Changing Customer Demographics Drive Food Portion Size, Price, and Packaging

 

A household is defined by the U.S. Census Bureau as all the people who occupy a single housing unit, regardless of their relationship to one another.

There were 37 million one-person households in 2021, or 28% of all U.S. households. While 35.03 percent of all households in the United States were two person households. Combined 63.03% of all U.S. households have just one or two people living in them.

More than ever demographics continue to drive change in everything we do.  The change in population mix including fewer married couples, more people living alone, smaller household size and multi-generational households each are creating new opportunities for food retailers and packaging companies.

Foodservice Solutions® Grocerant Guru®, Steven Johnson is constantly asked why is the Grocerant niche filled with Ready-2-Eat and Heat-N-Eat fresh food driving change in every aspect of the retail food space? Demographics are changing Gen Z, and Millennials spend more often on food than any other demographic in the U.S.

Packaged Facts in an important report on food and beverage packaging entitled Food and Beverage Packaging Innovation in the U.S.: Consumer Perspectives, published by Packaged Facts outlined five key drives shaping packaging.

 

 

The five drivers are:

1. Targeting Millennials: While millennials may seem like a broad and amorphous target, numerous studies show there are some commonalities. Millennials like fresh, less processed foods, as demonstrated by their preference for “fast casual restaurants that offer freshly prepared foods, and shopping the perimeter of grocery stores where fresh and non-packaged foods can be found.”

2. Smaller Packages are a Big Trend in Packaging: With one- or two-person households representing 61 percent of all U.S. households, packages sized to serve one or two people have become a big trend in packaging. Such formats include single-serve packaging, meals for two, multi-packs of individual portions, and resealable packaging. The rise in smaller-footprint stores is also influencing this trend.

3. Packaging for Convenience: Convenience is a major selling point for food and beverage packaging. Features such as ease of opening, re-seal-ability, portability, lighter weight, and no-mess dispensing are packaging benefits that influence consumers’ purchasing decisions positively.

 

 

4. See-Thru Packaging Can Boost Sales: More and more marketers are putting their products in packages that are see-thru or have see-thru windows. Transparency in packaging taps into consumer desire for transparency about how food and beverages are produced, both figuratively and literally. Companies that are transparent about their ingredients, sourcing, and business practices are reaping the benefits in consumer goodwill and trust.

5. Eco-Friendly Packaging Growing: In the past few years, single-serve bottled water has come under attack by environmentalists as epitomizing the wasteful nature of modern society. As a result, some marketers of bottled water have stepped up their introductions of more sustainable packaging. Likewise, Packaged Facts believes that improved recyclability and sustainability will become ever more important to the success of the single-cup brew market — if not a cost of entry — as this business matures. In the past two years, several American and Canadian marketers have introduced more environmentally friendly designs for use in K-Cup brewers.

Success does leave clues and have the right packaging helps drive success.  The Grocerant niche filled with Ready-2-Eat and Heat-N-Eat fresh prepared food will continue to drive change in all areas of retail food service.  Do you know where most meals are consumed? Where are you selling meals?

Now over the last several months, sales for most food categories have been up due to inflation, but unit sales have been down. That is not the case for in-store bakery. Sales have been inflated and unit sales have either been flat or up slightly. According to the latest International Dairy Deli Bakery Association (IDDBA) research, 2022 showed $3.3 billion in total in-store bakery sales, with $1.9 billion coming from the center store and $1.4 billion coming from the perimeter.

The needs of shoppers are also evolving in this category. Where Baby Boomers are used to going aisle by aisle to find the products they want, Gen Xers and Millennials shop differently, and grocers need to change the way they do things if in-store bakery is going to continue to thrive. The younger consumer is looking for personalized offers via social media. So, if you have a sale on turnovers, you better take to TikTok or Instagram. The new shopper is not going down every aisle. They are coming with an agenda (if they come in person at all) and are approaching the shelves in a targeted fashion.

“That whole under-40 generation is not visiting the in-store bakery as frequently as the Baby Boomer generation did,” said Jonna Parker, principal of fresh foods for Circana (formerly IRI). “So you need to leverage social media and digital advertising to the right audience to make a play there.”

