20/06/2018 – News / Sustainability / Health / Brand Marketing / FMCG / Retail / US / Global
Nielsen: transparency is driving FMCG growth
Today’s consumer has unlimited access to information at the touch of a button – or the utterance of a voice command – and in the food and beverage segment they are exercising this power to seek out products that meet their demand for transparency. Sustainability, processing claims (such as organic or ‘natural’ products) and ingredients are the three predominant areas of interest, and sales among products that focus on these attributes are increasing, says global data analytics firm Nielsen.
Shopping for sustainability
According to data from Nielsen and Nielsen Product Insider, 64 per cent of US households buy sustainable products – up four percentage points from a year ago. In the retail space, sales growth is being driven by products that promote sustainable farming and social responsibility, at 14 per cent and 8 per cent, respectively. Sales among products publicising their sustainable resource management have grown by six per cent, while sustainable seafood sales have increased by three per cent.
Nielsen Product Insider reports that most sustainable shoppers make their purchases online, and are 67 per cent more likely to be digitally engaged than the average US consumer. Sustainable shoppers are also 22 per cent more likely to shop on a handheld device, 12 per cent more likely to use handheld devices in stores and 11 per cent more likely to shop online than in store. In addition, they are 66 per cent more likely to have children under six and 47 per cent more likely to have a household income of over US$150,000.
According to Nielsen’s 2017 global survey on sustainability, 68 per cent of Americans believe it is important that companies implement programmes that improve the environment, reflecting a growth in overall consumer interest in sustainability. 67 per cent said they are prioritising health or socially conscious food purchases this year, while 48 per cent said they will change their consumption habits to reduce their environmental impact.
Seeking the source of food
Nielsen’s 2017 global sustainability survey found that 67 per cent of consumers want to know everything that goes into the food they purchase, with 46 per cent of Americans saying that claims on food products have a direct influence on their buying decisions.
“Organic”, “natural” and “free from” are three key marketing claims that continue to drive sales growth, with Nielsen reporting double-digit organic sales growth for the last five years. Consequently, organic products are no longer only available at high-end and speciality stores: the premier grocery segment has lost 3.4 per cent of its share of the organic spend over the past two years, while the warehouse/club channel now leads the field with a 27 per cent share of the total organic spend.
Consumers are not necessarily making purchases purely off the back of marketing claims, however – ingredients also play a significant role. While a transition toward ingredient-driven growth is certainly underway, says Nielsen, currently consumers are checking the ingredients lists of products to ensure they do not contain certain undesirable ingredients, rather than looking at what ingredients are actually included. The consumer shift towards so-called ‘clean-label’ products can be seen across store aisles, with 25 per cent of US dairy products falling into this category, and a 1.1 per cent share increase towards clean-label dairy between 2015 and 2017 – a seemingly insignificant increase that in fact equates to almost US$1bn in sales.
Next steps for manufacturers
While there is no single strategy to ensure a strong performance going forward, Nielsen has identified three key approaches for food manufacturers and retailers.
With around half of Americans saying that product claims affect the decisions they make at the shelf, brands and retailers must ensure that on-pack claims are meaningful and engender consumer trust.
Secondly, it will be vital to understand the true purchasing impact of those shoppers in search of specific ingredients, and product offerings must be effectively aligned to encourage purchase behaviour.
Finally, Nielsen urges companies to be cognisant of the fact that consumer concern surrounding well-being extends beyond their own families to the wider world. Sustainability is not a trend, and shoppers are increasingly demanding it from the companies from which they purchase products and services.