consumer emphasis on health and convenience creates industry-wide trends
Over the past few years, the demand for health- and wellness-oriented products has exploded. It can be seen rippling across industries. From the rise of athleisure clothing and innovations in wellness technology to the increasing interest in socially-conscious food options, the effect has been nearly ubiquitous.
Like every other industry, the supermarket industry is subject to changing trends that reflect the zeitgeist of consumers. Food is an essential pillar of good health and wellbeing, so it is not surprising that consumer demand has significantly affected what is on store shelves—not to mention the stores themselves.
the rise of the grocerant
Once upon a time, Whole Foods’ in-store buffets and dining options were a unique gimmick. Now, other grocery markets have begun to realize the potential profit of in-store dining. The result? “Grocerants” are popping up across the country. The portmanteau refers to grocers that offer retail foodservice (i.e., restaurant-like services).
The NPD (previously the National Purchase Diary, Inc.) estimates that in-store dining and takeout from grocery stores has climbed to 30% in the last decade. This is undoubtedly driven by consumer demand for better-for-you food options. The NPD found that consumers rate meals from grocerants as being healthier, fresher, and higher quality than those found at quick-service restaurants.
Grocers who have their finger on the pulse of consumer demand have identified an opportunity to take a bite out of restaurants’ market share, and they do it by appealing to Millennials’ desire for dining options that are both health-conscious and convenient.
meal kit madness
Grocerants offer a blend of health and convenience that is ideally suited for our increasingly busy, on-the-go lives. In-store meal kits hold a similar appeal. In fact, meal kits are currently the fastest growing channel in the entire food industry. When these products were first introduced by companies like Blue Apron, Hello Fresh, and Plated around 5-6 years ago, they were perceived as a major disruptor. The threat was not imagined: in 2017, meal kit sales were up more than 26% year over year.
However, markets have taken the potential competition and spun it into yet another opportunity. Chains all over the country have identified ways to use the trend to their advantage. Big-name markets like Walmart have innovated their own line of meal kits. Additionally, as of 2018, many major meal kit services have entered the brick-and-mortar setting. For instance, Kroger acquired the company Home Chef this past spring, and consumers seem to prefer the in-store version of these products instead of the online version, which requires a subscription.
Like in-store dining, meal kits hit that sweet spot where health meetsconvenience. Also like in-store dining, meal kits use a lot of plastic packaging. These materials are a cheap and easy solution, but it’s an area in which consumers do not want to compromise. After all, they want health and convenience. Consumers are unwilling to sacrifice the health of themselves and their environment for the sake of convenience—driving yet another major change in food-related industries.
demand for sustainability
The health and wellbeing movement extends to our environment. As plastic waste damages our ecosystems, enters our food chain, and potentially affects human health, there has been a newfound emphasis on waste reduction. Consequently, the food packaging industry is undergoing significant change.
Companies like McDonald’s and Coca-Cola have announced major sustainability-related goals. Whole communities have risen to the cause: Vancouver, Canada became the first city to ban plastic straws. Australia plans to have 100% recyclable, reusable, or compostable packing by 2025. Three in four consumers are willing to pay more for sustainable packaging and this shift in values is reflected in the response of countries and companies alike.
The sustainability trend directly affects the previous two; both grocerants and meal kit providers need to think about sustainable packaging and dine-in materials. Many already encourage recycling. For example, Whole Foods and Fresh Market place recycling stations prominently near the eat-in areas, as well as near the exits.
With the growing emphasis on eco-friendly practices, it’s only a matter of time before these services and institutions replace their takeout boxes, utensils, cups, straws, lids, and packaging with plastic alternatives. As a result, sustainable packaging is becoming a critical part of how a company thinks about, creates, and markets their products. To understand how packaging now affects every stage of product development, view our Sustainability Report.