Parker pointed to the overnight success of Costco’s chocolate peanut butter pie. The dessert experienced its moment on social media; and shoppers went nuts.

“If that is not proof perimeter bakery can create a viral adventure, I don’t know what is,” Parker said.

The younger crowd also is not one to overindulge, which means single servings of desserts and other items are now starting to move more rapidly.

“[Gen Zs and Millennials] are not big leftover eaters,” said Rick Stein, vice president of Fresh Foods at the Food Industry Association (FMI). “So, we are seeing that single-serving section really being expanded. We’re seeing our members really start to gravitate to these grab-and-go items.”

Parker said that buying enthusiasm is linked to the emergence of the perimeter of the in-store bakery, where a lot of these single servings are put out on display.

Under-40 buyers also demand freshness, but there’s also a contradiction to that behavior, which is that younger consumers typically have bought food at night when the bakery staff is long gone. The habit is changing, and more buyers are starting to come earlier in the day. Still, it is creating an issue for store managers who are looking to offer the freshest items possible.

This is where baked goods with longer shelf lives are thriving, particularly at the supercenters. Families also appreciate food with a longer sell-by date.

Other emerging bakery trends include variety (taste and size) as well as international flavors.

“That’s a growing part of the business we really have not seen in the last several years,” Whitney Atkins, global marketing vice president at IDDBA, said. “I think [bakers] were very innovative during COVID and they took that time to learn how to really hit the consumers in some different ways.

Atkins said Asian flavors are ranking high among shoppers. Ube, a purple yam with a nutty vanilla flavor, is native to Southeast Asia and predominantly used in Filipino cuisine. Another flavor is Yuzu, a Japanese citrus lemon valued for it’s highly aromatic rind. Blends of spicey-sweet are also hot right now, Atkins said.

Since the COVID-19 pandemic, work from home flexibility has increased for many, and higher prices are impacting the abilities of families to eat out. According to first quarter numbers from IDDBA, 29% of Americans work from home at least twice a week. That number is down compared to 2021 (47%) and 2022 (41%).

Rochester, N.Y.-based Wegmans said it has been affected by an increase in remote work. The company is currently testing a pilot moving towards self-serve coffee stations, citing an increase in work-from-home as a pain point to its full-service coffee options.

Yet other parts of bakery are still rebounding from pandemic-related changes in behavior.

“Some of the issues on donuts probably stem from how it got really hurt during COVID because you could not buy single donuts anymore,” Stein said. “I think as that department has reopened up now and back into full selection consumers can go back to picking.”

Atkins said just the excitement of selecting your own donuts post COVID has helped lead the resurgence.

The pandemic also drove a trend of making dishes from scratch, especially with regard to desserts. However, inflation is now contributing to a perception that buying individual ingredients may be more expensive than grabbing something out of the bakery.

Convenience and time also are king when it comes to households with busy schedules. Stein said more households are bringing premade dinners into the home, and with that comes the sweet after meal.

Gatherings also continue to be on the rise, and many happen at the home. Pool parties, game nights and holiday events also are another way consumers are combating inflation, according to Parker.

The grocers capitalizing on those types of events are the ones leaning into advertising that highlights bakery’s role. For pool parties, it might be an illustration showing kids getting together and offering a food solution like brownies.

Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

Food and Beverage Marketing Messaging Matters When Speaking to Gen Z

 

Do your branded marketing messaging campaigns look more like 2005, 2015, or 2025?  Here is the question are you looking a customer ahead?  All food retailer know that Gen Z is their key target customer for the next 12 years. Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® often repeats this catch-phrase “consumers are dynamic not static”. 

Evolving with your target customer is a must. We Generation Z is the first to be digitally native and if you are wondering what's driving the cohort's brand loyalty is shopping and advertising preferences, keep reading.

So, according to a new consumer sentiment survey commissioned by NCSolutions (NCS),

1. nearly six in 10 members of Gen Z (58 percent) don't like advertising that interrupts the content they're enjoying
2.  vs. 38 percent of baby boomers.
3. At the same time, more than half of Gen Zers (52 percent) say they'll engage with creative and entertaining ads,
4. compared to 42 percent of boomers,
5. Generation Z (sometimes called zoomers), born between 1997 and 2012, is now flowing into the workforce and represents significant spending power in the consumer packaged goods (CPG) marketplace. Gen Z households spend an average of 12 percent more on consumer packaged goods than all other households,

Below are the four advertising factors that NCS identified as driving the Gen Z cohort's buying decisions:

A social and sustainable mindset drives brand loyalty.

