Snack manufacturers embrace digitization | Food Business News

CHICAGO – Inflation, ongoing supply chain challenges and other factors are likely to weigh on consumer purchases and create headwinds for the snack category in the coming months.

“A big challenge for snack players is to add value to products so that consumers are willing to pay higher prices for them,” said Anne Scott Livingston, food and nutrition research analyst at Euromonitor, during a presentation at the Sweets & Snacks Expo, held May 23-26 in Chicago. “In the case of snacks, the value proposition involves not only unit price but also convenience, including packaging and delivery options.”

Opportunities exist for snack food manufacturers to add value by embracing digitization, he said. The expansion of remote work remains a priority for 70% of companies surveyed by Euromonitor.

“This increased time spent at home creates huge challenges for snack players,” said Ms. Livingston. “While consumers who make impulse purchases have decreased, those who buy groceries online have continued to grow.”

Euromonitor data shows that almost half (46%) of global consumers now buy food online at least once a month.

“The growth of e-commerce is one of the most significant impacts of the pandemic,” said Ms. Livingston. “Many companies have launched their own direct-to-consumer websites, not only to have a new sales channel, but also to gain a better understanding of consumers and the ability to try new products.”

Driven by consumers’ desire for greater speed and convenience, home delivery is playing an increasingly important role in snacking consumption. Electronic commerce has historically had a low penetration in the distribution of snacks. Undeveloped cold chain infrastructures in many markets have restricted the rapid delivery of products such as ice cream and yogurt in particular.

A new generation of third-party platforms is addressing those challenges, delivering snacks and other typical convenience store products to shoppers in 30 minutes or less. These ultra-fast delivery services operate their own fulfillment centers, commonly known as dark stores.

“Dark stores are located close to the end consumer, allowing orders to be filled and delivered within minutes,” said Ms. Livingston. “With their short delivery windows, these services allow urban consumers to use online ordering for impulse purchases.”

He pointed to GoPuff as a case study in lightning-fast delivery. Launched in 2013, the Philadelphia-based company operates hyper-local fulfillment centers that are strategically located in more than 900 cities. Late last year it expanded into the UK, its first international market.

GoPuff Dark Stores feature their own product inventory, eliminating the need for couriers to stop at physical stores to pick up items. This quick delivery has caught the attention of investors. GoPuff was valued at $15 billion after raising $1 billion in funding last summer. The company has acquired several online retailers and delivery services, including coffee and ice cream shop Bandit, spirits chains BevMo and Liquor Barn, and European instant delivery services Fancy and Dija.

The ultra-fast delivery space still faces challenges, Ms Livingston said. Many consumers are eager to return to pre-pandemic shopping behaviors, which typically means prioritizing physical store purchases over online purchases.

“Furthermore, with inflation reaching levels not seen in years, consumers looking to mitigate these price increases may be more hesitant to pay a premium for ultra-fast delivery than they were last year, especially as snack products may still be sold. you can easily get in the store,” he said.

Live streaming is another tool snack makers can use to generate impulse purchases online. A 2022 Euromonitor survey found that a third of shoppers use live streaming to purchase products or services. E-commerce live streaming has taken hold in China, where 67% of consumers use the channel to shop. Snacks are among the top categories purchased through live streams in the country.

Ecommerce live streaming is just beginning to emerge in North America and Europe, and major social networks are paying attention. Facebook, Instagram, Pinterest and TikTok have all launched e-commerce or online shopping live streaming features.

Nestlé’s KitKat team in 2020 introduced Australia’s first Facebook Live shopping experience. The digital experience featured chocolate experts showcasing confectionery creations, product demonstrations and limited-time offers. Viewers were able to make purchases directly through the live stream.

“The main reasons consumers use live streaming are that it allows them to get discounts from brands and makes it easier to understand product features,” said Ms. Livingston.

According to Euromonitor, eight out of ten consumers watch TV or movies at least once a week and half play video games at least once a week. The market research company also found that half of consumers snack at home, while only 18% reported snacking on the go in 2022. Forty-three percent said they snack while watching TV or streaming streaming content. video, reaching 53% for the 15- to 29-year-old demographic.

“Clearly there are opportunities here on these home entertainment occasions for snacks,” Ms. Livingston said. “More snack brands need to develop products and promotions for these occasions at home.”

Partnerships with PlayStation offer an example. Brands like Nestle’s KitKat and PepsiCo’s Doritos have teamed up with the video game brand, giving gamers the chance to win a free game console when they buy a snack.

Another example is Unilever’s ICNOW (Ice Cream Now). The platform is dedicated to finding opportunities for ice cream in the instant delivery space. Last year, a campaign debuted in Spain that allowed players to watch a tournament live on the Twitch video platform to order Magnum pints in-stream. The company partnered with a local on-demand delivery service to deliver orders within 10 minutes.

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