The Blurring of the Food Industry - How do we adapt? Matt Middleton, Ventura Foods, VP Sales Marci Needham, Ventura Foods, VP Insights & Category Management
Ventura Foods provides flavor and performance across the Sales Channel continuum Custom and Branded Products Developed in All Channels; Each Product Has a Distinct Role
Future of the Food Industry & Key Dynamics Impacting Changes 3 3
Significant shifts in consumers are driving changes in needs and behavior Consumer Activism Household Dynamics 40% of women are the primary salary in the US Households Delay of marriage and child rearing 2 MM fathers stay at home +100% vs. 1990 183% growth in childless couples Implication: Consider the need for single person meals, smaller sizes or more take out Ethnic Shifts Millennial and Generation Z Impact MILLENNIALS GEN X Fruity Sour Smokey Bold Ethnic Spicy 2042 Latinos will lead the US in ethnic majority 72% of K-12 in LAUSD are of Latino descent Implication: Aculturation behaviors will drive changes in drivers and barriers Sweet Salty Savory Tangy Grilled BOOMERS Herbal ALL DEMOGRAPHIC SHIFTS IMPACT CONSUMER CHOICE AND DESIRE Source: NPR, Pew Research, Time Magazine, Technomic
Consumers are driving a highly fragmented market with their increasing VOICE and DESIRES for transparency Vending Sit Down Restaurant Take Out Consumer Direct Meals Community Supported Ag 3 rd Party Restaurant Delivery E-Commerce Grocery Alternative Restaurants - Food Halls - Food Trucks - Pop Ups Traditional Grocery Drug Grocerants Convenience & Gas Store Club Coffee Café s Work Cafeteria, Hotel Dining Specialty Grocery - Whole Foods - Sprouts - Wegman s Small Format Grocery - Trader Joe s - WM Neighborhood Markets Farmer s Markets Virtual Grocery Stores
Fundamental shift in restaurant visits over past 10 years Challenges to the industry include: - Blurring of traditional foodservice and retail; Blurring of QSR and Fast Casual - Older Millennials eat in visits down 1% in 2015, while Drive Thru down 6% - Younger Millennials are spending $146 less vs. 2007 while Older Millennials are down $213 40 35 Fast Food 30 25 20 Full Service Sit-Down The Recession The New Normal 15 207 208 208 207 10 5 Per Capita Restaurant Visits 199 197 195 193 192 191 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: The NPD Group s Biweekly Food Safety Monitor & CREST The NPD Group collects this data bi-weekly.
Younger generations are voting with their dollars Traditional Supermarket/C-stores have increased their strategic intent to steal from foodservice causing a blur to the consumer with QSR wedged between two rapidly growth segments Fast Casual Fresh, Real & High Quality Worth The Time & Money Satisfied Customer Base Supermarket Deli/ C-Stores Convenient & Affordable Expanding Beyond Snacking Improving Satisfaction & Quality Unmatched Beverage Variety +8% Traffic Flat +3% Traffic +7.8% Sales +1.5% Sales +6.8% Sales Traffic PCYA YE June 15
Re-imagination of C and G Store Offerings Branded QSR 9% Proprietary Foodservice CAGR 2010-2015 Proprietary foodservice $19.5B 21% 2.6% 2.4% 2.3% Retail food 70% Total Food Beverage 8
59% 56% 50% 47% 19% 20% 20% 59% 56% Boomers Gen X Gen Y Gen Z American Food 8% Boomers 50% Gen 47% X Gen Y Gen Z Korean Food 23% 25% 17% 16% 19% 20% Boomers Gen X Gen Y Gen Z 8% 11% Boomers Gen X Gen Y Gen Z American Food Boomers Gen X Gen Y Gen Z Vietnamese Food Indian Food
Consumers want to know about pesticide and food safety make it transparent as a quality cue Food & Beverage Concerns (top 2 box; 5-pt. scale) Chemicals in food Food Safety, Foodborne Illnesses Pesticide usage Freshness of foods & beverages Healthy foods that kids like Hormones in animals GMOs Mistreatment of animals Higher cost of healthy foods Lack of nutrients in processed foods Processed foods Depletion of earth s natural resources Foods that are bad for your teeth or breath Foods that are not nutritionally balanced Foods that are hard to digest Food allergies Eating disorders Extremely Concerned Very Concerned Total Concerned 38% 38% 36% 35% 33% 32% 32% 32% 30% 27% 27% 26% 22% 22% 21% 20% 17% 26% 29% 24% 30% 30% 26% 22% 23% 30% 28% 24% 25% 25% 25% 25% 17% 15% 65% 67% 61% 65% 63% 58% 55% 55% 60% 55% 50% 51% 47% 46% 46% 37% 32% Source: New Healthy MenuTrends Keynote