Gen Zers prefer brands whose missions align with their values and are more willing to support and be loyal to purpose-driven brands. Thirty percent of Gen Zers value brands that prioritize the environment, compared with 15 percent of baby boomers, and 27 percent of Gen Z will stay with brands that use sustainable packaging vs. 18 percent of baby boomers.

As a result, Gen Z is less concerned than other generations about being loyal to brands that provide the best quality or value for their budgets. For instance, fewer Gen Zers (59 percent) find the quality of a brand important than boomers (75 percent). Boomers also believe value is more important (79 percent) to them than zoomers (68 percent).

Alan Miles, CEO of NCSolutions, stated, "Gen Z undoubtedly will raise the bar for CPG brands, as they differ from older generations in some meaningful ways. Having grown up with — not alongside — the internet, they are used to having instant access to information, products and services. They bring to the marketplace a fully informed and defined point of view about advertising and brands," ... "That presents both an opportunity and a risk for brands, which is why we conducted this analysis. The findings will support brands as they consider how best to connect with and build relationships with this generational force."

Unobtrusive, funny and social ads connect.

More than other generations, Gen Z is most engaged when advertising is humorous or entertaining. Almost six in 10 (58 percent) dislike ads interrupting their content. More than half (52 percent) prefer creative and entertaining advertising, while only 42 percent of baby boomers, 44 percent of millennials and 40 percent of Generation X agree.

Brands that tickle the funny bone are more likely to capture Gen Z's attention, NCS found. Forty-three percent say they prefer ads to be humorous. Ads with a social message also resonate well with Gen Z; 17 percent like ads when they are aligned with the social messaging of the ad compared with 6 percent of baby boomers.

Social media sways decisions.

Zoomers are most receptive to advertising that appears in social media feeds, much more so than ads that appear on either cable TV or broadcast television. Nearly three in four Gen Zers (72 percent) say they're open to seeing ads in their newsfeeds vs. 28 percent who say they're receptive to ads on cable TV and 20 percent who say they're open to broadcast TV advertising.

Conversely, 19 percent of baby boomers are more receptive to ads on social media vs. 58 percent who say they're receptive to broadcast TV advertising and 45 percent to cable TV ads.

Miles continued, "The economic impact Gen Z will have in the coming years makes understanding what makes this generation tick particularly significant for brands' long-term marketing strategies," ... "The purpose-driven mindset and significance of social media in the lives of zoomers are notable differences."  

Zoomers love convenience.

The analysis also found the younger generation values convenience in several different ways. Fifty-five percent of Gen Z keep frozen meals on hand compared to 49 percent of older generations. Twenty-two percent of Gen Z shop for food items at convenience stores, and 18 percent look for food products in drug stores. At the same time, only 8 percent of Gen X shop for food at a c-store and 6 percent seek food products at a drugstore.

The convenience factor also applies to eating patterns for Gen Z. Just more than half (51 percent) are frequent snackers compared with 42 percent of baby boomers. One-fifth are meal planners, while 34 percent of baby boomers plan weekly meals.

Miles went on to say, "Creative executions and advertising platforms that worked for previous generations may not drive the same sales impact for Gen Z consumers," ... "Marketers will need to test, measure and learn to understand what messages, platforms and creative work best for their brand. Although zoomers have a different set of expectations than previous generations, the fundamentals of effective advertising remain the same."

NCS conducted an online survey of 2,186 consumers in February. Half of the respondents are from Gen Z, with the other half split among baby boomers, Generation X and millennials. The full report is available for download.

Invite Foodservice Solutions® to complete a Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 Foodservice Solutions® of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

Grocerant Guru Talking Food and Beverage Price, Value, Service Equilibrium

 

Success does leave clues. Getting things right takes hard work and continue refinement and retooling according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®. Johnson first identified quantified and qualified restaurant, convenience store, and service deli opportunity within the retail foodservice space.

