retail news in context, analysis with attitude

The NPD Group is out with a new report suggesting that "a confluence of changing demographics, economic pressures, and evolving consumer attitudes and behaviors" has forced major food companies - dubbed "Big Food" - to struggle "to find growth in a changing marketplace where legacy brands are ceding share to smaller, new entrants and the store perimeter is outperforming center of the store."

The report goes on: "Among the contributing factors to Big Food’s current dilemma is consumers’ increasing demand for purity in their foods and beverages. Consumers are avoiding adulterated elements and looking for natural and fresh food and beverages at grocery stores, and avoiding the processed foods on which many major food companies base their business. Fresh, limited processing and natural are desired characteristics particularly among Millennials.

Two other trends affecting Big Food's sales:

• "The number of food and beverage occasions consumed by the average American is flat, according to NPD. The number of dishes and ingredients used to prepare meals continues to decline as more one-and-two dish meals grow at the expense of the traditional 3-part meal. Consumers are also relying more on 'healthy' portable snack foods to be a part of their breakfast, lunch, and dinners. Dinner has seen the greatest contraction in dishes and ingredients while breakfast has actually gotten a little more involved with the popularity of eggs."

• "Generational and multicultural attitudes are also influencing U.S. consumer consumption patterns and the business of food. Millennials are more diverse than the generations that preceded them with 44 percent being part of a minority race or ethnic group. Even more diverse are those Americans younger than 5 years old with 50 percent being part of a minority race or ethnic group. By 2044, the U.S. Census Bureau projects that more than half of all Americans will belong to a minority group."

“The bottom line is that major food companies and retailers are faced with meeting changing consumer needs with processes and infrastructure that were built for the mass produced foods consumers craved a decade ago,” says David Portalatin, a vice president and food analyst with NPD. “It’s now a battle for share of stomach but through acquisitions and American ingenuity, food companies have made progress over the past few years in finding white space, growth occasions, and new products.”
KC's View:
The added problem for big food companies is the growing distrust that Americans feel for so many institutions. That especially goes for Millennials, who, according to Harvard University's Institute for Politics, are enormously distrustful of the media, Congress, Wall Street, politicians in general, and law enforcement. In fact, scientists and the military are two of the few institutions that have majority support among the Millennial generation.

And I figure that Millennials aren't the only ones that feel this way. The percentages may be different, but institutional skepticism is rampant. When one goes to the store, choosing a product made by a small, upstart company is one way in which people can protest against the major institutions that they see as being untrustworthy ... and when you add to that the fact that small companies often are more legitimately innovative, the trend continues.