Consumers are increasingly concerned with what s in their food and seeking out more clean labels the future will be about terms that are clear on what clean actually means Now Future All-Natural Real Fresh Clean Label Organic Antibiotic Free No Artificial Ingredients Natural Preservatives Short Ingredient List GMO Free Source: NPD Clean Eating 2016
The Millennial Woman is more willing than any other generation to invest in food 83% are willing to pay more for good tasting, healthy and/or nutritious food 87% of Millennial women are willing to spend more on quality food with great flavor Source: BHG Food Factor 2016
Disruption
Younger generations are driving growth into the Urban Center addressing needs in this concentrated area will be key Meal kit services, meal delivery services and grocery delivery are all focused on the urban consumer due to the difference in types of transportation used. Urban consumers are more likely to use public transportation or spend more time in traffic traveling shorter distances than more rural consumers. Consumer direct meal services are a boon to urban consumers because they cut down the need for travel to prepare meals or to have them delivered. Online on demand ordering will continue to grow and threaten traditional outlets (Amazon, UberEats)
Identifying the right partnership for gaining consumer penetration will be key to growing in the future The vast majority of online orders today are made through a restaurant s own site / app. But look for third party resources -used more by younger generations - to grow their share in the periods ahead. TYPE OF SITE / APP USED % who used that for their last online order Restaurant's own site / app Third party site / app Total 84% 16% Millennials 77% 23% Gen X 80% 20% Boomers + 88% 12% B-CC7: Thinking back to the very last time you ordered restaurant food online, on this occasion did you
P/E is Taking Notice Online Food Ordering Capital Investment ($mm)
Consumer-direct disruptors Meal kit subscriptions from companies like Blue Apron, HelloFresh and Plated are generating ample investor and media interest and are currently valued at approximately $1.5 billion expected to grow to over $5B in 10 years. Restaurant operators will clearly need to innovate delivery to stay relevant as meal kits gobble up more of the market Awareness and learning how to use a new, interesting ingredient such as kale, dragonfruit, endive are key factors in consumer acceptance San Francisco s Slanted Door is one of the first restaurants offering customers a meal kit delivery service via a partnership with Munchery. Customers can now order fresh ingredients to be sent to their home to make some of the restaurant s most popular dishes.
Retail organizing to cash in on the new consumer behavior Identifying this growth channel, retailers are modifying footprints to provide quick, ready meals for consumers to grab and go Leveraging quality cues such as Chef Endorsement and unique ingredients will drive consumer interest Pre-prepared vegetable blends and recipe cards make the dish seem more approachable
New delivery increasingly important to drive a frictionless experience with consumers to engage with food 1
High growth, emerging concepts are laser focused on fresh and real ingredient stories 20 Food is consistently fresh and you really can't go wrong with anything you choose from their menu. Not all calories are created equal and they have made them wonderfully here. Great service. Great food. Good prices. Whole food. Filling ingredients. Extremely fresh, simple, delicious food. Everything is good. This is the place if you live a healthy lifestyle. The food is definitely made from fresh veggies. Love this place! The ingredients taste fresh, and they have a list of where everything is sourced from. Freshii offers healthy food in a creative way and most importantly, it tastes great! The focus is on really good organic ingredients. Eating here is different than the usual meal out.
