Assessing Digital Frontiers in Packaged Food For Future Growth

November 2016

Packaged food volume growth in developed markets (where the majority of food sales are generated) is expected to remain static over the next five years. This is forcing strategy makers to look beyond traditional growth markets to stay relevant, and find new pockets of growth through value creation in a new technological era. This briefing looks at where digital frontiers can be found and assesses which technological innovations are out there, and which will lead the way in food.

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Packaged food sales will be static in developed markets, making value creation all the more important

With emerging markets no longer being the main drivers of growth, food players are turning to developed markets such as the US for sustained future growth. Per capita disposable incomes in developed markets are seven times higher than in emerging markets and product margins are also greater because of a sophisticated distribution network being in place. Yet prolonged deflationary pressures in core developed markets have been a concern for many packaged food players in 2016 which emphasises the need for value creation as future volume sales are expected to remain static.

For time-strapped consumers, value creation is mostly found in time-saving (technologically-driven) solutions. By assessing digital attractiveness, key markets are found to explore digital innovation

New pockets of growth can be found in markets where digital commerce is strongly developed which can be measured in home, and mobile connectivity, market environment and commerce infrastructure. By leveraging over 2,500 data points Euromonitor has ranked 50 countries according to attractiveness for future deployment of digital initiatives. China, South Korea, the UK and the US score highest on the digital consumer index and are key markets to explore new food innovations that offer solutions in time management, food waste and experience.

Globally, Millennials and Generation Z consumers will hold 47% of gross income by 2025

Digital consumers are predominantly Millennials and Generation Z consumers who are pioneers in the digital environment. This can be through use of smart appliances, connected devices, purchases through mobile devices, and so on. It will be these consumer groups that food manufacturers should target next in developed markets.

Consumers tend to be more daring when it comes to buying snacks and confectionery than staple foods yet technology opens new ways to excite consumers even for daily food items

Staple foods that are price inelastic, such as bread, rice, pasta and milk, traditionally have seen little innovation as consumers are more conservative in these categories and typically stick to their favourite brand. Technological innovation can bring back excitement to these categories and get consumers to try new things at higher price points and build an innovative brand image at the same time. With an already high penetration of these foods, even a small price increase can generate substantial new revenue, even in a deflationary environment.


Key findings (1)
Key findings (2)
Introducing industry 4.0 in packaged food
Who, where with what?
Prioritising markets with Euromonitor’s Digital Consumer Index

Which Innovations Will Lead the Way in Food?

Linking digital consumer index to low income elastic food groups
Changing brand loyalty in staple foods by exciting consumers…
…and competing against fewer brands
Samsung the inevitable partner for food technology
Controlling (or monitoring?) what we eat, by Nestlé and Samsung
Connectivity: Bringing recipes to life with virtual baking assistant
Why pay more? Because it offers more through technology
Connectivity: Future selves more likely to buy a service than food
Say it, scan it, buy it. Are food scanners the new norm?
Nutrigenomics in real time: Campbell’s personalised meal kit

Who and Where is The Digital Consumer

Meet the interconnected consumer of today…
…and of tomorrow
Heavy mobile shoppers are most likely to be Millennials
Millennials and Gen Z will control 47% of gross income by 2025...
…and be the most populous cohort across the globe
The UK leads the Digital Consumer Index but US will do better
The four expected leaders in the forecast digital consumer index
Four key takeaways to explore new pockets of growth


Food for thought


Methodology for the Digital Consumer Index
Methodology for the Digital Consumer Index, continued

Appendix: Industry Forecast Model

Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models


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