Ailish Forde, Markets Director, Bord Bia – Irish Food Board
A recent Euromonitor report examines competitor strategies among the global market leaders in packaged food, a market valued at US$2.4 trillion. It finds that while overall this is a very fragmented market, the strategies of the top 10 companies have resulted in sustained success. No one company accounts for more than 3% of the market, with the top five accounting for under 10% of sales. Yet, within the top 10, there has only been one new entry in the past five years (Ferrero) and no changes across the top 4. The global nature of the top 10 companies is certainly a factor here, with all companies in the top 10 having a worldwide presence but strategies on healthy snacking and sustainability also are material factors.
The growth of snacking has been an important element in the success of these companies. With consumers increasingly grazing throughout the day, just under half of the total sales of the top 10 companies is in snacks, the largest share of their sales, and valued at US$ 163 billion in 2018. The consumer trend towards healthier snacking has also impacted these companies’ strategies, with those that can combine the two showing particular success. Mondalez, for example, has adopted the tagline ‘Snacking made Right’, with an emphasis on health and wellness. PepsiCo has also shifted more emphasis to health and wellness positioning. It’s Good for You and Better for You options accounted for approximately 50% of revenues in 2017, an increase of about 38% since 2006.
For Irish companies, the Bord Bia 2018 report on Healthy Snacking gives insight into potential opportunities for new products and brands in this category for Ireland and the UK. Overall, the study highlights a gap for a range of new healthier options not just identified by product but also by price, format and size.
Consumer attitudes to sustainability, and more particularly, their wish to positively impact the environment has also impacted packaged food companies strategies. Many have brought sustainability to the forefront of their strategies, aligning them with the UN 2030 Sustainable Development goals.
These goals, set in 2015, cover a wide range of sustainability areas and include climate action, responsible consumption and production, good health & wellbeing, and clean water and sanitation. Many of the top 10 packaged food companies have plans that are directly aligned with these goals and have specific targets. From Kraft Heinz with targets of reducing energy and water consumption by 15% by 2020 to Unilever who has committed to halve its environmental footprint by 2030.
Nonetheless, these companies have remained vulnerable to changing consumer sentiment and can sometimes be seen as being reactive rather than proactive on sustainability. The recent debate on plastic waste and its impact on sea pollution illustrates this point, with many of the top 10 packaged food companies committing to sustainability goals in that area only after they had been named as being implicated. This trend underlines the case for external certification for these companies, allowing them to show that they are proactively striving to have no negative impact.
For Irish companies, joining Origin Green, the world’s first national food sustainability programme, is an ideal way to show proactive responsibility on sustainability. The programme is also aligned to the UN sustainability goals, with each company’s sustainability plan independently verified by Mabbett, a leading international sustainability company. Independent verification ensures that the targets set out are both viable and robust.
Bord Bia. (2018).Healthy Snacking UK and Ireland - January 2018. Retrieved from https://www.bordbia.ie/industry/manufacturers/insight/publications/pages/PublicationDetails.aspx?PublicationID=https://www.bordbia.ie/industry/manufacturers/insight/publications/bbreports/RecentMarketingReports/Healthy%20Snacking%20UK%20and%20Ireland%20-%20January%202018.pdf
Euromonitor International. (2019). Competitor Strategies in Packaged Food. Euromonitor International.
Neilsen (2019). Sustainable Shoppers Buy the Change They Wish to See in the World. Retrieved from https://www.nielsen.com/ie/en/insights/reports/2018/sustainable-shoppers-buy-the-change-they-wish-to-see-in-the-world.html
United Nations. (2019). About the Sustainable Development Goals - United Nations Sustainable Development. Retrieved from https://www.un.org/sustainabledevelopment/sustainable-development-goals/