in promotional strategy, perhaps Evidence of consumers becoming less cautious Source: GMN/Mintel Base: 2,000 adults online, ages 16+ (a) I like the idea of information on the receipt informing me how healthy my basket is (b) Specifically where promotional discounts haven’t been deducted from the bill

Retail Brands – M&S ranks top - again Little to pick between the Big 5 – the retailers that dominate the main shopping market. The other businesses are in some way complementary to the Big 5. But the Co-op faces a major challenge Base: 2,000 adults online, ages 16+Source: GMI/Mintel

The market opportunity What is your next target? How are you going to approach that market? Why are you looking at that market? When will you get there?

Next Steps Topics Date & time of next workshop Homework!