CHICAGO – Inflation, ongoing supply chain challenges and other factors are likely to affect consumer purchases and create winds 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 Ann Scott Livingston, food and nutrition research analyst at Euromonitor, during a presentation at the exhibition. Sweets & Snacks Expo, held May 23-26 in Chicago. “In the case of snacks, the value proposition includes not only the unit price but also the convenience, including packaging and delivery options.”
There are opportunities for snack manufacturers to add value by adopting digitalisation, she said. Expansion of telework remains a top priority for 70% of companies surveyed by Euromonitor.
“This increased time spent at home creates great challenges for breakfast players,” said Ms. Livingston. “While consumers who make impulsive purchases are declining, those who buy groceries online continue to grow.
Euromonitor data show that nearly half (46%) of the world’s consumers already buy food online at least once a month.
“The growth of e-commerce is one of the most significant impacts of the pandemic,” Ms Livingston said. “Many companies have launched their own websites aimed directly at consumers, not only to have a new sales channel, but also to gain a better understanding of consumers and the opportunity to test new products.
Marked by consumers’ desire for greater speed and convenience, delivery is playing an increasingly important role in snack consumption. E-commerce has historically had little penetration into the distribution of snacks. The underdeveloped infrastructure of the cold chain in many markets has limited the rapid supply of products such as ice cream and in particular yoghurt.
A new generation of third-party platforms tackles these challenges by delivering snacks and other typical products to shoppers in 30 minutes or less. These ultra-fast delivery services operate their own execution centers, commonly called dark stores.
“The dark stores are located close to the end user, which allows orders to be executed and delivered in minutes,” Ms. Livingston said. “With their short delivery times, these services allow urban consumers to use online orders for impulse purchases.
She cited GoPuff as a case in ultra-fast delivery. Launched in 2013, the Philadelphia-based company operates hyperlocal execution centers that are strategically located in more than 900 cities. Late last year, it expanded into the United Kingdom, its first international market.
GoPuff’s dark stores are stocked with their own inventory of products, eliminating the need for couriers to stop at regular outlets to pick up items. This fast delivery attracted 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-only coffee and ice cream shop, the BevMo and Liquor Barn alcohol chains and the European instant delivery services Fancy and Dija.
The space for ultra-fast delivery is still facing challenges, Ms Livingston said. Many consumers are eager to return to pre-pandemic shopping behavior, which usually means prioritizing shopping at regular retail outlets instead of shopping online.
“Furthermore, as inflation reaches levels not seen in years, consumers who want to mitigate these price increases may be more reluctant to pay a premium for super-fast delivery than they would have been last year, especially because “Snack products can still be easily obtained in the store,” she said.
Live streaming is another tool that snack manufacturers can use to trigger impulse purchases online. A 2022 Euromonitor survey found that one-third of buyers use live streaming to buy products or services. Live e-commerce has become popular in China, where 67% of consumers use the channel to shop. Breakfasts rank among the best categories purchased through live broadcasts in the country.
Live e-commerce is just beginning to appear in North America and Europe, and major social media networks are paying attention. Facebook, Instagram, Pinterest and TikTok have launched live e-commerce or online shopping features.
The Nestle KitKat Chocolatory team in 2020 presented the first live shopping on Facebook in Australia. The digital experience included chocolate experts who demonstrated confectionery creations, product demonstrations and time-limited offers. Viewers had the opportunity to make purchases directly through the live broadcast.
“The main reasons why consumers use live streaming is that it allows them to receive discounts from brands and makes it easier to understand the characteristics of the product,” said Ms. Livingston.
Eight out of ten users watch TV or movies at least once a week, and half play video games at least once a week, according to Euromonitor. The market research company also found that half of consumers eat snacks at home, while only 18% report eating snacks on the go in 2022. Forty-three percent say they eat snacks while watching TV or streaming video content, reaching 53% for the 15 – to the 29-year-old demographic group.
“Obviously there are opportunities here in this home entertainment for breakfast,” Ms. Livingston said. “More snack brands need to develop products and promotions for these homemade occasions.”
PlayStation partnerships offer an example. Brands, including Nestle’s KitKat and PepsiCo’s Doritos, partner with the video game brand, giving players a chance to win a free gaming console when they buy breakfast.
Another example is ICNOW (Ice Cream Now) from Unilever. The platform is dedicated to finding opportunities for ice cream in the space for instant delivery. Last year, he debuted with a campaign in Spain that allowed gamers to watch the tournament live on the Twitch video platform to order pints of Magnum in stream. The company partners with a local on-demand delivery service to place orders within 10 minutes.