Millennials are hungry…for better food. Today, 50 percent of these informed and tech-savvy consumers, aged 19 to 36, consider themselves “foodies” who connect food with social status, and will splurge on dining out even when budgets are tight. Like older foodies, millennials demand good tasting, interesting, high-quality food, but they differ in that they also want it to be organic, locally sourced, gluten-free, vegan, paleo, and nutritious. They expect to pay reasonable prices, too (Forbes).
Meeting this paradigm shift in demand has been difficult for Big Food producers, which have long focused on cheap and convenient offerings. But the food mainstays that led Baby Boomers to prosperity—frozen or nearly indestructible packaged goods full of sugar, fat, salt, and preservatives—are now the objects of millennial disdain. It doesn’t take long for changing preferences to affect revenue. Packaged food sales alone declined by 1 percent in 2015 as the market for organics grew by 11 percent. Meanwhile, the largest 25 food producers in the U.S. have seen a combined loss of $18 billion since 2009 (Fortune).
A Disruptive Dilemma
The problem isn’t lost on CEOs at traditional Big Food companies, but managing such drastic change is tricky. Organic and specialty food producers tend to be smaller with fewer suppliers, and operate on high growth/low margin business models that Big Food can’t easily mimic. That said, ignoring the Millennial Foodie Revolution is not advisable: more than 45 percent of Americans already look for organic foods when they shop today, and millennials are the largest demographic among them (Forbes).
As more millennials become heads of households, their desire for fresh and organic food choices will challenge the food supply chain at all levels, from agriculture and manufacturing to transportation and food retail. To effectively meet demand, it’s important to consider how millennial tendencies and preferences may affect your business (Fortune):
Focus on quality over quantity. Instead of cheap and plentiful, the new order of foodies wants nutrient-dense food that contributes to their health. In fact, more than 77 percent of consumers recently surveyed said eating healthier was a goal. While foods labeled as “diet” are losing popularity, foods made without pesticides, hormones, antibiotics, and GMOs are in demand (Fortune).
- Mistrust of big corporations. Millennials find advertising and words like “natural” dubious, and want more transparency in their food sources. Desire for locally farmed and sustainably produced food is on the rise, particularly from companies that mind the environment. These consumers also support legislation for mandatory, clear labeling practices that identify ingredients and trace their sources, from crop cultivation to food safety measures (Fortune).
- Buying in new ways. While quick-and-easy meals are still popular, busy millennials use more technology to enable their purchases, leveraging mobile apps and in-store ordering kiosks, as well as buying online. They’re also trying more food subscriptions from services that deliver nutritious, make-at-home meals. In addition to adapting technology, such companies must consider refrigeration capacity and locations, new distribution methods, as well as labor (Supply Chain Dive).
- Changing demand for packaging. Recyclable, light-weight, and compostable designs and materials are the new standard, and can help food producers meet their environmental goals. Tamper-evident packaging is becoming prevalent where food integrity is a concern (QSR).
Food for Thought
The Millennial Foodie Revolution is afoot. You may not find a solution quickly, easily, or without sacrifice, but asking the right questions is a necessary start:
- Is your product line evolving to meet shifting consumer preferences?
- Are you working with suppliers that can meet new requirements?
- Can your transportation network accommodate an increase in refrigerated and frozen shipments?
- If you’re a large company, what are you doing to combat slumping sales within “Big Food?”
Capstone can help you navigate these changing preferences, and effectively arm your supply chain for success. Contact us to learn more.