There are a number of sources you can rely on to share trends about the upcoming year. These trends can be helpful in your planning and to keep you on track with the issues. Our experience has been there is more effort to share than there is accountability for getting it right. When we were planning our SKUFood newsletters for Q4, Susan challenged me to dust off the 2023 trends to see how close we were. So here is our version of accountability.
We are going to rate each on a scale of 1-10 where 1 is we missed the mark totally and 10 is we nailed it and it was an issue that impacted many in our industry. We always appreciate your feedback!
2023 trends review
1. Calm focus on the priorities: Everyone has endured 2-3 years of upheaval and challenges to get products produced. Retailers are looking to work with suppliers who are focused on how they can get it done as opposed to the reasons why they can’t.
We are not sure how ‘calm’ the industry was this year, but we do know retailers were much more interested working with suppliers that would deliver on their commitments. For many reasons, retailers seem to have less resources and expect more from suppliers. You and your customers have to be realistic about the issues you can tackle or resolve on their behalf. They do not have the time or patience to dig into why it isn’t working. They want to focus on planning and the next program.
2. Sales growth is key: With consumers returning to food service, retailers are facing negative comparable sales. Any supplier who delivers positive year over year growth will be ahead of many.
This will never go away and should probably be on the trend list every year. The reason we felt it needed to be number 2 in 2023 was the volatility we have experienced. Sales shifting from channel to channel and the challenges to understand the trends with the pandemic still impacting history. We probably should have called out tonnage compared to dollars to ensure people put the focus on growing volume during a period of inflation.
3. Stability in product cost: Food inflation is a big issue and retailers are eager to work with suppliers who find a way to keep their costs in line and deliver stability.
We did not know the politicians were going to call the retailers to Ottawa to blame them for the higher food prices. This really put more focus on the issue and heightened awareness with consumers. As we have been clear to point out there are many issues impacting food inflation and anyone who expects retailers to ‘implement programs’ to lower prices does not understand this industry. Everyone needs to be focused on this one.
4. Local products that sell: Retailers have allocated more space and resources to regional and local brands. Now they need to see them deliver sales.
Local products continue to get to the shelf, but we also know retailers are putting more emphasis on sales performance. The Loblaw program is being re-launched and at the FCC Food Summit in Saskatoon, Jana Sobey told us they do expect sales and they are looking for products in a specific categories. Retailers might have been a bit slow to do the analysis and not sure how to deal with smaller vendors. With bigger companies they encourage/expect them to increase trade spend. We think it will still come for local products but did not happen this year. Local is still very important but we were early on the focus on sales.
5. Sustainability matters: Sustainable packaging, reduced food waste and your environmental footprint all matter. They can be a path to the shelf or your route off the shelf if someone else in your category figures it out.
This continues to gain momentum. Consumers want it and regulators are forcing it. The packaging issue has made it all the way to the Supreme Court and now the government will appeal the decision. We are starting to see products with value propositions tied to sustainability in many categories.
6. Next generation of plant-based products: It has been enough to be plant-based, now the products need to taste good and sell. There are opportunities for products that perform like the products they are designed to replace. Plant-based is not enough anymore.
This area did not get as much focus on 2023. Shelf space definitely was reduced as suppliers stopped investing to get space and retailers implemented line ups that reflected the sales. Not sure we tried a significant amount of great tasting products. It does take time and hopefully they are coming soon.
7. Reduce logistics costs: Products need to get from where they are produced to the shelf and it is costing more all the time. Retailers might entertain creative solutions such as fewer deliveries of more products, to share some benefits.
Unfortunately, the structure of most large retailers prevents the food merchants from really understanding logistics. They are much more focused on the ingredients and packaging in cost of goods negotiations. The freight and delivery considerations are really the domain of supply chain. It continues to be a challenge to get them to understand and be open minded in this area. This is the right thing to do but tough to get traction.
8. Accountants will have more input: Retailers are facing higher interest rates like everyone else. The cost of inventory and when it is paid for will be under more focus and pushed to the limits.
Our experience would be retailers are more focused on inventory management than ever. They want to manage inventory with surgical precision but they do not respect the impact on our trend #7. Shelf conditions have improved but selection in categories seems to be reduced. It is easier to look good when there are fewer SKUS to manage.
9. Communication is evolving: Some retailers are back with in person meetings and others prefer video. Keep an open mind. Remember they are all different.
If you are not using several forms of communication with your customers, you are getting left behind. Retailers continue to change people frequently so you do need to develop relationships all the time.
10. Watch your category: With sales declines in retail, food inflation and focus on inventory, a lot might change. There could be a lot of pressure to drive private label, reduce SKUS and focus on items that sell. Spend time in the stores and talk to your customers about how to deliver sales growth.
Just this week I spent an hour walking a store. There are changes and it really is category specific. You cannot determine what will happen in one category based on others. There are products being listed in natural food that might be more appropriate in grocery and some large vendors putting better for you options in grocery where there is more traffic. As mentioned earlier, products with sustainability such as compostable packaging are getting listed.
Our overall score
If we add our ratings we are 78.5/100.
Not sure my children would be happy with that in their high school marks but they seem to do better than I ever did.
It is a good grade and more important we hope our work on trends is a good guide for you in your business. We try to take a unique perspective that is created specifically for producers and processors in our food industry. You do need to read the trends from retailers like Whole Foods Market because they are consumer focused. SKUFood trends are more customer and consumer focused.
2024 Trends coming soon
We have finished our first and second drafts of our 2-24 trends and we will share them in December. If you see issues impacting our industry we are always interested in your perspective. Our objective is always to share as much as we can with people in the SKUFood community to help you get your products on the shelf and into the shopping cart.
We do hope you are getting out to the stores during this key selling period. They are full of inventory now and although employees are busy you can still keep working on your relationships at store level.
One note to follow up on from an earlier newsletter. I shared a story about my frustrations with Air Canada and a story of a better outcome on Aegean airlines. If you remember, we were 9 hours late arriving to our destination. Once we were home, I did register a complaint and after several emails back and forth, we did receive an e-transfer for each of our 5 tickets that was very close to the original cost. I would still have preferred to arrive on time and enjoy our vacation, but Air Canada did compensate us for our issues which was appreciated.
The biggest of food companies are protecting their shelf space. Kraft Heinz have writhed lost sales or believe they will to make this investment. Interesting they would partner with a start up, when you consider the product development resources they would have.
The Kraft Heinz Co. said Wednesday it's bringing dairy-free macaroni and cheese to the U.S. for the first time. The company said the new recipe has the same creamy texture and flavor of its beloved 85-year-old original Mac & Cheese but replaces dairy with ingredients like fava bean protein and coconut oil powder.
FCC peer groups are a great opportunity for food processors to learn from each other and share their knowledge. People from across the country come together online to talk about what is happening in our industry. I have had the privilege of facilitating peer groups for FCC the last few years. I have met some incredible food entrepreneurs. If you are interested and would like more information check out the FCC link below or give me a call.
Where is Peter Speaking?
We have been working hard to put together a new video to promote the work we do speaking at conferences and events. Hope you enjoy the video!