Modernizing salads with new ingredient combinations is important to woo younger consumers looking to incorporate more plant-based foods in their eating routine FAVORITES most menued green salad ingredients leafy greens veggies fruits cheeses proteins toppings dressings Romaine Tomato Avocado Parmesan Chicken Crouton Caesar Spinach Onion Cranberry Bleu Cheese Bacon Walnut Ranch Iceberg Cucumber Apple Feta Egg Almond Arugula Olive Mandarin Orange Balsamic Vinaigrette Cheddar Shrimp Noodle Olive Oil Cabbage Red Onion Raspberry Mozzarella Tuna Pecan Bleu Cheese Dressing RAPID TRENDS fastest-growing green salad ingredients leafy greens veggies fruits cheeses proteins toppings dressings Kale Little Gem Chicory Frisee Brussels Sprouts Roasted Carrot Butternut Squash Pickled Onion Blackberry Watermelon Burrata Queso Fresco Candied Bacon Quinoa Sriracha Pork Belly Farro Greek Yogurt Blueberry Ricotta Sopressata Sumac Chimichurri Pomegranate Pecorino Romano Lardon Breadcrumb Green Goddess Bok Choy Spring Onion Dates Manchego Fried Egg Granola Chili Lime
Future Considerations To Increase Awareness and Consumption
Highlighting the purity and romance The entire label is a positioning statement. All about the benefits. Very little branding. Waitrose Cooks Ingredients is used as an endorser.
New Paths individual snack meals that highlight plantforward ingredients kale, quinoa, pumpkin seed chicken noodles with pak choi 3 shelves, at least 12 linear feet per shelf Depending on account, additional separate gondolas Overall size larger than entire produce section In smaller stores, meal packages take up at least 2 gondolas, over 30% of entire square footage a velvety and simple soup made with fragrant and fresh coriander
Make variety easy and attractive, without abandoning classic favorites Refreshed classics, such as an updated caesar or Cobb salad, appeal to 47% of consumers. If you are not sure if your customer base is going to enjoy a particular veggie or flavor, try utilizing it in a familiar context. Over one-quarter of consumers say that topping variety packs would motivate them to eat more green salads. At retail, bundling dried fruits, nuts, seeds, and crunchy toppings can let customers turn the same base of greens and veggies into a different salad every day. Adding trendy ingredients to salad bars or buildyour-own offerings can provide customers with a break from the ordinary. Ingredients like edamame and shaved brussels sprouts require minimal prep, while pork and tempeh provide high protein and can be options for meat eaters or vegetarians. Rotating some ingredients with the seasons can make your offerings seem more thoughtful.
Health related callouts are driving quality perception for both the ingredient and the entity that delivers the product store, restaurant, food truck, all the channels When it comes to health-related terms, consumers are most interested in protein and fiber: - Including beans, hummus, or egg in addition to another primary protein can turn a regular salad into a power salad, which appeals to those looking for all-day energy. - Including naturally high-fiber ingredients like spinach, mushrooms, or broccoli and calling out their high fiber content could attract consumers looking to maximize their fiber intake. All natural, non-gmo, and antibiotic-free are rated as important by at least half of consumers. Operators and manufacturers should evaluate their products to see if terms like these already apply. Operators and manufacturers could also consider offering products made with premium ingredients like organic or sustainably farmed veggies, cage-free eggs, or pasture-raised protein. Starting these items as LTOs would help to verify if your customer base is willing to pay for these higher-cost products.
Salads and vegetables do not have to be confined to the later dayparts younger consumers are interested in alternatives at breakfast Three out of ten Millennials ate their last green salad outside of lunch or dinner, compared with just one out of ten Gen X ers or Boomers. For these younger, trendconscious consumers, green salad can serve as a snack or an infusion of healthy food any time of the day. Operators and manufacturers could consider capitalizing on this new occasion with snack size portions of green salad that are packed with protein and healthy, on-trend flavors and ingredients. Though only one out of ten Millennials ate their last salad for breakfast, in our Breakfast Keynote, released earlier this year, we learned that half of Millennials are very interested in ordering a breakfast salad a green salad that is topped with traditional breakfast ingredients like scrambled eggs or crumbled breakfast sausage. Operators who serve this mealpart may want to consider adding a breakfast salad to their morning menu to attract Millennials who are looking to start their day with leafy greens but don t want to leave traditional breakfast foods behind.
FOOD CONNECTS GENERATIONS