That first formula for the price, value, service success was: Price + Quality + Service + Portability = Value.  That formula has evolved with Gen Z and Millennials today.  Foodservice Solutions® Grocerant Guru® then retooled, reevaluated, calculated then evolved the formula and here is the new formula:  Price + Quality + Social + Portability = Value. 

With portability comes an increased focus on packaging according to Johnson.  Increasingly foodservice is a key category for the convenience channel as consumers increasingly view c-stores as a destination for food and beverage items. Price/value, food quality, taste and freshness are the most important factors shoppers consider when purchasing prepared food at a c-store, according to the 2023 Convenience Store News Realities of the Aisle Study, which surveyed 1,500 consumers who shop a c-store at least once a month. The study also found:

Get this, NEARLY TWO-THIRDS OF SHOPPERS (64%) Nearly two-thirds of shoppers (64 percent) say the reasons why consumers do not purchase prepared food at convenience stores include:

1. 40% Price at c-stores is too high
2. 35% Don't trust the quality sold at c-stores
3. 29% C-stores don't offer good selection/ variety
4. 21% I've just never thought of looking for these products at c-stores
5. 18% C-stores don't offer sales/promotions say they were extremely or very satisfied with their most recent prepared food purchase at a c-store
6.  while just 6% say they were not satisfied.

In case you did not know. The top five prepared foods consumers say they regularly purchase at c-stores are: Millennials favor breakfast sandwiches and fresh fruit or vegetable smoothies at higher rates than other generations, while Generation Z is more likely to buy French fries and Mexican food. 1. Breakfast sandwich 2. Pizza 3. Hot dog 4. Deli/ sandwich 5. Hamburger

The report continued, in a sign of the post-pandemic return to in-person or hybrid work, breakfast sandwiches jumped to 40% incidence among c-store prepared food shoppers, up 17 points from a year ago.

With the increase in demand for grocerant niche Ready-2-Eat and Heat-Eat-Fresh prepared food up in all sectors of retail foodservice including restaurants, grocery service deli, and convenience stores the need for sustainability packaging is beginning to take center stage according to Johnson.

In case you did not know, Novolex, is a leader in packaging choice, innovation and sustainability, is introducing Power Prep wrap for grab-and-go hot sandwiches and other freshly made foods. 

Manufactured by Novolex brand Bagcraft, the new wrap is laminated and insulated to keep food tasting fresh as it moves from the freezer to thawing and re-heating, and while it’s held under heat at the point of sale. This allows customers to enjoy a delicious hot sandwich that was made and wrapped off site. 

Power Prep wrap is ideal for convenience stores, supermarkets and other foodservice operators, catering to the growing demand for high-quality, freshly made offerings. 

Tim Coulson, Director of Technology, Paper at Novolex, stated, “When a national convenience store needed a new flexible packaging option for grab-and-go hot sandwiches, our innovation team developed a unique four-layer structure specifically designed to control moisture and heat,” .... “Our new Power Prep wrap is a true gamechanger, a unique solution that revolutionizes the way hot foods can be made, sold and enjoyed.” 

Service Deli’s, restaurants and convenience stores operators invest in central kitchens to provide more prepared grab-and-go food options, maintaining consistent quality and food integrity is critical. The Power Prep wrap protects food and performs across multiple temperature requirements. 

So, Power Prep wrap uses non-fluorinated oil-and-grease-resistant paper that is laminated to a liner using a honeycomb pattern that creates an insulated layer. Among the many features of the multilayered wrap: 

The lamination is designed with unique anti-curling capabilities to allow flat sheeting, saving time and increasing efficiency because foods can be quickly wrapped and frozen at scale.

It is more puncture-resistant than foil or foil/paper structure, providing an alternative to other packaging options. 

The wrap can be custom printed to include branding and promotional messages. 

Power Prep wrap is available as cut sheets in different sizes and can also be purchased as a roll.

Bagcraft food packaging products serve a wide range of foodservice, restaurant, supermarket, convenience store and bakery applications. Power Prep wrap is just the latest addition to the range of innovative packaging solutions from Novolex. 

Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook,  LinkedIn, or Twitter