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FMCG Food Industry Trends

FMCG F&B industry statistics, trends and marketing best practices

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    Landscape

    Competition in the FMCG sector has always been intense, but food manufacturers now also face an increasingly fragmented retail market, as well as an evolving set of social trends that have changed the landscape of the industry. 

    Setting the agenda for FMCG food and beverage companies are issues of:

    • Health & Wellness Focus
    • Omnichannel Campaigns
    • Price Sensitivity
    • Transparency & Sustainability

    With enabling technologies like social media, mobile apps, and other digital technologies that pave the path to purchase, FMCG foods companies are feeling the glare of the consumer spotlight. The COVID-19 pandemic and the geo-political instability in eastern Europe has also strained the industry as supply chains struggle. While 2020 to 2022 were unusual years, revenue in the Food segment in Europe is projected to reach €43.31 billion in 2022 and the market is expected to grow annually by 5.47%. 

    The EU food and drink industry employs 4.5M people, with a turnover of €1.1 trillion and €222 billion in value added, making it one of the largest manufacturing industries in the EU.

    Consumer spending on food and non-alcoholic beverages is is forecast to reach €2.3 trillion in 2025. 

    Per capita consumer spending on food and non-alcoholic beverages is forecast to reach 2771,52 per capita by 2025 

    Online Food Delivery Market is project to reach 67.3 Billion by 2027

    • The French food & beverages output is forecast to grow by about 4% in 2022, after increasing 4.6% in 2021
    • The Italian food & beverages value added output rebounded 4% in 2021, and is set to grow further in 2022, supported by domestic consumption and recovering exports

    • The Dutch food & beverages value-added output is forecast to grow by 3% in 2022

    • Food & beverages is one of Poland’s strongest industries, and value added output is forecast to grow by more than 5% in 2022

    • UK food & beverages output is forecast to grow by more than 3% in 2022, after increasing 4.1% in 2021 

    In order to help you understand the key drivers of change and keep their engagement with consumers relevant, we’ve put together this brief guide to FMCG food industry trends.

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    Trend #1: Health & Wellness

    One of the most powerful trends in the FMCG food & beverage industry over the past few years has been an explosion in consumer preferences for products that promote health and wellness - and ushered in a new consumer focus on the role of nutrition in immunity.

    Consumers are continuing to use food to manage their health and are being careful about what they put in their stomachs.

    In response to these priorities, food manufacturers are dramatically altering their strategies to serve consumers who are concerned about boosting their immunity and gut health, plant-based meat alternatives, and fewer sugars and fats in their foods.

    5 factors influencing food purchases in Europe:

    • Taste
    • Food safety
    • Cost
    • Where the food comes from
    • Nutrient content

    5 driving factors consumers feel Food brands have to include in their innovation path:

    • Pleasure
    • Health
    • Physical (weight etc.)
    •  Convenience
    • Ethics

    In particular, the global plant-based protein market is expected to grow at a rate of 10% year-over-year.

    In addition to addressing consumers’ nutritional goals, plant-based protein is viewed as a more sustainable, eco-friendly option—another trend we’ll cover in this guide.

    Key FMCG Food Industry Statistics related to Health, Wellness, and Immunity:

    • 49% of European consumers say protecting their health is now more important
    • 29% of European consumers say avoiding food additives and preservatives will continue to be more important
    • 29% of European consumers say food will be a crucial point to keep their weight under control
    • The Europe plant-based food and beverage market is projected to grow at a CAGR of 8,87 % over the next 5 years
    • Germany is the largest market for plant-based products in the region, with a growing vegan and vegetarian population and almost 10% of people identifying as vegetarian.
    • In France nearly 21% of FMCG Food & Bev spend goes to "food transition" products (organic, plant-based, natural, local production)
    • In the UK 37% of shoppers say vegan options can outsell meat and 35% think the same for dairy.
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    Trend #2: Transparency & Sustainability

    The consumer demand continues for transparency on how companies perform when it comes to sustainability and corporate social responsibility—a pressure increased by many of the events we experienced in the last couple of years. Food decisions are increasingly being based on where, how, and by whom products are made, grown, and raised.

    Consumer demand for transparency in information and production is driving the evolution of the food industry, requiring brands and manufacturers to rethink more than their marketing strategies. Efforts to implement sustainability and social responsibility need to be authentic and supported by every aspect of a business and its supply chain.

    Authentic changes made by brands to support sustainable causes and reduce their impact on the environment build trust and loyalty with consumers. 

