Snack Manufacturers Embrace Digitization | Food business news

CHICAGO – Inflation, ongoing supply chain challenges and other factors are likely to impact 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 Sweets. & Snacks Expo, held May 23-26 in Chicago. “In the case of snacks, the value proposition is not only about unit price but also about convenience, including packaging and delivery options.”

Opportunities exist for snack makers to add value by embracing digitalization, he said. The expansion of remote work remains a top priority for 70% of the companies interviewed by Euromonitor.

“This increase in time spent at home creates great challenges for snack players,” Ms. Livingston said. “While consumers shopping on impulse are declining, those shopping for groceries online have continued to grow.”

Euromonitor data shows that nearly half (46%) of global consumers now shop for 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 better understand consumers and the possibility of testing new products.”

Marked by consumers’ desire for greater speed and convenience, delivery is playing an increasing role in snacking. Ecommerce has historically had low penetration in snacking distribution. The undeveloped cold chain infrastructure in many markets has limited the rapid delivery of products such as ice cream and yogurt in particular.

A new generation of third-party platforms are addressing these challenges, delivering snacks and other convenience store products to shoppers in 30 minutes or less. These ultra-fast delivery services run their own fulfillment centers, commonly referred to as obscure shops.

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

He pointed to GoPuff as a case study in ultrafast delivery. Launched in 2013, the Philadelphia-based company operates strategically located hyper-local logistics centers in over 900 cities. Late last year it expanded into the UK, its first international market.

GoPuff’s dark shops are stocked with their own inventory of products, eliminating the need for couriers to stop at physical outlets to collect items. This quick delivery 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 the Bandit coffee shop and ice cream parlor, the alcohol chains BevMo and Liquor Barn, and the European instant delivery services Fancy and Dija.

Ultra-fast delivery space still faces challenges, Ms. Livingston said. Many consumers are eager to revert to pre-pandemic shopping behaviors, which typically means prioritizing physical store purchases rather than shopping online.

“Also, with inflation reaching levels not seen in years, consumers who are trying to mitigate these price increases may be more reluctant to pay a premium for ultra-fast delivery than last year, especially since products snacks can still be readily available in the store, “he said.

Live streaming is another tool that snack makers can use to stimulate online shopping. A 2022 Euromonitor survey found that a third of shoppers use live streaming to purchase products or services. Live e-commerce streaming has caught on in China, where 67% of consumers use the channel to shop. Snacks rank among the top categories purchased via live streaming in the country.

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

NestlĂ©’s KitKat Chocolary team introduced Australia’s first Facebook live shopping experience in 2020. The digital experience saw the participation of chocolate experts in displays of confectionery creations, product demonstrations and limited-time offers. Viewers were able to shop directly via the livestream.

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

According to Euromonitor, eight out of ten consumers watch television or movies at least weekly and half play video games at least once a week. The market research firm also found that half of consumers eat snacks at home, while only 18% reported eating snacks on the go in 2022. 43% said they eat snacks while watching TV or streaming video content. streaming, reaching 53% for 15- to 29-year-olds.

“There are clearly opportunities here on these snacks hometainment occasions,” Ms. Livingston said. “More snack brands need to develop products and promotions for these home occasions.”

Partnerships with PlayStation offer an example. Brands including NestlĂ©’s KitKat and PepsiCo’s Doritos have partnered with the video game brand, giving players the chance to win a free game console when they purchase 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 through 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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