Insight: trends and opportunities in UK foods

Wednesday, October 13, 2010 | Posted by: Fiona Cullinan
Categories: Financing | Tags: innovation, research, survey, report, strategy, growth, UK, data, insight, food, new products, beverage, new markets, drink, restaurants, NDP

What are the consumer trends? What growth strategies are food and drink companies considering in the next 12 months? And where do they stand on innovation and NPD? Here’s a summary from Grant Thornton’s new food sector survey.

The analysis below appears in Targeting growth: Challenges and opportunities for the UK Food and Beverage sector, which canvassed 50 CEOs and CFOs of UK companies on a number of key issues affecting the food sector. The full report is available for download here.

Overall, the data shows that companies have quickly adapted to the new economic reality. In fact, 25% of respondents say that the decline of conspicuous consumption in itself offers a significant opportunity with demand for home-cooking products and sales of value foods on the rise.

WHAT ARE THE CONSUMER TRENDS?

*Having trouble zooming in on this chart? A larger version is available on the report PDF.

Staying in
A combined 31% of respondents identify the increase in home cooking as a significant or very significant opportunity going forward The rise in home cooking and shift towards value products is also a boon for frozen foods producers, a trend that a total 30% of respondents say presents a significant or very significant opportunity. Looking ahead, it appears that fast-casual restaurants, offering a full service dining experience but with more competitive prices, will be a huge growth area in the restaurant sector.

Going out
Consumers who eat out have altered their consumption patterns in the down market. Unsurprisingly, the inexpensive fast food segment has done relatively well in the recession. In addition to offering cheap meals, many quick-service restaurants also saw opportunity and have increasingly pushed into the breakfast space. At the same time, full-service restaurants have had to be more reliant on promotional offers to attract customers.

Healthy eating
Many consumers are choosing healthier foods, presenting a lucrative area for growth in the UK food sector with 52% of respondents saying the increasing emphasis on health and wellness presents a significant or a very significant opportunity. Lifestyle and attitude changes towards eating tend to offer significant longer-term growth opportunities.

Local, green and ethical
Likewise, attitudes continue to change towards the way foods are produced, both in terms of the environmental impact and whether they are ethically sourced, creating new opportunities. One-quarter of survey respondents say there is at least significant opportunity in the Fair Trade and free range spaces, while a combined 23% say the same about the rise of the green consumer and move towards local produce.

HOW ARE COMPANIES RESPONDING?

*Having trouble zooming in on this chart? A larger version is available on the report PDF.

Innovation and NPD
Changing consumption is impacting on corporate plans for growth with 90% of those surveyed listing a number of ways changes in consumption trends impact upon their future plans, with the largest proportion (34%) saying these trends influence new product development and refinement of existing lines

Growth strategies in the next 12 months
The survey shows that making products that are more appealing to consumers is the key growth strategy for corporates going forward. Two-thirds of respondents are considering launching new products in the next 12 months and around half of survey participants (46%) are considering expansion into new markets.

According to UK Trade & Investment, while the US and European markets are the mainstay markets for British Food and Beverage producers, countries further east in the Gulf and Asia are presenting tremendous opportunities.

“We produce fresh products and moving into the frozen foods space will expand product shelf life and will give more opportunities to export,” one dairy products producer says.

Tellingly, other respondents are considering a host of options that will see them join forces with other players in the market through either M&A, strategic alliances, joint ventures or some type of commercial partnerships in order to grow their businesses.

Expert help from our Food and Beverage team
If you would like to discuss the findings of the report in more detail, please email foodandbeverage@gtuk.com or visit our Food and Beverage team page for more information.

You might also like:
* Financing your strategy report – free download available. Also, watch our video voxpops with CEOs and other experts on what needs to be done to improve the UK financing environment?

* M&A insight – who’s buying and in what sectors?

* Weaknesses and opportunities in UK retail.