    Food Facts (Transparency and Sustainability):

    • The global ethical food market is expected to reach a projected €739 billion in 2025

    • 78 % of Gen Z want transparency from food brands 
    • 87% of those buying locally produced food say this will continue to be more important 

    Leading food companies and retailers are doing their bit:

    • Nestlé has been purchasing more local and healthier food labels to offset declines in some of its mass-market brands.
    • Dutch supermarket Coop switched entirely to Fair trade bananas.
    • German retailer Lidl has done the same across several European countries
    • Nespresso has also expanded its sourcing of Fair-trade goods.
    • Unilever has already established sustainability goals - net-zero emissions from its products by 2039, and investments of 1.1 billion in ESG-friendly initiatives over the next ten years
    • Finnish grocer Kesko aims to become carbon neutral by 2025 and achieve net zero by 2030
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    Trend #3: Online, Omnichannel & DTC

    Every sector has seen a jump in online sales since 2020. However, prior to the pandemic, industries like grocery were behind in e-commerce adoption. Even though services like Amazon Fresh and Ocado have been around for some time, regular use by a majority of consumers was still low.

    In Europe, the biggest shift was seen in the food shopping behaviour with a 45% increase in online shopping. Home delivery accounted for the majority of this, with an overall increase of 41% 

    A recent McKinsey report revealed that in leading EU countries online grocery could make up 18 to 30% of the food-at-home market by 2030 

    No matter where consumers buy their groceries, they expect a seamless experience across platforms. An omnichannel approach is necessary in today’s market to compete. Availability and experience with your brand across online and brick-and-mortar stores is a requirement to connect and maintain relationships with consumers.

    Additionally, physical store space for marketing has gone down, as many retailers maintain their clean store policies and allot extra space for social distancing. With a more competitive space in-store for displays and signage, channels like social media and other digital marketing are important to capturing consumers’ attention.

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    Trend #4: Price Sensitivity

    Brands are spending more. Raw materials, packaging materials, transportation and logistics, and consumer pressure to lessen their environmental impact are affecting the bottom line of companies big and small—leading to price increases. Major brands like Coca-Cola, Unilever, Nestlé, Mondelez International, and General Mills have all raised prices or announced that price increases are coming.

    Raising prices, especially as consumers become more price-sensitive, is not ideal. However, McKinsey found that, since the onset of the pandemic, FMCG companies have taken on increases of up to 50% in certain cost categories.

    • 34% of surveyed European consumers say food affordability is a key concern

    • 42% Look for ways to save money when grocery shopping
    • Geopolitical instability and the pandemic (causing supply chain disruption and availability challenges) has affected margins for retailers and FMCGs have taken on price increases in certain costs categories

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    Best Practices for the FMCG Food Industry

    In a rapidly evolving environment, FMCG brands today need to push the envelope in their quest to engender loyalty from their increasingly diverse customers. The brands that succeed will find ways to engage their audience with their brand stories and purpose via digital technology.

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    1: Promote Transparency

    Effectively market to the keen, information-hungry consumer in an immersive and engaging way. Innovations like Augmented Technology can be used to convey Nutritional information, ingredients, customized recipes, and behind-the-scenes of production, creating an immediate connection with the consumer - on demand, and potentially for keeps.

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    2: Make Engagement Simple

    The easier your promotions are to engage with, the more likely your consumers will participate. Taking your promotions digital and leveraging technology is a great way to ensure this. For example, leverage receipt processing to enable ease of entry / participation while collecting a wealth of consumer data. Learn more about customer engagement marketing.

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    3: Make Engagement Insightful

    FMCG brands are using digitally derived consumer insights to support their marketing campaigns. Access all forms of data including consumer locations, online and offline behavior across channels collected from social listening and digital promotions to create a 360-degree view of a customer and enable further engagement and personalization.

    References:

     

    the-next-step-to-engagement

    Case Study: Kellogg's Family Rewards

    Enhanced Customer Experience and Engagement for KFR

    Kellogg’s is leveraging Snipp's receipt validation technology (integrated via API) to power their KFR program  - to validated all purchases across the brand portfolio, for a seamless CX and to deliver invaluable shopper and basket data for a better understanding of consumers purchase behaviors.

    Consumers simply have to do fun activities (upload a receipt, view a video, participate in a quiz, answer a poll) and each activity gets them 1 token and 1 sweeps entry. Consumers who reach 5 tokens a month can pick a prize of their choice.

    Snipp Kellpoggs KFR

    It's Time to Level Up FMCG Customer Engagement

    Customer engagement may be difficult to measure and perform well at scale, but it undoubtedly leads to higher profitability and customer retention. Looking ahead, the future of customer engagement is going to involve even more personalized experiences.

    To reach this future, brands need to optimize their people, operations, and technology to create a consistently positive feedback loop with customers. This will keep you in touch with your customers’ evolving needs, build your brand integrity, and allow you to use data to further improve their experiences.

    And that's where Snipp comes in.

    We provide global marketing and loyalty technology solutions that bring together modular SaaS technology with best-in-class marketing expertise to help you increase sales, retain customers, and unlock intelligent decision making.

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